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Capital Brief: Can Trump Beat Back The Three-Headed Monster?

Takeaway: Trump's Triple Threat; Slow Bern; Clinton's Comfort Zone

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: Can Trump Beat Back The Three-Headed Monster? - JT   Potomac under 1 mb

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.


Cartoon of the Day: Brexit

Cartoon of the Day: Brexit - Brexit cartoon 06.16.2016

 

A few catalysts to keep an eye on: 

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

Investors Losing Faith In Flippant Fed

Investors Losing Faith In Flippant Fed - Fed birdbrain cartoon 06.15.2015

 

For those of you keeping score, this year the Fed has shocked markets pivoting from hawkish to dovish a dizzying number of times. Here's the rundown:

 

Hawkish, December

Dovish, March

Hawkish, May

Dovish, June

 

Investors Losing Faith In Flippant Fed - Hawk dove cartoon 06.06.2016

 

Investors are justifiably frazzled and have scrambled to keep up with all the flip-flopping. When Yellen went hawkish in May, during a speech at Harvard University, she remarked that investors should "probably" expect a rate hike in the coming months.

 

Taking the Fed chair at her word, investors thought there was a greater than 50% chance the Fed would hike rates in July (see below). 

 

Today, markets think that possibility is essentially zero.

 

Click image to enlarge

Investors Losing Faith In Flippant Fed - rate hike prob 6 16

 

What's happening here?

 

Well, the Fed revised its dot plot (which shows each participant's expectations for future rate hikes). Interestingly, six Fed officials now see just one rate hike in 2016 versus just one participant suggesting as much in March. 

 

Investors Losing Faith In Flippant Fed - fed dot plog

 

It was quite the about-face for most FOMC members. As we noted earlier this week, San Francisco Fed head John Williams was publically calling for up to five rate hikes at the outset of this year. 

 

Then reality set in.

 

Here's what central planners have failed to fix:

 

 

(To name a few...)

 

And yet, here's the lead in yesterday's FOMC statement:

 

"Information received since the Federal Open Market Committee met in April indicates that the pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up."

 

That's simply not true which is why we'll reiterate once again...

 

Fade Rosy Fed Forecasts


investing ideas

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Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

CALL INVITE: HUNTED: THE F-35 PROGRAM AT FARNBOROUGH (LMT, UTX, NOC, BAE, BA)

Takeaway: USAF changes to its TACAIR portfolio will result in a 20% reduction in annual F35 deliveries in the 2020s.

Like a mighty elk pursued by wolves, the world’s largest defense program, the Joint Strike Fighter, is being stalked by a series of programs that individually are not threatening but as a pack can mortally wound the program.

 

Tomorrow, Friday, June 17th at 11:00 EDT, Hedgeye’s LtGen “Emo” Gardner will provide investors the context for the first ever appearance of the F-35 at the world’s most important aerospace show, the Farnborough International Airshow, July 11-17. 

 

He will cover the current US TacAir landscape, changes in requirements being made by the F35's largest customer and the impacts on the $1.4T F35 program and its contractors.

 

Participating Dialing Instructions

Toll Free:

Toll:

UK: 0

Confirmation Number: 13639094

Materials: CLICK HERE


Drake: Why The Central Planning #BeliefSystem Is Breaking Down

 

 

In this excerpt from The Macro Show, Hedgeye Senior Macro analyst Christian Drake gives subscribers a brief tutorial on one of our top three Macro Themes.


Call Invite with Top Washington Political Strategist Scott Reed

Hedgeye Potomac is hosting a call with one of Washington’s top political strategists, Scott Reed, to share his insights on the presidential election, the upcoming Democratic and Republican conventions, and outlook on the Senate and House races this fall.

 

The call will take place on Tuesday, June 21st at 11am ET with prepared remarks from Reed followed by Q&A.

 

ABOUT SCOTT REED

 

Scott Reed is the senior political strategist at the U.S. Chamber of Commerce. He is responsible for overseeing the Chamber’s federal voter education program. Reed created and implemented the blueprint for that strategy to help recruit business-friendly candidates, overseeing traditional and digital advertising campaigns, and identifying credible messengers to showcase the importance of the free enterprise system.

 

Reed was campaign manager for Bob Dole’s 1996 presidential campaign. He oversaw the national campaign, which included political strategy, policy development, communications, and advertising during the GOP primary and the general election. In addition, he directed preparations for the 1996 Republican National Convention in San Diego and the vice presidential selection process of Jack Kemp. In 1993, Reed was appointed executive director of the Republican National Committee. He served as chief operating officer of the GOP during the historic elections in 1993 and 1994 when the Republicans gained control of both the House and the Senate for the first time in more than 40 years. During the Bush administration, Reed served as chief of staff to Secretary Jack Kemp at the Department of Housing and Urban Development. He directed personnel, political, and policy matters, employing a long-term empowerment and privatization program. 

 

CALL DETAILS

 

Toll Free:

Toll:

UK: 0

Confirmation Number: 13638941


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