VEEPSTAKES: Traditionally, conventional wisdom holds that vice presidential picks are hype and for the most part don’t matter much (for the most part), but with this being a very unconventional year, the veep pick may matter – a lot. Given weaknesses and sagging favorability stats for both frontrunners, we believe the veep pick will unify the Democrats and help Hillary Clinton win over Bernie Sanders supporters and the liberal wing of the party; Donald Trump’s pick will serve to counterbalance the ticket, calming Republican nerves and and adding credibility to the ticket.
BIG MONEY IS BACK: Big donors are starting to break open their piggy banks as candidates lock up party nominations. Trump hit the jackpot with a backing by casino mogul Sheldon Adelson, while the Libertarian party will deposit desperately-needed funds to its first super-PAC donation - to the tune of one million dollars. Around the Capitol, you’ll find Republicans and U.S. Chamber of Commerce working to “Save the Senate” and House seats. Republicans remain scattershot on White House efforts, but stand united on a front to save Congress.
HEAD ON COLLISION: We’ve been lamenting the pace of the appropriations process this year, and now top Republicans leaders are heading down opposite tracks with spending bills setting up a collision course in the coming months. Speaker Paul Ryan’s pledge to give members more input in the legislative process is handicapping him and his ability to move any legislation, while Senate Majority Leader Mitch McConnell feels he has restored order to the once dysfunctional Senate passing eight approps bills out of committee - with bipartisan support. If both fail to resolve conflicting priorities, expect yet another massive late-year omnibus deal or a default to multi-month stopgaps. Did we mention funding for the government expires right before the presidential election?
WHEN DOES CLINTON CAVE?: Clinton has been dogged for more than a year as being too shifty insisting she broke no rules by maintaining her own private email server while Secretary of State. If she expects to win this November, she’ll need to break that syndrome as her half-hearted attempts to explain away her email server are not reassuring. Top Clinton allies have highlighted the importance for her to engage directly on the trust issue and re-center her campaign on positive footing with a positive agenda - resorting to negative campaigning already failed miserably for Trump’s primary opponents.
SIGN LANGUAGE AT OPEC: Nothing like $50 oil to create a positive atmosphere at the OPEC meeting in Vienna. Our Senior Energy Analyst Joe McMonigle, who is attending the meeting, has said for months not to expect any big action at the June meeting. But Joe said he was looking for signs of potential action at the next OPEC meeting in December after continued reductions in non-OPEC production. Joe believes the Saudis offered up such a sign on Wednesday when a "senior gulf official" said the Kingdom was "open" to some action to stabilize prices. As a result, for the first time in two years, we think a policy change could be under consideration at the end of the year.
BREXIT: SHOULD I STAY OR SHOULD I GO?: Join us for a call next Wednesday with Alexander Nicoll, a consulting member of the UK-based International Institute for Strategic Studies, as he discusses the events leading up to the UK vote and what the outcome of the vote spells for the UK and EU.
OPEC MEETING PREVIEW: In case you missed it, our Senior Energy Analyst Joe McMonigle and Former Secretary of Energy Spencer Abraham held a conference call previewing today’s OPEC meeting – “Energy Policy: OPEC Meeting Preview”
RAISE CASH, SELL SOME BONDS – Around the world, long-term bond yields have had #TheCycle story right from a GDP #GrowthSlowing perspective. Like the Swiss 10yr yield hitting new lows of -0.40% yesterday. The question now is, with the Yellen Fed “probably” raising rates in June/July, what do we do with our market-beating positions in Long-Term Bonds, Munis, Utilities, etc? Hedgeye CEO Keith McCullough says it’s time to book some gains. Enjoy the summer – we can always buy them back (at a better price). What does that mean for your portfolio? Here’s a complimentary look at Hedgeye’s proprietary Asset Allocation — Cash: 80%; U.S. Equities: 0%; International Equities: 0%; Commodities: 4%; Fixed Income: 8%; International Currencies: 8%. In other words, we remain very cautious on stocks at home and abroad.