CLIENT TALKING POINTS
USD
Pound Up, Dollar Down gave #Reflation the nod to ramp more than most things macro yesterday (CRB Index +1.1% vs. SPY +0.58%), but now the question remains what if my $1.47 signal level is right and they sell Pounds (cover USD) on the “news”?
Copper
The Doctor appears to be heading for the exits ahead of the crowd on that; Copper #Deflation resumes with a -1% decline back to $2.07/lb this morning; WTI down -0.9% as Oil Volatility remains around 40.
Spain
Brexit is newsier, but this Spanish Election (June 26) still matters – as does European #GrowthSlowing; Spain’s IBEX -0.15% after the 1-day bear market bounce remains in crash mode -27% from #TheCycle highs of 2015.
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 | |
|---|---|---|---|---|---|---|
| 6/20/16 | 64% | 4% | 0% | 10% | 18% | 4% |
| 6/21/16 | 62% | 4% | 0% | 10% | 20% | 4% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 6/20/16 | 64% | 12% | 0% | 30% | 55% | 12% |
| 6/21/16 | 62% | 12% | 0% | 30% | 61% | 12% |
THREE FOR THE ROAD
TWEET OF THE DAY
Cartoon of the Day: Short-Sighted #BREXIT https://app.hedgeye.com/insights/51824-cartoon-of-the-day-short-sighted … via @hedgeye
QUOTE OF THE DAY
"There are no traffic jams along the extra mile."
-Roger Staubach
STAT OF THE DAY
Tom Glavine pitched 22 years in the MLB, his career ERA was 3.54.
