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From Central Planning Shenanigans To Evaluating Hedge Fund Returns

Takeaway: Below are a selection of interesting links to stories that caught our attention (for both good reasons and bad).

From Central Planning Shenanigans To Evaluating Hedge Fund Returns - wall street sign

 

At Hedgeye, we rarely mince words in assessing Old Wall and it's media. Below are a selection of interesting links to stories that caught our attention (for both good reasons and bad). 

 

  1.  Ben Bernanke, Brookings Blogs, "Ending "too big to fail": What's the right approach?" An interesting read, if only to get up to date on the latest central planning orthodoxy surrounding "too big to fail."
  2. MarketWatch, "Fed’s Yellen says negative rates would need careful consideration." NIRP! Rep. Brad Sherman (D., California) released a letter from Fed head Janet Yellen in which she writes she cannot "completely rule out the use of negative interest rates in some future very adverse scenario."
  3. Wall Street Journal, "WSJ Survey: Economists Divided Over Next Fed Rate Increase." This one is just silly. "About 31% of economists surveyed by WSJ this month said the Fed will raise rates in June, down from 75% in April." As we Tweeted yesterday, in other words, "Faulty forecasters are uncertain about the whims of unelected bureaucrats."
  4. Reuters, "BOJ will act decisively using its 'ample' tools: Kuroda." BoJ head Haruhiko Kuroda said that the "risks to [Japan's] economy are tilted to the downside" but that the central bank will act "decisively" to achieve the 2% inflation target and reiterated that it has "ample" policy octions available to expand stimulus. Nope. Macro markets disagree. Nikkei was down -1.4% today.
  5. Clifford Scott Asness, BloombergView, "Hedging on the Case Against Hedge Funds." A thought-provoking op-ed on how best to evaluate hedge fund returns from the founder of hedge fund and asset management firm AQR Capital Management. It's as balanced an appraisal as you'll read.

The Evolving Complacency In Credit Markets

Takeaway: Complacency about the credit cycle is at YTD highs, especially in commodity-related sectors.

Editor's Note: Below is #CreditCycle analysis via our Macro team in a note sent to subscribers earlier this morning. 

 

The Evolving Complacency In Credit Markets - credit cycle

With renewed expectations for Fed intervention on growth slowing and the precedent of Central Bankers buying corporate bonds in Europe, bond market volatility expectations have been smashed.

 

The MOVE index is at a level not seen since 2014. High yield spreads have nearly returned to their 2015 averages. Energy OAS is below 2015 averages after trading +600 over that level back in Febraury, and materials and industrials spreads have nearly reverted back to 2015 levels.

 

What's changed? Expectations certainly have:

 

  1. Spreads being well-off 2014 cycle lows;
  2. Consumption rolling over; and
  3. Jobless claims picking up

 

A confluence of data suggests the cycle still cycles.

 

The Evolving Complacency In Credit Markets - credit spreads 5 13

 


RL – ISSUES INTO ANALYST DAY CALL

Takeaway: On June 6th, we will host a call to review the key issues facing RL management heading into its analyst day.

RL currently sits at the top of our Long Vetting Bench. The reality is that RL is one of the few stocks we can find in retail that has arguably found a floor, and has potential catalysts to take it higher. With RL Management pushing its 2017 guidance off until the June 7th Investor day, all eyes will be on this event.

 

On June 6th, at 1PM ET we will host a call to review our thesis, as well as the key insight on the issues we think management must address in its analyst meeting. 

 

Details will be provided prior to the call.


investing ideas

Risk Managed Long Term Investing for Pros

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.

The Macro Show Keith McCullough Replay | May 16, 2016

CLICK HERE to access the associated slides.

An audio-only replay of today's show is available here.


Daily Market Data Dump: Friday

Editor's Note: Below are complimentary charts highlighting global equity market developments, S&P 500 sector performance, volume on U.S. stock exchanges, and rates and bond spreads. It's on the house. For more information on how Hedgeye can help you better understand the markets and economy (and stay ahead of consensus) check out our array of investing products

 

CLICK TO ENLARGE

 

Daily Market Data Dump: Friday - equity markets 5 13

 

Daily Market Data Dump: Friday - sector performance 5 13

 

Daily Market Data Dump: Friday - volume 5 13

 

Daily Market Data Dump: Friday - rates and spreads 5 13


CHART OF THE DAY: Trump Beating Clinton? Not As Challenging As Once Thought

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Director of Research Daryl Jones. Click here to learn more.

 

"... Admittedly it is somewhat ironic to have a quote about losing from Donald Trump. To the chagrin of many, Trump has literally done nothing but win over the last year. He has won primary after primary and, if the most recent polls are any indication, beating Hillary Clinton might not be as challenging as pundits once thought either. In the Chart of the Day, we highlight this narrowing gap between the two."

 

CHART OF THE DAY: Trump Beating Clinton? Not As Challenging As Once Thought - 5 13 16 CoD


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