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[UNLOCKED] Keith's Daily Trading Ranges

We've made some new enhancements to Daily Trading Ranges - our proprietary buy and sell levels on major markets, commodities and currencies sent to subscribers weekday mornings by CEO Keith McCullough. Click here to view a brief video of McCullough explaining how to use it most effectively.

 

Subscribers now receive risk ranges for 20 tickers each day -  the last five of which are determined by what's flashing on Keith's screen and by what names subscribers are asking about. Click here to subscribe.

 

  • Bullish Trend
  • Bearish Trend
  • Neutral

INDEX BUY TRADE SELL TRADE PREV. CLOSE
UST10Y
10-Year U.S. Treasury Yield
1.67 1.53 1.60
SPX
S&P 500
2,055 2,095 2,071
RUT
Russell 2000
1,136 1,167 1,149
COMPQ
NASDAQ Composite
4,801 4,904 4,834
NIKK
Nikkei 225 Index
15,303 16,321 15,919
DAX
German DAX Composite
9,391 9,907 9,606
VIX
Volatility Index
16.70 22.65 20.15
USD
U.S. Dollar Index
93.23 95.22 94.66
EURUSD
Euro
1.11 1.14 1.12
USDJPY
Japanese Yen
104.01 107.79 105.98
WTIC
Light Crude Oil Spot Price
47.01 49.67 47.98
NATGAS
Natural Gas Spot Price
2.25 2.63 2.59
GOLD
Gold Spot Price
1,266 1,311 1,294
COPPER
Copper Spot Price
2.00 2.10 2.09
AAPL
Apple Inc.
96.05 99.98 97.14
AMZN
Amazon.com Inc.
701 731 714
MCD
McDonald's Inc.
121 124 122
NFLX
Netflix Inc.
91.30 98.04 94.29
MSFT
Microsoft Inc.
49.09 51.60 49.69
NKE
Nike Inc.
53.02 55.36 54.31


The Macro Show with Keith McCullough and Neil Howe Replay | June 16, 2016

CLICK HERE to access the associated slides.

 

An audio-only replay of today's show is available here.


Long-Term Bond Bull

Client Talking Points

JAPAN

They’re really out on the central banking #BeliefSystem in Japan – on the heels of reiterating 80T (T = Trillion Yen), the Yen ramped +1.7% (vs USD) to yet another YTD high, and the Nikkei continued to crash, -3.1% overnight (-7.2% on the week) and -26.1% from last year’s cycle peak in Global Equities (July).

GOLD

Oh the love - Gold is a currency and it’s got more momentum now than any currency in the world, charging to new YTD highs (+1.2% this morning to +23.1% YTD) of $1307/oz as German 10s drop back to negative this morning and U.S. 10s tick below Spanish 10s for the 1st time at 1.55% vs. 1.60%, respectively (Gold doesn’t have a yield, but it doesn’t have a negative one either).

S&P 500

In at 2,068 and out at 2,083? Yep. Not only does that beat the return you’d have had buying the S&P 500 1yearr ago today (it’s -1.18% vs. June 16, 2015 as #TheCycle was peaking), do you think we really trusted being net long after seeing another #Recession print on U.S. Industrial Production of -1.4% year-over-year yesterday? Do you think we trust the Fed’s #BeliefSystem?

Asset Allocation

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
6/15/16 64% 6% 0% 6% 18% 6%
6/16/16 66% 2% 0% 8% 20% 4%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
6/15/16 64% 18% 0% 18% 55% 18%
6/16/16 66% 6% 0% 24% 61% 12%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

Top Long Ideas

Company Ticker Sector Duration
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.

Three for the Road

TWEET OF THE DAY

VIDEO (3mins) My Response To Yesterday’s Fed Statement (I'm out) https://app.hedgeye.com/insights/51712-mccullough-my-response-to-today-s-fed-statement … via @hedgeye

QUOTE OF THE DAY

Know thyself means this, that you get acquainted with what you know, and what you can do.

Menander

STAT OF THE DAY

According to a new poll from Bloomberg Politics, 63% of women said they could never vote for Donald Trump.


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CHART OF THE DAY: This Economic Indicator Has Been Negative For 9 Straight Months

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.

 

"... I have been very serious about #GrowthSlowing for almost a year now. And guess what? It continues to slow.

 

After I saw yesterday’s recessionary US Industrial Production report for May of -1.4% year-over-year, being long stocks into the Fed going dovish (again), I knew I was getting too cute. So I sold into strength. I don’t like playing from a position of weakness."

 

CHART OF THE DAY: This Economic Indicator Has Been Negative For 9 Straight Months - 06.16.16 chart


I'm Out (again)

“I don’t miss it at all. I’m glad I’m out.”

-Larry Bird

 

I was able to stay long US Equity Beta for half of a trading day. That was uncomfortable. So I’m out.

 

Seriously? Yes. I have been very serious about #GrowthSlowing for almost a year now. And guess what? It continues to slow.

 

After I saw yesterday’s recessionary US Industrial Production report for May of -1.4% year-over-year, being long stocks into the Fed going dovish (again), I knew I was getting too cute. So I sold into strength. I don’t like playing from a position of weakness.

 

I'm Out (again) - paranoid bull 01.28.2016

 

Back to the Global Macro Grind

 

Don’t go all “holding period” on me now. This has nothing to do with being “short-term” vs. long-term. There isn’t one daily strategy note you read that has been more resolute in calling the long-term cycle (both ways) than Hedgeye Risk Management.

 

Yes, we help you risk manage the short and intermediate-term within the context of long-term economic, profit, and credit cycles. No, I don’t chase short-term charts. I stay with #TheCycle call. What if you’ve done that for a year now?

 

  1. LONG BOND (TLT) is up +15.3% (ex-coupon payments) vs. June 16, 2015
  2. US EQUITY BETA (SP500) is down -1.2% vs. June 16, 2015

 

And if you’re truthful about what’s happened from #TheCycle high (Q2 2015) you’ll see that plenty of classic Late Cycle #crashes have occurred in many US Equity Exposures, with the latest being Consumer Credit (see charts of SYF, COF, etc. for details).

 

In addition to the Global Demand has not “bottomed” data point on US Industrial Production and Producer Prices (PPI for May showed ZIRP pricing power at -0.1% year-over-year), in our research meeting yesterday, our Financials Sector Head, Josh Steiner, explained the latest from one of the largest private label credit card issuers in the world, Synchrony Financial (former GE Capital).

 

As PMs who are long the stocks can see, the “consumer is good” credit card exposures like Synchrony (SYF) and Capital One (COF) have crashed -28-30% from where you could have owned them (at the peak of the employment cycle) in July of 2015.

 

Why am I calling this out? (hint: more confirmation that we’re right on #TheCycle)

 

  1. US Employment is slowing at an accelerating rate
  2. US Consumer Credit is deteriorating at an accelerating rate
  3. US Income and Consumption growth is slowing passive aggressively in kind

 

And most stocks that have US domestic exposure (don’t blame China and Brexit for these, Janet) to these 3 Late Cycle factors are some of the worst places you could have had your money while Energy stocks have been rallying from 3 year lows.

 

My daily Real-Time Alerts don’t matter like our call on #TheCycle does. Unlike most people we compete with, I’m just trying to be 100% transparent with my every thought and move, across durations.

 

“What matters far more to superforecasters than Bayes’ Theorem is Bayes’ core insight of gradually getting closer to the truth by constantly updating in proportion to the weight of the evidence.” (Superforecasters, pg 171)

 

So yeah, I’m serious. My ½ day holding period was due to both cyclical and consumption data changing. Remember the catalysts I gave you yesterday?

 

  1. The Fed (she went dovish and equities turned red on that into the close)
  2. Brexit (what if they do exit?)
  3. Mean Reversion and performance chasing

 

That last one goes both ways. If I think about my immediate vs. intermediate-term (TRADE vs. TREND) risk range for the SP500, A) they are very different and B) trying to “time” a TRADE is looking at a tree instead of the probable forest:

 

  1. SP500 immediate-term TRADE risk range = 2055-2095
  2. SP500 intermediate-term TREND risk range = 1

 

In other words, while I was listening to Janet muddle and bumble about taking down the dots (again), the SP500 was at 2083 with 12 handles (+0.6%) of immediate-term upside and 144 handles (-6.9%) of intermediate-term downside.

 

Then I wake up this morning (again, “constantly updating in proportion to the weight of evidence”) to the simple truth that Chinese, Japanese, and European Stock markets continue to crash alongside Global Sovereign Bond Yields.

 

Do my eyes deceive me? Or is this poppycock case from perma equity bulls that the world hasn’t been slowing from its cycle peak last year simply annoy me at this point? (China -45%, Italy -32%, Japan -26%, Germany -23%, etc. from 2015 highs)

 

Maybe… just maybe… that’s why Janet Yellen said she’d consider “helicopter money” yesterday. When she said, “there might be a case for fiscal-monetary coordination”, the US stock market said huh?

 

Only a few weeks ago, Janet Yellen and her Regional Fed Heads were saying they’d “probably raise rates” in June or July… and now we need to consider helicopters? What changed?

 

My answer to that (and why I’m out on owning US Equity beta) is that nothing changed. The Federal Reserve is finally coming to terms with what we’ve been writing about all along. The #BeliefSystem that central bankers can stop #TheCycle from slowing is breaking down.

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.53-1.67%

SPX 2055-2095

NASDAQ 4

Nikkei 151

DAX 9

VIX 16.70-22.65
USD 93.23-95.22
Oil (WTI) 47.01-49.67

Gold 1

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

I'm Out (again) - 06.16.16 chart


JT TAYLOR: Capital Brief

JT TAYLOR:  Capital Brief - JT   Potomac banner 2
''You know nothing for sure...except the fact that you know nothing for sure.''

— JFK

TRUMP’S TRIPLE THREAT: It’s been exactly one year since Donald Trump announced his candidacy for president and through many highs and more lows than anyone ever expected, he finds himself on the ropes again. Seven out of ten Americans give Trump unfavorable marks beating out Hillary Clinton’s high negatives by a healthy margin - and Clinton is now up 8-12 points over Trump in the general election. Negative views of Trump are rising among a number of groups, jumping by double digits among liberals and conservatives, and among both Republican women and Democratic men. Even Republican leadership is scratching their heads and dodging questions regarding the presumptive nominee as the Republican party image faces historic lows. Trump faces major challenges on three fronts: Clinton and the Dems, the media, and his fellow Republicans. He now has one month left to win over the Republicans and stanch the bleeding as the threat of a three-headed monster will be too difficult to overcome this fall.

 

SLOW BERN: In the beginning, few believed Bernie Sanders was a serious challenger to Clinton, but when the dust settled, Sanders won 23 primaries and more than 12 million votes, all while energizing progressives with calls for a political uprising. Sanders, who has spent most of his political career on the sidelines, is now a major symbol and is expected to play a feature role at July’s convention. He’s vowed to help Clinton defeat Trump and shepherd his supporters her way - but don’t forget to read the terms and conditions. Sanders will take his time before endorsing while aggressively pushing his leftist policy agenda to Clinton, party leaders and convention power brokers.

 

CLINTON’S COMFORT ZONE: Despite her success, Clinton ran a rather uneven primary failing to understand and then extinguish the Sanders threat from the onset. Her victory speech after CA marked a turning point and now, on top of an multi-million dollar advertising assault, robust voter turnout, and her prudent response to the tragedy in Orlando, Clinton is becoming more comfortable with her message and her measured attacks on Trump. She’s engaging the people and opening up more on the trail - but still needs to inject much-needed confidence back into party, win over Independents and doubtful voters.

 

NO LEAVE FOR UNIONS: After months of speculation, union leaders across America are voicing confidence that their groups will stay blue in this year’s election. Trump has labeled himself  a labor-loving Republican, courting unions aggressively with tirades against trade agreements and immigration – two things that sit well with blue-collar voters – but has never fully connected. Though some union leaders have reservations about Clinton, they just don’t see the groundswell toward Trump. There’s no way to predict what individual union members will decide in the privacy of the voting booth, but local leaders often hold the key to their groups’ interests and they’re pointed right at Clinton.

 

BREXIT: A week remains until the June 23rd “Brexit” referendum with recent polls shifting towards the “Leave” camp. However, we maintain our view that the Remain camp will ultimately prevail. See: research note and expert call with Alex Nicoll. We believe the downside economic risks (even if exaggerated by the party line) combined with a hefty percentage of undecided voters (that we suspect will marginally sway towards a Remain tally) will push the vote to Remain. In the last days, the Remain camp has loudly re-engaged the conversation for a special “Brexit budget” aimed at filling a £30bn hole in public finances by increasing the basic rate of income tax from 20% to 22%, with top earners’ share rising by 3pp to 43%. More fear-mongering? Maybe… but we don’t suspect the island nation to vote Brexit.

 

ELECTION PREVIEW WITH SCOTT REED: With the fight for the White House heating up, we’ll talk with Scott Reed, one of Washington’s top political strategists, to gather his views on who will be the next President of the United States, the upcoming party conventions, and the highly competitive Senate and House races this fall. The call will take place next Tuesday, June 21st at 11:00 AM EDT. You can find the dial-in information here.

 

HUNTED: THE F-35 PROGRAM AT FARNBOROUGH: On Friday, June 17th at 11:00 EDT, our Senior Defense Policy Advisor LtGen Emo Gardner will host a call for investors regarding the first ever appearance of the F-35 at the world’s most important aerospace show, the Farnborough International Airshow, July 11-17.


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.

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