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Washington on Wall Street: The Very Real Possibility Of A Contested GOP Convention

 

Following Tuesday’s presidential primary contests, Hedgeye Director of Research Daryl Jones walks through the key takeaways, including the historical context around previous contested conventions and potential stock market implications.


NEW VIDEO | The Bear Case On Foot Locker (FL)

We thought you would appreciate this brief 2-minute video.

 

Hedgeye Retail analyst Alec Richards explains why the expansion of Nike’s (NKE) direct-to-consumer business is bearish for footwear retailer Foot Locker.

 

If you have any questions or comments, please email Matt Moran at .

 

Best Regards,

The Hedgeye Team

 


Why Clinton Lost Michigan... & Cruz's Big Gamble

Takeaway: What to watch on the election 2016 campaign trail.

Below is a brief excerpt from Potomac Research Group Chief Political Strategist JT Taylor's Morning Bullets sent to institutional clients each morning.

TRUMP TRIUMPHS:

 

Why Clinton Lost Michigan... & Cruz's Big Gamble - trump face

 

Whatever rattled Donald Trump last weekend is already old news. His double-digit takedown of his rivals in MI coupled with his wins in MS and HI last night netted 71 delegates and significantly shifted momentum back his way. Now heading into the winner-take-all states, Ted Cruz is back on defense despite winning Idaho, Marco Rubio is limping (he picked up no delegates) and after playing big in MI, John Kasich may have lost momentum going into his neighboring OH.

 

Trump's focus now turns to tomorrow night's debate in Miami (another QVC-esque infomercial for Trump products anyone?) and holding his ground while his rivals frantically attack him.

PREVENT DEFENSE:

 

Why Clinton Lost Michigan... & Cruz's Big Gamble - ted cruz photo

 

Ted Cruz continues to invest serious resources into FL, despite having no chance of winning the state. Cruz's strategy to intercept the anti-Trump vote from Marco Rubio has two prongs:

  1. Denying him a home-state victory and likely sinking his candidacy for good;
  2. Keeping Rubio pinned down while he presses ahead in other March 15th states.

It's a big gamble -- if Trump wins the state along with NC and IL, his delegate lead will be all but insurmountable. While Rubio and John Kasich are pinning their hopes on prevailing at an open convention, Cruz is reaching for an outright win in the delegate count -- even at the risk of ending the contest next week.

ALL POLITICS (WERE) LOCAL:  

 

Why Clinton Lost Michigan... & Cruz's Big Gamble - bern

 

Throughout Hillary Clinton's campaign, she has raked in local endorsements from Democratic mayors, state leaders, and even governors across the nation. Her tactical focus on local issues like water, minimum wage fights, and her calculated attacks against Republican governors at local rallies have so far won her broad support.

 

Then what happened in Michigan last night? One word -- trade. In exit polling, MI Democrats overwhelmingly expressed that trade with other countries "takes away U.S. jobs" -- and it didn't help that Bernie Sanders outspent Clinton in the state and exposed her support for trade pacts during the Flint debate, in speeches, and negative ads for the past month. With Clinton's overwhelming win in MS, she still wins the day and more delegates.


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real edge in real-time

This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.

A Look At The MLP Boom & Bust With Hedgeye Energy Analyst Kevin Kaiser

Editor's Note: Earlier today, Hedgeye Energy analyst Kevin Kaiser published a 55-page "Midstream MLP Chart Book" institutional research deck highlighting key metrics and developments. As a reminder, Kaiser has been the lone MLP bear since the beginning on companies including Kinder Morgan and Linn Energy. He was recently featured in Barron's (MLPs: Is the Worst Over?). 

 

The chart below compares the narratives floated about the MLP industry during the boom years (2000-2014) to the bust of 2015.

 

Click to enlarge 

A Look At The MLP Boom & Bust With Hedgeye Energy Analyst Kevin Kaiser - mlp kaiser chart

To access Kaiser's research email sales@hedgeye.com.


Why We’re Keeping a Close Eye on Wynn

 

In this brief excerpt from The Macro Show this morning, Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan distills what’s going on with Wynn Resorts (WYNN) right now, why it matters to Macau, and what to expect going forward.

 

Subscribe to The Macro Show today for access to this and all other episodes. 

 

Subscribe to Hedgeye on YouTube for all of our free video content.


How To Trade This Market Chop and Volatility

Takeaway: Fade oil-related rallies and stick with longer-term calls on #GrowthSlowing & #LowerForLonger (rates).

How To Trade This Market Chop and Volatility - Volatility cartoon 09.02.2015

How should investors trade these volatile markets?

 

Fade oil-related rallies.

 

That's the latest from our Macro team in a note sent to subscribers this morning. Here's more analysis:

 

"Chase the wabbit – U.S. equity futures whipping around on what Oil does and that isn’t going to do anything for the economy obviously (volatility = bad). The immediate-term risk range for WTI is 30.65-38.18 so the way we would deal with this is fade Oil related beta moves at the top end of that range."

 

How To Trade This Market Chop and Volatility - wti risk range

 

Outside our immediate-term trade advice, our longer-term calls on #GrowthSlowing and #LowerForLonger (rates) still hold.

 

But how do you play it?

 

"No matter what oil does, our favorite S&P Sector remains Utilities (XLU) which ramped another +1.0% yesterday to immediate-term TRADE overbought at +10.5% year-to-date as our favorite Sector to be short remains Financials (XLF) which led “ex-Energy” losers yesterday -1.6% to -8.1% year-to-date."

 

How To Trade This Market Chop and Volatility - xlu v xlf ytd

 

To be sure, it's been a rocky three weeks. Hedgeye CEO Keith McCullough wrote as much in a recent Early Look:

 

"Of all the bad weeks I’ve had since the US profit cycle peaked (when US and Japanese stocks peaked in July of 2015), last week ranked right at the top of them.

 

And, to be clear, since I was telling you to buy the Long Bond at 2.53% on the 10yr (in July), I’ve had some really bad weeks. But you’ve had to be able to endure those to have been right for the last 8 months."

 

What does the score look like since July?

How To Trade This Market Chop and Volatility - tlt v s p ytd

 

Reality check ... bear markets bounce. Economic gravity prevails.


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