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[UNLOCKED] Early Look: A Courageous Vote

Editor's Note: Below is a complimentary Early Look written by Hedgeye CEO Keith McCullough this morning. Click here to learn more.

 

“Your heart is free – have the courage to follow it.”

-William Wallace

 

For many, today will not be easy. For many others, it will be one of their best. This is the path. This is life. Everyone doesn’t always get a sticker. There are winners and losers. This is democracy.

 

[UNLOCKED] Early Look: A Courageous Vote - Brexit cartoon 06.16.2016

Click here to watch our post-Brexit analysis from renowned European economist and market strategist Daniel Lacalle and Hedgeye CEO Keith McCullough in this morning's The Macro Show.

 

I realize that there were crazy people on both sides of this vote. There always are. People are crazy. But The People do have a right to vote against both the establishment of a highly-paid-political-life and being centrally planned from an office they didn’t elect.

 

What will the ECB and lord Draghi do next?

 

Will they opt for another currency devaluation? Or will they realize now that a debased currency undermines the legitimacy of the government trying to manipulate it? Will they “cut rates” from negative to negative-and-beyond? What happens to the banks?

 

I don’t know.

 

But do they? That remains The Question I have about the entire #BeliefSystem of central market-planning. That’s the question I have been asking myself ever since markets started pricing in that the probability of this not ending well was rising.

 

No, this is not a day for a victory lap.

 

Not for me. This isn’t my win. This is theirs. And don’t kid yourself – there are a lot of “they” out there who have been pounded by the confiscation of their purchasing power. That’s what’s in the value of a currency. And governments should never compromise its trust.

 

Do we have you positioned properly for this?

 

  1. Long The Long Bond (TLT)
  2. Long Gold (GLD)
  3. Short SP500 (SPY)

 

Yes. But, again, this is not a day to party. This is a serious day where serious leaders need to step up and have a real conversation about what it is that The People just voted for.

 

If Americans don’t have this public conversation, is our stock market next?

 

Today’s market news might be that:

 

  1. Japan’s stock market closed down -8%
  2. Germany’s opened down -7%
  3. Spain and Italy’s are trading down -11% (on the day)

 

But the real story has been one that’s been priced in sometimes slowly – and now all at once.

 

This is partly a story of central market-planners having the arrogance to promise the world that they can bend and smooth economic gravity and that “there is no alternative to buying stocks.”

 

In 17 years, I’ve worked and lived through two major US stock market crashes. Today, I’m proud to say I worked and lived through another crash in European stock markets not having to make excuses to my clients on why “no one could see this one coming.”

 

Macro markets did see this coming.

 

I know you are not the consensus. You wouldn’t be reading this if you were. If you had the courage to follow your own research and risk management process, I sincerely hope that you and all that you’ve worked for in your life has a good day.

 

It’ll be a great day for democracy and what’s left of our free-market liberties.

 

[UNLOCKED] Early Look: A Courageous Vote - asset alloc 6 24

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.49-1.72%

SPX 2039-2113

Nikkei 14802-15918

DAX 9199-10306

VIX 16.40-30.99 
USD 93.08-95.80 
EUR/USD 1.10-1.13 
Oil (WTI) 44.79-50.72

Gold 1260-1328

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

[UNLOCKED] Early Look: A Courageous Vote - tlt


CHART OF THE DAY: Were You Positioned Properly For Brexit?

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. 

 

***Click here to watch our post-Brexit analysis from renowned European economist and market strategist Daniel Lacalle and Hedgeye CEO Keith McCullough in this morning's The Macro Show.

 

"... Do we have you positioned properly for this?

 

  1. Long The Long Bond (TLT)
  2. Long Gold (GLD)
  3. Short SP500 (SPY)

 

Yes. But, again, this is not a day to party. This is a serious day where serious leaders need to step up and have a real conversation about what it is that The People just voted for."

 

CHART OF THE DAY: Were You Positioned Properly For Brexit? - tlt


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.

CLICK HERE TO WATCH the replay

 

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.

CLICK HERE TO WATCH


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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.


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 sales@hedgeye.com.

 

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, THE DISCIPLINED

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.

CAN CLINTON COMPETE COUNTRYWIDE?

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.

SANDERS SUPPORTERS STILL SEARCHING

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.


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