CLIENT TALKING POINTS
BREXIT
Coin toss? We would say so. And since we don’t make calls on coin tosses, we’ll just give you both bearish intermediate-term TREND signals in FTSE (6,388 resistance) and Pound ($1.47 vs. USD) with an intermediate-term risk range of $1.39-1.47. In other words, even if they don’t exit, odds are the FTSE remains bearish TREND (because the UK economy is slowing regardless vs. last year’s cycle peak).
DAX
More definitively bearish TREND than FTSE, but that’s because the DAX remains in crash mode (-22% from last year’s cycle high). Reminder that we still have the Street low forecasts for both Eurozone and German GDP in 2H of 2016 – #GrowthSlowing is the tail wagging the political dog, and it’s not just the UK who has political risks accelerating in kind.
OIL
Oil was down -4.2% yesterday, up +1.4% on the bounce today, down -23% year-over-year, but up +20% in the last 3 months – which way from here? The risk range signal says lower-highs ($46.06-49.21 WTI) and Oil’s Volatility (OVX) signal (ramped back up to 44 this week) says this said bull market isn’t done chopping a bullish consensus up for the summer time.
*Tune into The Macro Show with Retail Sector Head Brian McGough live in the studio at 9:00AM ET - CLICK HERE.
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 | |
|---|---|---|---|---|---|---|
| 6/16/16 | 66% | 2% | 0% | 8% | 20% | 4% |
| 6/17/16 | 66% | 2% | 0% | 8% | 20% | 4% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 6/16/16 | 66% | 6% | 0% | 24% | 61% | 12% |
| 6/17/16 | 66% | 6% | 0% | 24% | 61% | 12% |
THREE FOR THE ROAD
TWEET OF THE DAY
**REPLAY About Everything | Q&A w/ @HoweGeneration: Demographic Warning Shots In America https://app.hedgeye.com/insights/51725-about-everything-q-a-with-neil-howe-tom-tobin-demographic-warning …
@Hedgeye
QUOTE OF THE DAY
Kind words are the music of the world.
F. W. Faber
STAT OF THE DAY
Over 50% of Canada's population has a college degree, making it the most educated country in the world.
