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CLICK HERE to access the associated slides.
In this brief excerpt from The Macro Show today, Hedgeye Senior Macro analyst Darius Dale discusses our macro team’s call to remove the Industrials and Energy sector as top short ideas while adding short Financials.
"Since Q4 ended on December 31st (they haven’t been able to centrally plan a change in the calendar dates yet), has anyone considered why we just saw the worst 6 week start to a stock market year ever? Yep, it’s the Profit vs. Credit Cycle (within the Economic Cycle), stupid," Hedgeye CEO Keith McCullough wrote in a recent Early Look.
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Below is a brief excerpt from Potomac Research Group Chief Political Strategist JT Taylor's Morning Bullets sent to institutional clients each morning.
Our claim that endorsements matter little will be tested next Tuesday in WI, where political and media establishment figures are lining up to endorse candidates who are not Donald Trump. WI Gov. Scott Walker endorsed Ted Cruz yesterday, while former WI Gov. Tommy Thompson is backing John Kasich. Most local conservative radio hosts are virulently anti-Trump, and anti-Trump super PACs have made more ad-buys than anyone else in the state. These efforts have had little success to date, and could just be another example of the party elite out of step with the base.
GLOVES COME OFF:
Bernie Sanders is slowly ditching the nice guy persona as his victories in HI, WA and AK make him an irksome opponent to Hillary Clinton. This is the same man who proclaimed that he didn't follow polling or use negative attacks, but is singing a different tune as he sets his sights on WI. Sanders and Clinton are currently neck-and-neck in the state that shares its borders with MI and MN (both won by Sanders), but has a demographic similar to OH (won by Clinton). Sanders' strategy is to pummel Clinton on her ties to Wall Street, fracking, campaign finance, and Iraq to keep his winning streak - and hope - alive.
NY STATE OF MIND:
With WI looming next week, Clinton is already turning her attention to her home state of NY with the hope that it will provide her with a decisive win over Sanders - boosting enthusiasm in her party, and securing her enough delegates to put her in a position to defeat Sanders well before CA. Sanders' strategy is to target the same districts won by Gov. Andrew Cuomo's last primary challenger (whose platform was similar to Sanders') and, although he's a Brooklynite, losing the state will not be a shock, but he wants prevent Clinton from taking home the lion's share of the delegates. His focus will be on tightening the margins in the Empire State and in PA - where he is closer to Clinton in the polls.
In this complimentary edition of “About Everything,” Hedgeye Demography Sector Head Neil Howe discusses the sweeping behavioral changes of Millennials (“Generation Yawn”) compared to prior generations, and spells out what it all means for investors and companies around the globe.
Takeaway: Stick with what has worked all year: Gold, Utilities, Long Bonds (and short the Fed's forecast.)
Omnipotent (dovish?) Fed head Janet Yellen yesterday said the opposite of her hawkish regional Fed talking heads who made the Old Wall media rounds last week. So, naturally, USD/Rates smoked, reflation rallies!
However, what really matters is not Janet Yellen's every last word but economic fundamentals, which continue to slow. According to Hedgeye CEO Keith McCullough:
"As opposed to v-bottoms on the SPY short-side, the long side has been easy YTD – as #GrowthSlows, Fed Easing has pounded the 10yr down to 1.81% this morning (2yr just went from 0.90% to 0.77% in less than a week on Fed Head confusion) and Utilities (XLU) continued to lead the way on yesterday’s Yellen Ramp, closing up another +1.5% = +14.3% YTD XLU."
How about those sectors? Take a look:
"Heck, why buy Utes on Yellen turn-tailing dovish when you can go right to the vein and buy Gold? It was +3% yesterday (vs. Financials barely up at +0.18% XLF #terrible) to +17% YTD leading most things in absolute return space which I highly doubt will be trumpeted more than “the S&P is up” (+0.5% YTD) all day today (into month-end markups)"
So here's what's working:
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Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.