CLIENT TALKING POINTS
VIX
Inasmuch as it was obvious to sell US Equity Beta in the 12-13 VIX range (it’s been working for almost a year now), 21-22 VIX is a buy/cover signal – again, very immediate-term capitulation for chart chasers who got pinned 45 handles higher in SPY.
USD
Dollar Up, Rates Down – that is the #Deflation Risk On – and that’s a big reason for the oversold signal in Global Equities this morning – Reflation sensitive countries (Russia -3%, Australia -2%) and Reflation Risk sector exposures have corrected, hard, from our USD oversold (Energy Overbought) signal last week.
UST 10YR
1.57% 10yr Yield. Yep. All-time low. Rates are oversold ahead of Yellen’s 4th pivot (hawkish to dovish to hawkish to dovish) in 6 months as #EmploymentSlowing becomes obvious...
TOP LONG IDEAS
TLT
No matter what side of the reflation/deflation trade you’re on, the growth in global demand continues to decelerate on a trending basis. The debate is no longer whether or not growth is slowing. The real debate centers on the policy response and the market reaction to that policy response. While that question presents us with “open the envelope” risk, #GrowthSlowing will continue to be the bull catalyst for U.S. Treasuries whatever the policy response as the slow march to zero yields globally goes on.
GLD
To sum things up, stay away from the guessing game and stick to what is empirically evident. A stronger USD over the longer term is a probable scenario in our book. We expect the Fed, and all central banks for that matter, will try to combat deflation. That said, global currencies all burning at the same time makes a compelling case for GLD, as gold knows no currency. You can sell it in local currency all over the world. Scary but true.
MCD
There have been rumblings in the news that McDonald's (MCD) 2Q comps have slowed due to the temporary replacement of the 2 for $5 value platform for Monopoly. This has clearly been reflected in the stock as of late, as MCD has underperformed the S&P 500 over the last month.
Despite this near term headwind, we still strongly believe in the long-term story for MCD and remain confident that once they get their value platform right nationally, they will be just fine. In the short to intermediate term, as we wait for a solidified value platform, this recent underperformance represents a great buying opportunity. We remain LONG MCD.
Asset Allocation
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 6/13/16 | 66% | 0% | 0% | 6% | 18% | 10% |
| 6/14/16 | 64% | 2% | 0% | 6% | 19% | 9% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 6/13/16 | 66% | 0% | 0% | 18% | 55% | 30% |
| 6/14/16 | 64% | 6% | 0% | 18% | 58% | 27% |
THREE FOR THE ROAD
TWEET OF THE DAY
US 10-year Treasury yield 1.58% Lowest since 2012 $TLT remains our #1 non-consensus call #winning @KeithMcCullough pic.twitter.com/fdyXW5Lwt5
QUOTE OF THE DAY
"Either you run the day, or the day runs you."
-Jim Rohn
STAT OF THE DAY
Aroldis Chapman holds the record for the fastest pitch ever thrown, 105.1 mph.
