Client Talking Points
Ex-Japan, which loves Burning Yens (Up Dollar), Asian Equities have not enjoyed this Fed hike into a slow-down concept, at all. The Hong Kong Index and the KOSPI are both down -1.4% overnight; India is down -1.6%, and Indonesia is down -1.1% (all of those markets still signaling bearish TREND).
#Deflation Risk is depressing the “reflation” bulls with Copper breaking to new lows down -0.7% this morning at $2.21/lb. Copper’s immediate term risk range is 2.19-2.30.
The S&P 500 is down for 4 straight days and starting to signal moderately oversold in the 2050-2070 zone, so we would cover some green shoot shorts so that we can lay them out again on the next bounce to lower-highs vs. that all-time #bubble high of 2130.
**Watch The Macro Show replay - CLICK HERE.
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Top Long Ideas
Post earnings, the next catalyst for McDonald’s (MCD) is going to be next week's November 10th analyst meeting. The meeting will be an opportunity for management to shed more light on the progress of all day breakfast, additional G&A cuts and the potential of doing a REIT.
Our Restaurants team remains bullish on the name, and they look forward to giving you some material updates after the meeting.
Restoration Hardware (RH) hit all-time highs this week, but this story is far from over. We think RH will earn close to $11 per share in 3 years, which compares to the consensus estimate of just over $6. We estimate that the stock is worth $300.
The square footage component is well known, but we think people are missing…
Current policy makers remain fixated on the jobs market, and this Friday’s report was good on the surface. Here’s the rundown:
So, again, on the surface it was a positive report. However, as we’ve emphasized, consumption and labor market strength are staples of an economy that is late cycle.
Growth continues to slow, and a rate hike has the potential to pull-forward a recession and flatten the yield curve. In the event this happens, you’ll be happy you held onto your long-bond position. If you haven’t bought into the #slower-for-longer view, the market is giving you the chance to buy bonds at another lower high… For the 5th time this year.
Three for the Road
TWEET OF THE DAY
VIDEO (2mins) The Cyclical + Secular Slowdown Call https://app.hedgeye.com/insights/47433-2-things-sabotaging-the-bullish-cheap-oil-narrative… via @hedgeye
QUOTE OF THE DAY
First say to yourself what you would be; and then do what you have to do.
STAT OF THE DAY
So far this year U.S. exports are down 11%. The only other times they have fallen this dramatically since the turn of the century were during the last two recessions.