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Remember The Fed's December Rate Hike? What Happened Again?

Takeaway: Following the Fed's December rate hike, Long Bonds (our favorite macro call) rallied to up 12% year-to-date versus 2.6% for the S&P 500.

Remember The Fed's December Rate Hike? What Happened Again? - Hawk dove cartoon 06.06.2016

 

As the Fed flounders from rate hike rhetoric to cautious soothsaying, Treasuries have rallied. Take a look at the flattening of the yield curve since the Fed decided to "raise interest rates" in December 2015. The yellow line is the yield curve on 12/15/15 and today's is the green line.

 

Rate hike ... What rate hike?

 

Click image to enlarge.

Remember The Fed's December Rate Hike? What Happened Again? - rate hike yield spread

 

To be clear, long the Long Bond (TLT) has been our most vocal Macro call. 

 

Heading into this year, it was a massively contrarian and in direct opposition to Wall Street consensus, which remained convinced the 10yr Treasury yield would hit 2.5% to 3% on Fed rate hikes. 

 

Guess what? Our Long Bond call...

 

IT'S WORKING

 

The flattening of the yield curve has paid off massively for investors in TLT. Below are the year-to-date returns on Long Bonds versus the S&P 500.

 

Remember The Fed's December Rate Hike? What Happened Again? - long bonds vs s p


This Is One of the Top-3 Stock Market Bubbles in History

 

In this excerpt from The Macro Show this morning, Hedgeye CEO Keith McCullough and Demographics Sector Head Neil Howe discuss why “the stock market is one gigantic emotional rollercoaster” perched perilously at its peak.

 

Subscribe to The Macro Show today for access to this and all other episodes. 

 

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Got #GrowthSlowing? European Equities Hammered

Takeaway: We again reiterate our call for slowing growth in the Eurozone beginning in Q2.

Got #GrowthSlowing? European Equities Hammered - growth cartoon 10.08.2014 large

 

Below is analysis from our Macro team in a note sent to subscribers earlier today:

 

"Got #GrowthSlowing? We again reiterate our call for slowing growth in the Eurozone beginning in Q2 and today got classic "late to the party" confirmation from the German economy ministry who said the country’s economy had a decent start to the Q2 but its growth pace is likely to slow during the course of the April-June period."

 

The 1yr drawdowns in European equities are unequivocally terrible:

 

Got #GrowthSlowing? European Equities Hammered - european equities 6 10

 

This isn't a trend exclusive to Europe:

 

"No matter what side of the reflation/deflation trade you’re on, the growth in global demand continues to decelerate on a trending basis. Only 35% of country and regional PMI figures across manufacturing, services and composite readings are both expanding (i.e. > 50) and accelerating sequentially as of last month. The rest are either expanding but decelerating or in outright contraction (i.e. < 50).

 

With continued evidence of economic contraction, we’re confident stick with growth-slowing allocations (TLT, XLU) while waiting and watching on deflation/reflation exposure."

 

Here's the S&P sector scorecard:

 

Got #GrowthSlowing? European Equities Hammered - sector performance 6 10


Daily Trading Ranges

20 Proprietary Risk Ranges

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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 10

 

Daily Market Data Dump: Friday - sector performance 6 10

 

Daily Market Data Dump: Friday - volume 6 10

 

Daily Market Data Dump: Friday - rates and spreads 6 10

 

Daily Market Data Dump: Friday - currencies 6 10


CHART OF THE DAY: Yellen's Favorite Indicator Prints Worst Reading Since 2009

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

 

"... Janet’s favored dashboard labor Indicator, The Labor Market Conditions Index (LMCI) dropped to an index reading of -4.8 in May, marking a 5th consecutive month of decline, a 7th straight months of deteriorating conditions and the worst reading since 2009."

 

CHART OF THE DAY: Yellen's Favorite Indicator Prints Worst Reading Since 2009 - 06.10.16 EL


Cartoon of the Day: Drinking The Kool-Aid?

Cartoon of the Day: Drinking The Kool-Aid? - central bank kool aid 06.09.2016

 

Did you drink the central planning Kool-Aid?


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