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Cartoon of the Day: Shot In The FTSE

Cartoon of the Day: Shot In The FTSE - Brexit Footsie cartoon 06.24.2016

 

The Brexit vote has set off a massive wave of selling in global equities. 


McCullough: "Risk Happens Slowly, Then All At Once"

Editor's Note: Below are Hedgeye CEO Keith McCullough's top three bullets from his Macro notebook in a note sent to subscribers earlier this morning.

 

 

1. 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

 

McCullough: "Risk Happens Slowly, Then All At Once" - gbp usd 

 

2. 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

 

Here's the FTSE:

 

 

... And the DAX:

 

 

3. 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%

 

 

(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.)


Fed Rate Hike? Forget It. Rate Cut Probability Rising

Takeaway: Fed funds futures now show a 12% probability of a rate CUT in September.

Fed Rate Hike? Forget It. Rate Cut Probability Rising - rate hike cartoon 11.17.2015

 

The market is saying no Fed rate hike in 2016. In fact, rate cut probabilities just rose (even if just marginally). This is a complete breakdown in the central planning belief system.

 

Take a look at the implied probabilities in Fed Funds futures, 0% chance of cut through November and only 11% through February 2017. Meanwhile, rate cut expectations for September sit at 12%. Just yesterday, markets saw a greater than 50% probability of a hike in December. 

Today

 

Fed Rate Hike? Forget It. Rate Cut Probability Rising - fed prob rate cut

6/23/16

 

Fed Rate Hike? Forget It. Rate Cut Probability Rising - fed rate hike prob 6 24

 

But no worries, right? The Fed has got this. Here's the Fed's post-Brexit statement this morning:

 

"The Federal Reserve is carefully monitoring developments in global financial markets, in cooperation with other central banks, following the results of the U.K. referendum on membership in the European Union. The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the U.S. economy."

 

What happens if the market no longer believes that central planners can save the day?

 

We've been saying that for a while now and reiterate that call today...

 

The central planning #BeliefSystem is breaking down.

 

(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.)


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[UNLOCKED] Keith's Daily Trading Ranges

We've made some new enhancements to Daily Trading Ranges - our proprietary buy and sell levels on major markets, commodities and currencies sent to subscribers weekday mornings by CEO Keith McCullough. Click here to view a brief video of McCullough explaining how to use it most effectively.

 

Subscribers now receive risk ranges for 20 tickers each day -  the last five of which are determined by what's flashing on Keith's screen and by what names subscribers are asking about. Click here to subscribe.

 

  • Bullish Trend
  • Bearish Trend
  • Neutral

INDEX BUY TRADE SELL TRADE PREV. CLOSE
UST10Y
10-Year U.S. Treasury Yield
1.72 1.49 1.74
SPX
S&P 500
2,039 2,113 2,113
RUT
Russell 2000
1,124 1,175 1,172
COMPQ
NASDAQ Composite
4,720 4,890 4,910
NIKK
Nikkei 225 Index
14,802 15,918 16,238
DAX
German DAX Composite
9,199 10,306 10,257
VIX
Volatility Index
16.40 30.99 17.25
USD
U.S. Dollar Index
93.08 95.80 93.53
EURUSD
Euro
1.10 1.13 1.13
USDJPY
Japanese Yen
102.18 106.11 106.03
WTIC
Light Crude Oil Spot Price
44.79 50.72 50.13
NATGAS
Natural Gas Spot Price
2.45 2.82 2.74
GOLD
Gold Spot Price
1,260 1,328 1,259
COPPER
Copper Spot Price
2.00 2.15 2.16
AAPL
Apple Inc.
93.07 97.03 96.10
AMZN
Amazon.com Inc.
690 724 722
MCD
McDonald's Inc.
118 123 121
NFLX
Netflix Inc.
87.11 94.18 91.66
GOOGL
Alphabet Inc.
675 728 714
FB
Facebook Inc.
109 115 115

 

***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.


Daily Market Data Dump: Friday

Takeaway: A closer look at global macro market developments.

Editor's Note: Below are complimentary charts highlighting global equity market developments, S&P 500 sector performance, volume on U.S. stock exchanges, and rates and bond spreads. It's on the house. For more information on how Hedgeye can help you better understand the markets and economy (and stay ahead of consensus) check out our array of investing products

 

***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.

 

CLICK TO ENLARGE

 

Daily Market Data Dump: Friday - equity markets 6 24

 

Daily Market Data Dump: Friday - sector performance 6 24

 

Daily Market Data Dump: Friday - volume 6 24

 

Daily Market Data Dump: Friday - rates and spreads 6 24

 

Daily Market Data Dump: Friday - currencies 6 24

 


Risk happens slowly, then all at once…

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%.

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%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

Top Long Ideas

Company Ticker Sector Duration
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.

Three for the Road

TWEET OF THE DAY

People are starting to realize that a collapsing currency is a bad thing #Pound Example = progress

@KeithMcCullough

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.


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.46%
  • SHORT SIGNALS 78.35%
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