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Jobs Bomb = Fed Dovish? = December Rate Hike?

Takeaway: Yesterday, markets predicted a more than 50% chance of a July rate hike. Now, rate hike expectations don't get above 50% until December.

Jobs Bomb = Fed Dovish? = December Rate Hike? - Jobs.rate hike cartoon 11.04.2015

 

The #JobsBomb (a.k.a. the May Non-Farm Payroll number of 38,000) just shocked Old Wall consensus.

 

How do we know?

 

Take a look at investor's most recent expectations for a Fed rate hike. Yesterday, markets were predicting a more than 50% chance of a July rate hike. Now, rate hike expectations don't get above 50% until December.

 

What a difference a day can make...

6/2/2016

 

Jobs Bomb = Fed Dovish? = December Rate Hike? - rate hike prob 6 2

6/3/2016

 

Jobs Bomb = Fed Dovish? = December Rate Hike? - rate hike prob 6 3

 

We're not surprised. We've been saying #EmploymentSlowing for a while now.

 

When will the Old Wall learn?


Daily Market Data Dump: Friday

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: Friday - equity markets 6 3

 

Daily Market Data Dump: Friday - sector performance 6 3

 

Daily Market Data Dump: Friday - volume 6 3

 

Daily Market Data Dump: Friday - rates and spreads 6 3

 

Daily Market Data Dump: Friday - currencies 6 3


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.


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.

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.


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


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