CLIENT TALKING POINTS

Europe

Seeing the weakest countries in European Equity markets get a jumpstart on selling this am with Italy leading losers -0.8%, taking its stock market crash to -28% from last year’s cycle high (Portugal -0.6%, Spain -0.4% both remain in crash mode too with European #GrowthSlowing no matter what the vote).

GOLD

Especially if you haven’t been long it yet, good spot to buy some down here in the $1 range with immediate-term upside to $1; short Copper on the other side of it around $2.10-2.15 with downside to the YTD lows; great way to stay with the reality that global growth hasn’t “bottomed”.

10 YR

Day 2 for Yellen where she’ll talk about “considerable uncertainty” in her forecasting process – wow did she look wobbly yesterday; Brexit vote providing us yet another buying opportunity in what’s +15.1% from this day last year (TLT) vs. SPY -1.6%; immediate-term downside in UST 10yr to 1.54%

TOP LONG IDEAS

TLT

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

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

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
6/21/16 62% 4% 0% 10% 20% 4%
6/22/16 61% 3% 0% 12% 21% 3%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
6/21/16 62% 12% 0% 30% 61% 12%
6/22/16 61% 9% 0% 36% 64% 9%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

THREE FOR THE ROAD

TWEET OF THE DAY

Cartoon of the Day: Chum app.hedgeye.com/insights/51858… cc @KeithMcCullough $SPY #Stocks pic.twitter.com/EcN3xYeIPy

@Hedgeye

QUOTE OF THE DAY

"We cannot change the cards we are dealt, just how we play the hand."

-Randy Pausch

STAT OF THE DAY

The Florida Gators became the 3rd team in the College World Series history to fail to win a game in Omaha.