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Not Brexit: European Economies Just Look Terrible

Not Brexit: European Economies Just Look Terrible - Brexit cartoon 06.20.2016

 

"Whatever you do, don't talk about the UK economic growth data slowing this morning," Hedgeye CEO Keith McCullough wrote earlier today. 

 

Here's a look at this morning's UK data:

 

Not Brexit: European Economies Just Look Terrible - uk data

 

None of this Europe #GrowthSlowing data has anything to do with Brexit (we'll get a better understanding of the Brexit impact in coming data releases) and has everything to do with #TheCycle

 

Take a look at recently reported Eurozone data:

 

(No acceleration to speak of)

 

Not Brexit: European Economies Just Look Terrible - euro data

 

What do you do with ugly #EuropeSlowing data? We're watching the Euro. Hedgeye CEO Keith McCullough calls the euro "the main event." In a note sent to subscribers, McCullough writes:

 

"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."

 

Not Brexit: European Economies Just Look Terrible - eurusd 6 30

More to come

 


Daily Market Data Dump: Thursday

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 TO ENLARGE

 

Daily Market Data Dump: Thursday - equity markets 6 30

 

Daily Market Data Dump: Thursday - sector performance 6 30

 

Daily Market Data Dump: Thursday - volume 6 30

 

Daily Market Data Dump: Thursday - rates and spreads 6 30

 

Daily Market Data Dump: Thursday - currencies 6 30


Crashy: These 4 Stock Markets Are Down Over 20%

Takeaway: Germany's DAX and Japan's Nikkei are still in crash mode while our #GrowthSlowing call, i.e. long the Long Bond (TLT), continues to pay off.

Crashy: These 4 Stock Markets Are Down Over 20% - euro crash

 

"Gotta love the decelerating-volume month and quarter-end markups – economic and profit cycle reality continues tomorrow," Hedgeye CEO Keith McCullough wrote this morning in a note sent to subscribers.

 

Here's more from McCullough:

 

"Germany's DAX is 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."

 

  

 

Meanwhile in Asia...

 

"JAPAN: flat for the Nikkei post a few days of a centrally planned bear market bounce, still -25.4% since July 2015," McCullough writes.

 

Crashy: These 4 Stock Markets Are Down Over 20% - nikkei 6 30

 

But there's always a bull market somewhere...

 

We're the Bulls on #GrowthSlowing. Here's a look at our favorite Macro position, long the Long Bond (TLT) year-to-date:

 

  • TLT: +14.8%

  • S&P 500: +1.3%

 


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CHART OF THE DAY: What Establishment Media Has Missed All Year Long

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.

 

"... I get it. Instead of truly trying to understand how we got to now (causal factor analysis across durations), what establishment media needs to do is hurry up some headlines on how they get ad revs up tomorrow.

 

Progress?

 

Nah. This is Wall Street. And while we think we can get away with more and more and more of this behavior, The People are telling us (see equity fund outflows, fee compression, redemptions, etc. for details) that they don’t trust us anymore."

 

CHART OF THE DAY: What Establishment Media Has Missed All Year Long - 06.30.16 EL Chart


Cartoon of the Day: Guru Wisdom

Cartoon of the Day: Guru Wisdom - central bankers cartoon 06.29.2016

 

This one speaks for itself.


The BS Filter: Hedgeye's Take On Today's Financial News

The BS Filter: Hedgeye's Take On Today's Financial News - central banker house of cards

 

Below is a collection of interesting links and insights from today's news with analysis filtered through our macro lens. This installment discusses why the public have stopped paying attention to economists, an update on negative yielding government bonds, the BOJ's latest efforts to prop up their struggling economy, and Italy's plan to help their struggling banks.

 

Enjoy! 

 

Why We've Stopped Paying Attention to Economists

"The predictions from economists about the consequences of Brexit were widely ignored. That shouldn’t be surprising. In recent years the public has lost faith the in the economics profession," economist Mark Thoma writes in The Fiscal Times. Thoma recounts the disagreements among economists, who can't seem to agree on why productivity has fallen, declines in the labor force participation, and what is the cause of inequality.

 

Bottom Line: We are equally skeptical of linear economic forecasters (both at the Fed and on Wall Street). Watch Hedgeye CEO Keith McCullough in the video below, "The 3 Most Overrated Economists in the World." 

 

 

More NIRP...

According to Fitch Ratings, "Investors' flight to safe assets following the UK's EU referendum on June 23 pushed the global total of sovereign debt with negative yields to $11.7 trillion as of June 27, up $1.3 trillion from the end-May total." Japanese government bonds make up a staggering two-thirds of the negative yielding bonds ($7.9 trillion). 

 

The BS Filter: Hedgeye's Take On Today's Financial News - fitch neg yields

 

BOJ Bloviating

Reuters reports that Japanese government and BOJ officials met for a second time post-Brexit in which "Abe urged Bank of Japan (BOJ) Governor Haruhiko Kuroda to ensure the central bank provides ample funds to the market to prevent any credit squeeze."

 

"A sense of uncertainty and worry about risks remain in the markets," Abe told the meeting. Finance Minister Taro Aso is also closely monitoring currency moves and responding flexibly to market developments in coordination with other Group of Seven economies. In other central-planning news, Chinese Premier Li Keqiang won't allow "rollercoaster" markets following Brexit.

 

Bottom Line: Central planners are pulling out all the stops to stem the post-Brexit bleeding. For the time being, investors seem to be buying into all the bloviating.

 

Italy's Troubled Banks 

Apparently, the Italian government is considering injecting as much as 40 billion euros ($44 billion) to some of its banks, according to Bloomberg sources. "The government may support lenders by providing capital or pledging guarantees, said the person. The amount is still under discussion and no final decision has been taken, according to the people."

 

"Italian banks, hurt by 360 billion euros of non-performing loans, sluggish economic growth and record-low interest rates, are under pressure to clean up their balance sheets and restore investor confidence. The country was among the hardest hit by Friday’s market rout that wiped $2.5 trillion from global equity values, with some of Italy’s largest banks dropping more than 20 percent."

 

Bottom Line: With the ECB's negative interest rate policy, don't expect struggling Italian banks to be in the clear anytime soon. Avoid the region, #EuropeSlowing...


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