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A Look At How Yellen Is Moving Markets This Morning

Takeaway: Fed head Janet Yellen's speech Friday had key investment implications for Copper, Gold and Long Bonds.

A Look At How Yellen Is Moving Markets This Morning - Yellen cartoon 04.06.2016

 

Fed head Janet Yellen spoke at Harvard University on Friday and supplied her latest thinking on Fed policy. 

 

“It’s appropriate, and I’ve said this in the past I think, for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate," Yellen said.

 

Here's analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers this morning.

 

"Friday’s Yellen QA @Harvard was easily her most hawkish of the year – she said she’s “probably” going to raise in June or July based on her forecast. Since her forecast has always been the risk, there’s not a lot I can own into her making another policy mistake (tightening into a slow-down like she did in DEC); hence my sell signals in Treasuries, Utes, etc. Friday."

 

Look at the falling 10-year Treasury yield despite the Fed's December rate hike:

 

A Look At How Yellen Is Moving Markets This Morning - 10yr treasury 5 31

 

Meanwhile in commodities...

 

"Copper is down -0.6% this morning => Dollar Up, Rates Up deflates the “reflation” – Gold gets this too. Come June/July I can’t see why markets won’t look like they did by the end of DEC and through JAN. If you have Hedgeye’s GDP and profit cycle forecasts (Q2 will be the worst – Q1 was not the “bottom”), you might have our view of 1-3 month risk here."

 

 

As for Gold...

 

 

The risk to macro markets is that Janet Yellen makes her second rate hike mistake. 

 

Remember Yellen is a labor economist so ahead of Friday's non-farm payroll report, here's her favorite labor market indicator. Note: It's deteriorated for the fourth straight month:

 

A Look At How Yellen Is Moving Markets This Morning - yellen favorite indicator

 

More to be revealed.


Daily Market Data Dump: Tuesday

Takeaway: A closer look at global macro market developments.

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: Tuesday - equity markets 5 31

 

Daily Market Data Dump: Tuesday - sector performance 5 31

 

Daily Market Data Dump: Tuesday - volume 5 31

 

Daily Market Data Dump: Tuesday - rates and spreads 5 31

 

Daily Market Data Dump: Tuesday - currencies 5 31


CHART OF THE DAY: Fed Forecast Versus #TheCycle

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.

 

"... And now, markets are “gonna rip” based on a low-probability scenario that the Fed’s forecast for growth to magically re-accelerate (into peak of #TheCyclecompares in Q2) is accurate? #Cool. Good luck with that.

 

We’re sticking with our forecast of GDP sub 1% for Q2 and the worst profits of #TheCycle in Q2 and Q3. Alongside #EmploymentSlowing, we remain The Bears on #EarningsSlowing. We expect The Financials (XLF) to lead on the downside of earnings with the Yield Spread (10yr minus 2yr) not budging last week (still at YTD lows of 94 basis points wide)."

 

CHART OF THE DAY: Fed Forecast Versus #TheCycle - 05.31.16 Chart


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

REPLAY! This Week On HedgeyeTV

Our deep bench of analysts take to HedgeyeTV every weekday to update subscribers on Hedgeye's high conviction stock ideas and evolving macro trends. Whether it's on The Macro ShowReal-Time Alerts Live or other exclusive live events, HedgeyeTV is always chock full of insight.

 

Below is a taste of the most recent week in HedgeyeTV. (Like what you see? Click here to subscribe for free to our YouTube channel.)

 

Enjoy!   

 

1. Steiner: ‘China Is An Enormous Systemic Risk’ (5/26/16)

 

 

 

In this brief excerpt from The Macro Show, Hedgeye Financials analyst Josh Steiner discusses why the “unbelievable rate of credit growth” in China is now slowing and why it could pose risks for investors long the stock market.

 

2. McGough: 10 Reasons Why I Don’t Like Hanesbrands | $HBI (5/25/16)

 

 

Retail analyst Brian McGough hosted a Black Book presentation earlier this week to update his short call on Hanesbrands (HBI). In this brief video excerpt, McGough lays out the ten reasons HBI shares are headed lower.

 

3. McCullough: Stop Whining, Stick With The Process (5/25/2016)

 

 

During the live Q&A section of The Macro Show earlier today, Hedgeye CEO Keith McCullough provides a “stick with the process” pep talk for a subscriber worried about his short positions.

 

4. Why We Remain Bearish On Junk Bonds (5/24/2016)

 

 

In this brief excerpt from The Macro Show earlier today, Hedgeye Macro analysts Darius Dale and Ben Ryan respond to a subscriber’s question about our views on the credit cycle and high-yield debt.

 

5. What The Yield Spread Reveals About Growth (5/23/2016)

 

 

In this brief excerpt from The Macro Show this morning, Hedgeye Senior Macro analyst Darius Dale provides an in-depth, granular look at why investors should pay close attention to the yield curve and what it says about growth.


This Week In Hedgeye Cartoons

Our cartoonist Bob Rich captures the tenor on Wall Street every weekday in Hedgeye's widely-acclaimed Cartoon of the Day. Below are his five latest cartoons. We hope you enjoy his humor and wit as filtered through Hedgeye's market insights. (Click here to receive our daily cartoon for free.)

 

Enjoy!

 

1. The Writing On The Wall (5/27/2016)

This Week In Hedgeye Cartoons - Bull case cartoon May 2016

 

With a "0" in front of GDP and S&P 500 earnings growth -8.5% year-over-year, the writing is on the wall for investors.

 

2. Piggy Banks (5/26/2016)

This Week In Hedgeye Cartoons - Financials cartoon May 2016

 

Our Macro team's favorite sector short, Financials (XLF), is the second worst performing S&P sector year-to-date at down -0.7%.

 

3. Incredulity (5/25/2016)

This Week In Hedgeye Cartoons - Long incredulity cartoon 05.25.2016

 

A sign of the times.

 

4. Atlas (5/24/2016)

This Week In Hedgeye Cartoons - growth cartoon 05.24.2016

 

Global growth continues to surprise Macro consensus to the downside.

 

5. The Hourglass (5/23/2016)

This Week In Hedgeye Cartoons - hour glass cartoon

 

The central planning #BeliefSystem is breaking down. 


The Week Ahead

The Economic Data calendar for the week of the 30th of May through the 3rd of June is full of critical releases and events. Here is a snapshot of some of the headline numbers that we will be focused on.

 

CLICK IMAGE TO ENLARGE.

The Week Ahead - 05.27.16 Week Ahead


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