CLIENT TALKING POINTS
China
Reuters article, if true, could bring back another major – suggests PBOC is “willing to allow the Yuan to drop to 6.80” (vs. USD) – that’s another 4.5% as the USD is toying with another breakout; Shanghai Comp -0.1% overnight after signaling immediate-term TRADE overbought within our bearish TREND view.
DAX
Backing off its bear market bounce this morning with both IBEX (Spain) and MIB (Italy) backing off -0.3-0.5% - don’t forget that A) all of these economies were going to slow in 2H 2016 ex-Brexit anyway and that B) all of their stock markets remain in crash mode (DAX -23%, IBEX -32%, MIB -34%) from their 2015 economic cycle peaks.
Euro
With the entire edifice of consensus staring at the Pound (which has a crazy wide risk range of $1.30-1.39), the EUR/USD is looking more and more vulnerable by the day; if they can’t break it out > $1.13, $1.05 is in play on the downside – something to seriously consider within the context of more exits and #GrowthSlowing.
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.
TIP
We want to be long of continued growth decelerating and inflation picking up from a GIP modeling perspective into the back half of 2016. TIPS are a great way to play both of these views along with our GLD (reflation) and TLT (growth slowing) positions.
The policy response globally will continue to be, currency devaluation and monetary easing with the intent to create inflation, and we take their commitment to this very seriously .
Asset Allocation
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 6/29/16 | 58% | 0% | 0% | 14% | 25% | 3% |
| 6/30/16 | 58% | 0% | 0% | 12% | 26% | 4% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 6/29/16 | 58% | 0% | 0% | 42% | 76% | 9% |
| 6/30/16 | 58% | 0% | 0% | 36% | 79% | 12% |
THREE FOR THE ROAD
TWEET OF THE DAY
Are 10 Million Americans About To Be Screwed Out Of Their Pensions? by @HedgeyeHWP investopedia.com/stock-analysis… #pensions pic.twitter.com/IL1jCvyQAl
@Hedgeye
QUOTE OF THE DAY
“Every moment is a fresh beginning.”
-T.S. Eliot
STAT OF THE DAY
Mike Trout has 156 career MLB homeruns, he is 24 years old.
