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"Fed Day Live" w/Keith McCullough Today at 2:10PM ET

Investors will anxiously watch as the Fed releases its highly-anticipated policy statement today at 2:00PM ET.


Keith McCullough will host a LIVE + INTERACTIVE online event today at 2:10pm ET offering immediate market reaction and commentary on whatever the Fed has decided to do (or not do). He will also answer viewer questions live during the show and offer high-level insight on the market impact, catalysts and how to position your portfolio going forward.


CLICK HERE to watch.



While our team believes the Fed will be more dovish than expected, Keith will distill various scenarios and describe how to be best positioned going foward. If you'd like to ask Keith a question, simply submit it via the dialogue box below the video stream.

Topics will include:

  • Does "Slower-For-Lower" (Growth) and "Lower-For-Longer" (Rates) remain the macro call?
  • Is Deflation still a risk?
  • Where is the Dollar headed into year-end?
  • What is an appropriate gross and/or net exposure to have as we traverse the next 3-6 months?




The Macro Show Replay | October 28, 2015



CHART OF THE DAY: This Classic Pro-Cyclical #Bubble indicator Is Flashing Red


CHART OF THE DAY: This Classic Pro-Cyclical #Bubble indicator Is Flashing Red  - 10.28.15 EL chart


Editor's note: Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough. Click here if you'd like to subscribe and get a step ahead of consensus.


"As you can see in today’s Chart of The Day, M&A is what we call a classic pro-cyclical #Bubble indicator (peaks at the end of an economic cycle). That makes complete sense. When top-down Global and US GDP growth slows, companies try to buy growth and/or “synergies.”

Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

Storytelling Recession

“The more you leave out, the more you highlight what you leave in.”

-Henry Green


In the spirit of The Great #Deflation Risk, I’m finding some eerily relevant quotes from the 1930s these days. Green was an English author best known for his 1939 novel titled Party Going. What a capital markets bender this #SuperLateCycle US economic story has been!


As you can see in today’s Chart of The Day, M&A is what we call a classic pro-cyclical #Bubble indicator (peaks at the end of an economic cycle). That makes complete sense. When top-down Global and US GDP growth slows, companies try to buy growth and/or “synergies.”


In case you didn’t know, “synergies” means firing people. This is why Jobless Claims rising above 300,000 is one of the Top 3 US Recession Indicators – the other 2 (already happening) are Consumer Confidence rolling off its cycle peak, and Corporate Profit #GrowthSlowing.


Storytelling Recession - Fed cartoon 10.27.2015

Hedgeye CEO Keith McCullough will host a LIVE + INTERACTIVE online event today at 2:10pm ET offering immediate market reaction and commentary on the Fed statement. Click here to watch. 


Back to the Global Macro Grind


Not surprisingly, this week’s US economic data has been more of the same (i.e. the #GrowthSlowing bottom is not in):


  1. US New Home Sales for SEP missed (slowed)
  2. US Durable Goods (-3% y/y) remain in a recession, missing/slowing again
  3. US Consumer Confidence slowed to 97.6, right on time, from its #LateCycle peak in Q2 of 106


Since US Employment growth (Non-Farm Payrolls) peaked in Q1 of 2015 and US Consumption growth peaked in Q1, should it surprise anyone that Q3 and Q4 are going to be #GrowthSlowing quarters for both US employment/consumption and US corporate profits?


Even the most over-owned stock in human history (AAPL) is slowing. I’m sure that has nothing to do with why it looks “cheap.”


While there’s obviously a recession in Durable Goods, Inflation Expectations, Emerging Markets, etc., there’s a less subtle recession developing in US stock market storytelling.


While I was driving to hockey practice (after the market close) last night, I heard back to back Fast Monkeys on CNBC say this about Twitter’s (TWTR) quarter: “I’m long the stock and the guidance isn’t what I wanted to see, but you definitely have to buy it down here.”


At that point the stock was down 8-10%. They kept reading the corporate headline of “ad engagements” being up. Meanwhile their pricing was down -39% year-over-year. #lol. Thanks for coming out guys.


Imagine that. The ad-cycle has pricing pressure, as the US economic cycle slows from a 77 month peak…


In other #Deflation Risk news:


  1. Oil & Gas Stocks (XOP) led losers in the US stock market yesterday closing -2.9% vs. the Russell 2000 (IWM) -1.1% on the day
  2. US Transportation Stocks (IYT) were a close 2nd to last in terms of US Sector Style Factor exposure, closing -2.7% on the day
  3. Biotech (IBB) led gainers +3.1% on the day ahead of Gilead (GILD) reporting at the closing (and falling -2% on the news)


Yeah, #NoWorries. Everything you had to be long for the 1st two weeks of October has gone straight down in the last 3 trading days post the Draghi Devaluation => USD Up Deflation. And Healthcare Stocks just “outperformed”, for a day.


But but, the SP500 is “flat” for the YTD…


True. It was in 1987 too. And the only problem with “flat” is that everyone and their brother was looking for it (and interest rates) to be up this year. Oh, and many many funds aren’t “flat” (they’re down YTD) because most of the internals are down.


Another way to look at “internals” is this thing called market breadth. If you look at the stocks that were “up” on the day yesterday on the NYSE (New York Stock Exchange), the number was 25% (versus 72% of stocks being down on the day).


With the Russell 2000 and SP500 down -11.6% and -3.1%, respectively, from their all-time #Bubble peaks, you can tell me a story about unicorns, but I don’t buy it. There’s a recession in the credit quality of that narrative too.


Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND research views in brackets) are now:


UST 10yr Yield 1.98-2.09% (bearish)

SPX 1 (bearish)
RUT 1135--1176 (bearish)
DAX 96 (bearish)

VIX 13.41-19.96 (bullish)
USD 95.82-97.44 (bullish)
EUR/USD 1.10-1.13 (bearish)
YEN 119.08-121.39 (neutral)
Oil (WTI) 44.24-46.31 (neutral)

Nat Gas 2.19-2.41 (bearish)

Gold 1150-1175 (bullish)
Copper 2.30-2.41 (bearish)


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Storytelling Recession - 10.28.15 EL chart

October 28, 2015

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The Fed, Oil and China

Client Talking Points


After consensus was calling for a “rate hike”, the latest bull case for U.S. stocks is that the Fed doesn’t hike – got it? Roger that. After New homes, Durable Goods, and Consumer Confidence all slowing this week, UST 10YR Yield = 2.03%.


Oil was slammed by ECB President Mario Draghi’s Devaluation, closing down another -1.8% yesterday (WTI), taking it to -5.2% in the last week alone. Oil is still very much in crash/deflation mode down -47% year-over-year; carnage in Oil & Gas stocks (XOP) -2.9% yesterday too.


Apple is slowing in China, but Chinese GDP is 6.9% right? Right. The Shanghai Composite failed (like most things EM have in the last week) @Hedgeye TREND resistance and closed -1.7% overnight (#Deflation = bear market in EM).


***Keith McCullough will host a LIVE + INTERACTIVE online event today at 2:10pm ET offering immediate market reaction and commentary to the Fed. CLICK HERE to watch.



Asset Allocation


Top Long Ideas

Company Ticker Sector Duration

What week it was for MCD shareholders! Shares finished the week up 7.3%. We have been saying all along that the third quarter of 2015 would be the inflection point for the McDonald’s (MCD) turnaround. After this print, it appears that the heartache is finally over at McDonald’s, as this quarter marks the first good quarter the company has had in two years.


From here, the upside in the stock price lies with the growth of All Day Breakfast, additional G&A cuts, national value offering implementation, reimaging of restaurants, commodity deflation, especially in beef and increased operational efficiencies, among others. In addition, the REIT is a potential driver of incremental value but not crucial to the long-term success of this call. With Steve Easterbrook at the helm we are confident this company will be better managed than it has been in a long time.


RH unveiled a full floor of Modern product in their New York Flatiron store this week. The new concept sits on the first floor of the 21k sq. ft. store and marks the 3rd property in RH’s fleet (along with Denver and Atlanta) to carry the new product line.


Fundamentally and financially, we’re about to see growth at RH go on a multi-year tear. We think this stock is headed to $300 over the next 2-3 years. We’ve been patient for the catalyst calendar to begin, and the waiting is finally over.


As devaluation and global currency war jockeying from central bankers around the world continues, the acknowledgement of growth slowing continues to push yields lower. The long-bond was up on Thursday, after the ECB meeting, despite an easing-fueled rip in equities. The bond market doesn’t believe in the growth storytelling and we expect it to continue.


Remember that Down Euro Devaluation is a global TIGHTENING event because the world’s biggest asset price #deflation risk is that the world’s inflation expectations (commodities, debt, etc.) are DENOMINATED IN DOLLARS. That has implications for gold (risk to being long), but we want to get through the Fed meeting and GDP data next week before we pivot on a gold view. Stay tuned.

Three for the Road


SPECIAL EDITION: McCullough Answers 4 Macro Questions From Elmo https://app.hedgeye.com/insights/47160-special-edition-mccullough-answers-4-macro-questions-from-elmo… via @KeithMcCullough



Everyone has a fair turn to be as great as he pleases.

Jeremy Collier


The Durable Goods headline number for September was down -1.2% and the August figure was revised from -2% to -3%.  Notably, down -3.0% year-over-year with year-over-year growth negative for the 8th consecutive month and in 10 of the last 11 months.  

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