prev

CHART OF THE DAY: What Happens When The #BeliefSystem Breaks Down In US?

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.

 

"... Perversely, if the #BeliefSystem starts to break down here in the USA, Gold is going to be an intermediate-term loser in that. Those who are begging Yellen to devalue will have to cover US Dollar shorts and sell both their Oil and Gold futures contracts."

 

CHART OF THE DAY: What Happens When The #BeliefSystem Breaks Down In US? - 04.26.16 Chart


An Uncomfortable Market Truth In Europe

Takeaway: Blind faith in the central planning edifice is beginning to crumble. Case in point ... the ECB.

An Uncomfortable Market Truth In Europe - Draghi Peter Pan cartoon 04.13.2016

 

Investors are slowly starting to acknowledge that the central planning #BeliefSystem has failed. Despite ECB head honcho Mario Draghi's best efforts, there's more evidence out of Europe's muddling economy this morning. 

 

Here's the latest data dump out of Europe:

 

 

No surprise ... it's been a rough year for European equities.

 

Here's a smattering of performance data across the Eurozone (1-year change):

  • EuroStoxx 50: -16.1%
  • UK, FTSE 100: -11.5%
  • France, CAC 40: -12.6%
  • Germany, DAX: -12.8%
  • Italy, FTSE MIB: -21.4%
  • Spain, IBEX: -20.6% 

 

An Uncomfortable Market Truth In Europe - europe stocks

 

Last week, Draghi did his best to instill confidence. European equities bounced. Today, it's back to what actually matters. The data.

 

Is the U.S. next?


McCullough: You’re ‘Crazy’ Buying Stocks Now

In this brief excerpt from The Macro Show this morning, Hedgeye CEO Keith McCullough explains why he’s not going to be the “crazy one” buying U.S. stocks at this point.


real-time alerts

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.

Reflation Reversal Risk Is Growing

Takeaway: Short interest in the S&P 500 is the lowest its been since mid-December.

Reflation Reversal Risk Is Growing - caution tape

 

Investor sentiment is one of the key indicators we track. 

 

Unsurprisingly, what happens over the course of the market cycle is that most investors are:

 

  1. Most bearish at the market lows
  2. Most bullish at the top

 

As Hedgeye Senior Macro analyst Darius Dale and CEO Keith McCullough discussed on The Macro Show this morning, that's exactly what we're witnessing right now in non-commercial S&P 500 futures and options positioning. As you can see in the chart below, short interest in the S&P 500 is the lowest its been since mid-December.

 

Remember what happened next?

 

Click to enlarge

 

 Keep your head up out there.


6 Macro Market 'Reality Check' Charts

Takeaway: Ignore what's going on around you at your own peril.

6 Macro Market 'Reality Check' Charts - bubble cartoon 11.02.2015

 

QUESTION FOR YOU ... What's changed?

 

That may be the most important question to ask yourself right now. Here's the answer. Nothing. Nothing has changed. And that's why we're holding the line on our bearish thesis. 

 

It was our non-consensus call heading into 2016 ... and we continue to flag the risk that U.S. economic growth continues its slide from 3% to 2% to 1%. Meanwhile, corporate profits continue to contract and are on pace for the third consecutive quarter of declines. (Click here for an update on Q1 earnings.)

 

More on macro markets this morning via Hedgeye CEO Keith McCullough in a note sent to subscribers. Take a look at Copper:

 

"One of the many proxies to pay attention to right now on the “reflation” hope vs. the #Deflation TREND - -0.25% this am after failing to breakout above its MAR high; $2.31/lb Copper and $46 WTI are big resistance levels for me."

 

 

meanwhile, over to Europe...

 

After a reading of German business sentiment failed to meet expectations, Euro-zone permabulls continue to be battered by these ugly economic realities: 

 

 

That's why countries like Italy remain in crash mode. 

 

 

heading over to Asia...

 

Here's the Shanghai Comp Casino today:

 

 

... And Japan:

 

 

So, what should you own? As McCullough noted on The Macro Show today, Long Bonds (TLT, ZROZ, EDV) are "the most obvious position you should have" on U.S. growth slowing. Here's McCullough's incremental Monday morning update: 

 

"Was it a bad week for Long Bond Bulls or the last big buying opportunity of Q2? I say buyem (again) – and buy anything that looks like a safe yield (XLU, EDV, ZROZ) with the 10yr tapping the top-end of a 1.70-1.90% immediate-term risk range."

 

 

Back to reality this Monday morning.


CHART OF THE DAY: Earnings Season Reality Check

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.

 

"... Do (or did) you believe that growth would slow this fast, from 3% to 2% to 1%?

 

Or did you believe in it so clearly that you knew that the Financials (XLF) would start Earnings Season with the following reality:

  1. 32 of 90 “Financials” in the SP500 have reported their respective quarter
  2. Aggregate Earnings (non-GAAP!) are currently -17.0% year-over-year
  3. Financials (XLF) had their “reflation” rally now too (back to -1.2% YTD)"

 

CHART OF THE DAY: Earnings Season Reality Check - 04.25.16 chart


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

next