CLIENT TALKING POINTS
Pound
The Pound continues to crash, down another -3.4% vs. USD to $1.32 – signaling immediate-term TRADE oversold, finally – but this crash and the bearish TREND break-down in EUR/USD keeps the super-cycle (bullish) call for USD intact. There’s #Deflation risk in that.
Spain
Rajoy wins a minority government with 137 seats, and Spanish stocks continue to crash down another -0.9% after dropping -6.9% last week, taking the crash in the IBEX to -35% from the 2015 cycle-peak; DAX -1.6% this AM, down -24% from its 2015 cycle-peak.
UST 10YR
Our favorite ways to play both US and Global #GrowthSlowing in 2016 continues to be the Long Bond, Gold, and Safe Equity Yields (like Utes) that look like bonds; UST 10yr = all-time lows this AM at 1.46% as UK 10yr drops another -13bps breaking 1.0% at 0.96%.
TOP LONG IDEAS
TLT
In Great Britain, the people voted for freedom and not for the broken promises that central planners can bend and smooth economic gravity. The #BeliefSystem is breaking down and despite the fact that every central banker around the world was out Friday talking about “stepping in.”
As we’ve mentioned, the bond market has gotten the #GrowthSlowing call right all along.
GLD
Looking at other markets (yes there are other markets), maybe being long the Long Bond (TLT) for almost two years and sitting long of Gold (GLD) was too boring for some people, you have to ask yourself what you’re buying in broader equity indices with an ongoing earnings and cyclical slowdown. The second quarter of 2016 is setting up as the 5th consecutive quarter of Y/Y earnings declines for the S&P 500, the longest streak since the quarter ending in Q3 2009.
MCD
There have been rumblings in the news thatMcDonald'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 | |
|---|---|---|---|---|---|---|
| 6/26/16 | 57% | 0% | 0% | 13% | 25% | 5% |
| 6/27/16 | 58% | 0% | 0% | 13% | 25% | 4% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 6/26/16 | 57% | 0% | 0% | 39% | 76% | 15% |
| 6/27/16 | 58% | 0% | 0% | 39% | 76% | 12% |
THREE FOR THE ROAD
TWEET OF THE DAY
How to handle #Brexit chafing. $TLT $GLD @KeithMcCullough pic.twitter.com/NcdZxKO9x4
QUOTE OF THE DAY
“Vision is the art of seeing what is invisible to others.”
-Jonathan Swift
STAT OF THE DAY
Wayne Gretsky had 894 NHL goals.
