REPLAY | The Aftermath: Post-Brexit Market Analysis with Keith McCullough & Daniel Lacalle

Takeaway: We opened up The Macro Show for free to the world this morning.

***In light of momentous, market-moving events surrounding Britain's decison to LEAVE the EU ... we opened up the The Macro Show for free this morning. Renowned European economist and market strategist Daniel Lacalle joined Hedgeye CEO Keith McCullough one-on-one to discuss the implications.



REPLAY | The Aftermath: Post-Brexit Market Analysis with Keith McCullough & Daniel Lacalle - HETV macroshow title Lacalle


Lacalle will be LIVE FROM LONDON providing critical insights and takeaways for global investors with Keith. Have a question? We will open up the conversation to live Q&A as we do every weekday morning.


A brief overview of what will be covered:

  • The Brexit vote outcome … what it ultimately means for the EU
  • Investing Implications … analysis of global stocks, bonds and currencies
  • What to watch ahead of this weekend’s uncertain Spanish election (and why it matters)


Join us live at 9am ET—you don’t want to miss this. 


Brief Bio on Daniel Lacalle

Lacalle is a European economist, who previously worked at PIMCO and was a PM at Ecofin Global Oil & Gas Fund and Citadel.  He is the author of Life In The Financial Markets and The Energy World Is Flat and a lecturer for the IE Business School and Master MEMFI at UNED University. He is currently CIO of Madrid-based Tressis Gestion.


Cartoon of the Day: Yellen's Flock

Cartoon of the Day: Yellen's Flock - Yellen cartoon 06.23.2016


"In what seemed like an exasperating moment for the Fed Chair yesterday, when Senator Pat Toomey (PA) asked Janet Yellen if she’d yet considered that 0% rates might be a bad thing in the years 2017 and beyond… she answered 'No.' Wow," Hedgeye CEO Keith McCullough wrote in a recent Early Look.

The Irony Behind The Fed’s Inflation Target



In this excerpt from The Macro Show earlier today, Hedgeye U.S. Macro analyst Christian Drake explains why hitting the Fed’s 2% inflation target would be a “tax on consumers” given the rising, inflationary pressures associated with rent inflation.

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Capital Brief: Will Sanders Supporters Choose Trump Or Clinton?

Takeaway: Donald, The Disciplined; Can Clinton Compete Countrywide?; Sanders Supporters Still Searching

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


Capital Brief: Will Sanders Supporters Choose Trump Or Clinton? - JT   Potomac under 1 mb


“He serves his party best who serves the country best.”

Rutherford B. Hayes


Donald Trump is pressing the reset button with the intention of setting a new tone for his campaign. In his first rebuttal speech to Hillary Clinton’s assault, Trump sharply hit Clinton with distinct blows – labeling her a status-quo candidate and sacking the Clinton Foundation, but also spent time emphasizing his path forward while looking composed, softening his tone, and showing early signs of change…for the most part.


There’s no assurance that this disciplined approach will last and we’ve all seen it before - although he did refrain from six scheduled interviews to avoid drowning out his message. But if he’s looking for a lasting way to right the ship, he’ll need to prove that this maneuver will last more than one day to major donors, elected party leaders across the country and the RNC and repair previous ruptures. The move comes in the nick of time as efforts by anti-Trump factions to disrupt the convention are picking up steam.


To compete in all 50 states, Clinton will need all the help she can get – cue: meeting with House Dems. Her theme was simple - unity. Clinton emphasized the importance of her efforts to unify Democrats in ‘08 following her primary battle and loss to then-Senator Barack Obama, even though her supporters urged her to continue in opposition.


Clinton and the Democrats are nowhere close to the circling firing squad the Republicans are facing with Donald Trump, but she still must arduously work to pursue Sanders’ progressive wing of the party. While Sanders had only a fraction of Clinton's support among House Democrats, party leaders are well aware that they will all need Sanders’ supporters come November.


While Bernie Sanders vowed to help Clinton defeat Trump in November, he has yet to endorse her - and more importantly - his supporters are still waiting on the sidelines. There is still a lingering distrust of Clinton among the Sanders crowd, viewing her as too establishment-friendly, hawkish, and concluding that she is beholden to too many special interests.


Clinton’s scant support among Sanders voters still has the opportunity for growth, but don’t expect it to be easy - many supporters still claim they could never support her - and a whopping 22% of them say they’ll support Trump according to Bloomberg.

INSTANT INSIGHT: Massive Corporate Buybacks, BOJ Firepower & PBoC Central Planning

Takeaway: Corporate Buybacks; U.S. #GrowthSlowing; The Lone BOJ Dissenter; PBoC Central Planning

INSTANT INSIGHT: Massive Corporate Buybacks, BOJ Firepower & PBoC Central Planning - earth


Below are a collection of interesting links and insights from today's news with analysis filtered through the Hedgeye macro lens. This installment discusses a recent record for corporate buybacks, U.S. #GrowthSlowing via Bed Bath & Beyond, BOJ central planning and China's yuan policy and shadow stimulus.




The 2nd-Largest Quarter Of Corp Buybacks Ever

"Companies in the S&P 500 spent $161.4 billion buying back shares in the first quarter of 2016, the second-largest amount on record, supporting stock prices amid the index’s early-year drop," the Wall Street Journal reports. Why are companies buying back shares? Simple. "As Earnings Slow, companies lever up and buy back stock to hit EPS targets that determine executive bonuses," Hedgeye CEO Keith McCullough writes.


Another U.S. #GrowthSlowing Casualty

"In other news, Bed Bath & Beyond (BBBY) is the latest US #ConsumerSlowing report (post market close)," McCullough wrote. BBBY posted a sales decline and missed earnings estimates as foot traffic slowed and increasing competition from hurt results. 


The Lone BOJ Dissenter Rips On Negative Rates

"The additional (positive) effects of quantitative and qualitative easing have been diminishing," Takahide Kiuchi told business leaders at a conference today. "On the other hand, numerous side effects of QQE seem to be increasing steadily," he said. Kiuchi has said before that the BOJ's sustained ultra-low interest rates and the negative rates decision had destabilizing effects on the bond market and hurt the central bank's credibility.


In other Japan-related Central Planning News

Is the BOJ holding back its bond buying firepower for after today's Brexit vote? Maybe. Bloomberg reports:


"Up to now, the Bank of Japan has tended to conduct bond-purchase operations -- known locally as “rinban” -- on the days following a government auction. Not this time. The Finance Ministry had sold about 400 billion yen ($3.8 billion) of Japanese government bonds with tenors of 20, 30 and 40 years on Friday, but come Monday, the central bank wasn’t buying.”


With yields on Japanese government bonds touching record lows last week, perhaps the BOJ is just holding off and letting the market ride for a bit? 


China, Yuan & Shadow Stimulus

According to China's state-owned media outlet Xinhua, the People's Bank of China is making strides toward "increas[ing] the investability of the renminbi." A seperate Xinhua article this week explains:


"The central bank has stressed that it will stick to market-oriented reforms and increase the yuan's exchange rate flexibility, according to the commentary 'Understand the yuan's fluctuations.'


'What needs to be avoided is not fluctuations but possible risks caused by them,' said the article, adding that while risks do exist, there is no basis for long-term depreciation of the yuan.


'We should make sound plans to respond to any risks, rather than hesitating over risk concerns,' it read."


Another interesting read on China, check out the FT's piece "China deploys state enterprises to economic stimulus effort." Here's the key takeaway from the chart below. Essentially, China's state-owned entities are doing the government's bidding to stimulate its slowing economy.


INSTANT INSIGHT: Massive Corporate Buybacks, BOJ Firepower & PBoC Central Planning - china investment


Whatever It Takes: ECB To "Examine" Buying Greek Sovereign Bonds (& Other Junk)

Takeaway: ECB to "examine" the purchase of Greek government bonds, which still carry a junk rating, "at a later stage."

Whatever It Takes: ECB To "Examine" Buying Greek Sovereign Bonds (& Other Junk) - greece


The Mario Draghi-led ECB is already buying junk bonds so why not add Greek sovereign bonds to the list too?


That's the latest bit of central planning hocus pocus from the ECB. Yesterday, the central bank granted Greek banks access to cheap funding, after sidelining them for more than a year due to debt negotiations.


Draghi & Co. would also "examine" the purchase of Greek government bonds, which still carry a junk rating, "at a later stage":


"The Governing Council will examine possible purchases of Greek government bonds under the public sector purchase programme (PSPP) at a later stage, taking into account the progress made in the analysis and reinforcement of Greece’s debt sustainability, as well as other risk management considerations."


Whatever It Takes: ECB To "Examine" Buying Greek Sovereign Bonds (& Other Junk) - greece owe everyone else


Why not?


The ECB is already purchasing corporate junk bonds. Here's Bloomberg reporting from earlier this month when the ECB first began buying corporate bonds:


"Purchases on the first day included notes from Telecom Italia SpA, according to people familiar with the matter, who aren’t authorized to speak about it and asked not to be identified. Italy’s biggest phone company has speculative-grade ratings at both Moody’s Investors Service and S&P Global Ratings. The company’s bonds only qualify for the central bank’s purchase program because Fitch Ratings ranks it at investment grade."


And even if a bond is universally downgraded to junk by all ratings agencies the ECB can hang on. Here's more from an ECB press release:


"Will the Eurosystem sell its holdings of bonds if they lose eligibility? For example, if they are downgraded and lose investment grade status?

The Eurosystem is not required to sell its holdings in the event of a downgrade below the credit quality rating requirement for eligibility."


this is Draghi's "whatever it takes" on steroids.  

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