CLIENT TALKING POINTS
Pound
Not since Black Wednesday (1992) has the UK seen a FX move like this – down -7% vs. USD and one of our favorite ways to be positioned for what the central planners have to try next (devalue more?) remains long Gold +4.5% on the session to $1310 =+24% YTD.
Stocks
Since the crash in European stocks was already in motion, this is really just an extension of what risk managers should have been proactively preparing for – reiterating the 0% asset allocation to Japanese, European, and Emerging market Equities with stock markets like Spain and Italy down 11%, on the day.
Bonds
Reiterating our all-time lows in the UST 10yr Yield call as the causal factor behind most of this is #GrowthSlowing – not new because The People rose up against the Establishment and/or being centrally planned by Eurocrats; 1.52% on the 10yr now with an immediate-term risk range of 1.49-1.72%.
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 | |
|---|---|---|---|---|---|---|
| 6/23/16 | 61% | 3% | 0% | 12% | 21% | 3% |
| 6/24/16 | 57% | 0% | 0% | 13% | 25% | 5% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 6/23/16 | 61% | 9% | 0% | 36% | 64% | 9% |
| 6/24/16 | 57% | 0% | 0% | 39% | 76% | 15% |
THREE FOR THE ROAD
TWEET OF THE DAY
People are starting to realize that a collapsing currency is a bad thing #Pound Example = progress
QUOTE OF THE DAY
“Common sense is not so common.”
-Voltaire
STAT OF THE DAY
Giancarlo Stanton of the Miami Marlins has the furthest homerun YTD, it went 490 feet.
