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About Everything | Q&A with Neil Howe: Everything Must Go

In this complimentary edition of About Everything, Hedgeye Demography Sector Head Neil Howe discusses why department stores are slowly fading away. "The downward arc started well over a decade ago—long before the Great Recession," Howe writes. "In fact, you need to go back to the Clinton ‘90s to find a really healthy growth year for department stores... Those days are long gone."

 

Click here to read Howe’s associated About Everything piece.


CHART OF THE DAY: What To Watch Ahead Of Today's Jobs Report

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by U.S. Macro analyst Christian Drake. Click here to learn more.

 

"... As we’ve highlighted, just because we’re charged with generating high-frequency macro commentary doesn’t mean the slower, temporal progression of the cycle ceases to exists. As the Chart of the Day below illustrates, our larger, late-cycle point is simply that once we roll past peak rate-of-change in payroll growth, it’s a one way street towards convergence with 0%. The period of the cycle is years and historical precedents suggest some further runway in the present employment expansion but the slope of the line has now been negative for 15 months and the baseline expectation should be for that to continue to play itself out in autocorrelated fashion to the downside."

 

CHART OF THE DAY: What To Watch Ahead Of Today's Jobs Report - CoD employment Growth


Cartoon of the Day: Today's OPEC Meeting

Cartoon of the Day: Today's OPEC Meeting - Saudi cartoon 06.02.2016

 

Nothing like $50 oil to create a positive atmosphere at the OPEC meeting in Vienna.

 

Our Senior Energy Analyst Joe McMonigle, who attended 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.


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An Update On Brexit: Should I Stay Or Should I Go Now

Takeaway: The aggregate of the latest polling, as of May 31, suggests 47% would like to remain in the EU and 43.2% would like to leave.

Editor's Note: Below is a brief excerpt from an institutional research note written on Brexit by Hedgeye Macro analyst Matt Hedrick on 5/26. To access our institutional research email sales@hedgeye.com.

 

**Note: The aggregate of the latest Brexit polling, as of May 31, suggests 47% would like to "remain" in the EU, 43.2% would like to "leave," and 9.9% are "undecided." (Slightly different than the chart below)

 

An Update On Brexit: Should I Stay Or Should I Go Now - the clash

 

With just under a month before the UK votes to Stay or Leave the EU, below we offer what we believe are the most salient points governing the vote. Taken together, we believe Brexit will be voted down on June 23rd.

 

For quick reference, an aggregate of the main polls available currently shows a 7 point lead to Stay

 

An Update On Brexit: Should I Stay Or Should I Go Now - brexit 6 2  1

 

Three of the most important points that anchor our decision tree:

  • Political – There’s intensely strong political support from UK leadership (including PM David Cameron and Bank of England (BoE) head Mark Carney) met by equally fervent support from the EU partners like German Chancellor Merkel and French President Holland, which we believe will influence the vote to stay in the EU.
  • Financial/Economic – Existing weakness in the UK economy is met with grave fears and concerns that Brexit will negatively impact trade, tax revenue and jobs; and to boot cause the exit of London as a the financial capital. Conversely there’s very little public conversation or reporting on the benefits of Brexit. We expect this collective economic uncertainty to tip the balance to Stay.
  • Behavioral – From our behavioral psychology reading it’s apparent people generally don’t like change and indecision. Leaving clearly spells huge indecision that we think the majority will choose to fade.

 

View on Pound Sterling year to date the GBP/USD is flat, and up 6% since a February low. We view the currency cross as poised to accelerate on any more favorable indication of Stay vote outstripping Leave. BoE Governor Mark Carney echoed this sentiment stating that “my personal view is that the next [currency] rate move is more likely to be up than down in a Remain vote.”

 

An Update On Brexit: Should I Stay Or Should I Go Now - brexit 6 2  2


Capital Brief | Clinton & Trump: The Search For A VP

Takeaway: Veepstakes; When Does Clinton Cave; Head On Collision;

Capital Brief | Clinton & Trump: The Search For A VP - JT   Potomac banner fixing issue4

 

Editor's Note: Below is a brief excerpt from Hedgeye Potomac Chief Political Strategist JT Taylor's Capital Brief sent to institutional clients each morning. For more information on how you can access our institutional research please email sales@hedgeye.com.

VEEPSTAKES

Capital Brief | Clinton & Trump: The Search For A VP - trump 7

 

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.

WHEN DOES CLINTON CAVE?

Capital Brief | Clinton & Trump: The Search For A VP - hillary clinton 222

 

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.

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?

 


What The Media Missed At Today’s OPEC Meeting

 

In this excerpt from The Macro Show this morning, Hedgeye Potomac Senior Energy analyst Joe McMonigle called in from the OPEC meeting in Vienna to discuss why Saudi Arabia is deeply concerned with $50 oil.

 

Subscribe to The Macro Show today to hear all of Joe's remarks from Vienna.  

 

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