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Client Talking Points

Gold

One down day and right back up we go, +0.4% to +24.2% YTD for the Gold Bulls as both US and Global Bond Yields crash to all-time lows; don’t chase it into the month-end markup; buy more at low-end of the $1290-1339 immediate-term risk range; rinse & repeat.

UST 10YR

Watching the Old Wall (and it’s media) shift to “Fed on Hold, buy stocks” is funny – but a friendly reminder that this is not funny if you are a bank; 1.44% 10yr Yield minus 0.62% 2yr = fresh YTD low (and low for #TheCycle) as trending US employment growth continues to slow ex-Brexit.

SP500

While we covered some shorts 2 days ago on the SPX oversold signal, I kept the SPY signal itself on as I think this one might look good for more than a little while; with buy-backs blacked out and the worst EPS season of #TheCycle pending (Financials report 1st), shorting more US Equity Beta in the 2058-2085 range would be a nice Canada Day gift.

Asset Allocation

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
6/28/16 61% 0% 0% 12% 24% 3%
6/29/16 58% 0% 0% 14% 25% 3%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
6/28/16 61% 0% 0% 36% 73% 9%
6/29/16 58% 0% 0% 42% 76% 9%
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

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 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

QUOTE OF THE DAY

“The most difficult thing is the decision to act. The rest is merely tenacity.”  -Amelia Earhart

STAT OF THE DAY

Jeff Blauser had a career batting average of .262.