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Cartoon of the Day: LOST

Cartoon of the Day: LOST - Fed cartoon 06.10.2016

 

What can we expect from the FOMC next week?

 

"Remember that projecting an air of confidence and maintaining maximum policy optionality requires carefully treading the hawkishly dovish messaging line … or maybe it’s the dovishly hawkish line," Hedgeye U.S. Macro analyst Christian Drake wrote in today's Early Look.

 

In other words, if you're hoping for clarity, don't hold your breath. There's more nonsensical Fed-speak to come.


Capital Brief: No Money, Mo' Problems For Trump?

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.

 

Capital Brief: No Money, Mo' Problems For Trump? - capital brief

NO MONEY, MO’ PROBLEMS:

Donald Trump’s finance team held its first official meeting amid concerns over the campaign’s lack of a finance team, infrastructure and coordination with the RNC with less than five months left to prepare for the general election. In most election cycles, fundraising for presidential campaigns starts 18 to 24 months out - and Trump will be at a disadvantage out of the gate given his continued controversies and general lack of enthusiasm among the Republican donor class leading many to question whether Trump can achieve his previously stated goal of raising $1 billion.

 

Donors are disturbed with the threadbare nature of his campaign which continues to struggle in carrying out even the most basic of functions. He lacks pollsters, data and field expertise, a policy-writing shop, and a communications apparatus - and will soon find that the general election is a different animal than the primary.

CLINTON’S CASH COW:

On the other hand, when it comes to fundraising, Hillary Clinton and the Democrats are running like a well-oiled machine. She’s spent well over $200 million, has a large campaign staff with seasoned veterans, and continues to pad her war chest every day. Additionally - with Clinton, well, being a Clinton - she enjoys a deep bench of supporters ready to fundraise, cut ads, hit the campaign trail, and utilize social media. When Bernie Sanders finally exits the race, she’ll look to tap into a deep reservoir of new (and smaller) donors padding her fundraising lead.

WARRENTED ENDORSEMENT:

In what may be an audition for the prototypical running mate, Elizabeth Warren launched another blistering attack on Donald Trump, the Republican party, and calls for Wall Street reform. Warren has been suggested as  Clinton’s veep choice by none other than Minority Leader Harry Reid, despite his warning on choosing a senator from a state with a Republican governor. The case for Warren is clear - she’s an outspoken populist-progressive leader who would rally the supporters of Bernie Sanders to Clinton’s cause.


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


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

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. 

 

Subscribe to Hedgeye on YouTube for all of our free video content.


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

 

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 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


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