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Capital Brief: The Calculus Behind Trump's Trade Tirade

Takeaway: Trump's Trade Tirade; Hampering Hillary; Trump Veepstakes

Editor's Note: Below is a brief excerpt from Hedgeye Potomac Chief Political Strategist JT Taylor's Capital Brief sent to institutional clients each morning. For more information on how you can access our institutional research please email sales@hedgeye.com.

 

Capital Brief: The Calculus Behind Trump's Trade Tirade - JT   Potomac under 1 mb

 

“On matters of style, swim with the current, on matters of principle, stand like a rock.”

― Thomas Jefferson

TRUMP’S TRADE TIRADE

Donald Trump’s protectionist and populist trade talk is becoming a big fly in the ointment for Republicans. He pledges to abolish policies that send American jobs overseas, threatens to impose tariffs on Chinese imports, promises to punish companies that move manufacturing to countries with cheaper labor, and bashes the U.S. Chamber of Commerce for their “insider deals” - even though economists of all stripes argue that Trump’s trade stance would be devastating to the economy and global trade.

 

Trump is making a calculated move on two fronts: go after both Clintons and their backing of trade deals over the decades, and woo working class voters and Democrats at the expense of main street Republicans and support from the business community. Someone had better buy up Trump’s foreign made clothing line before he gets elected...

HAMPERING HILLARY

In contrast to Trump, June was a good month for Hillary Clinton – she’s climbed in the polls, garnered important endorsements, and dodged a number of potential setbacks. She even broke ground on confronting the trust and likeability issues that have dogged her for years and then, BAM!, the State Department email issue resurfaces in earnest - courtesy of her top aide’s sit down with the Justice Department and her husband’s indiscreet conversation with U.S. Attorney General Loretta Lynch - who this morning announced she would not overrule the final decision by prosecutors and the FBI in the case.

 

It’s been nearly a year since the inspector general raised concerns over Clinton’s server, and despite comments that they plan to continue the case further, there’s increasing speculation that the Justice Department has set the date of the convention later this month as an unofficial deadline to finish the probe.

TRUMP VEEPSTAKES

While Trump has mostly been moving in the right direction, there’s still an abundance of doubt within his party – he has yet to receive big-name endorsements or even put the convention on solid footing. Trump can quickly allay that doubt once he names his veep. The right veep, that is. Choosing his running mate will anchor support from many in his party as well as provide a foundation for his yet-to-be-unveiled policy agenda. Trump plans for a convention reveal, but we think he’ll do it before – he needs momentum going into the convention. 


Got #GrowthSlowing? 10-Year Treasury Yield Hits All-Time Lows!

Got #GrowthSlowing? 10-Year Treasury Yield Hits All-Time Lows! - Yield cartoon 06.14.2016

 

Around the world, government bond yields are making fresh lows as global growth slows. U.K. gilts and the 10yr Treasury yield hit all-time lows this morning.

 

Below is analysis from Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning:

 

"We’re seeing fresh all-time lows in the USA’s 10yr this morning (briefly touching 1.40%) – obviously the higher return (especially on a volatility adjusted basis) position, for a year now, has remained long the Long Bond (TLT) instead of US Equity Beta (SPY) and Micron (MU) is just a preview of Earnings Season; risk range on VIX = 14-27!" 

 

 

That's why, since late 2014, we've been making the call to get long the Long Bond (TLT). It's been the right call. With yields making record lows, TLT is at an all-time high today and has crushed the S&P 500 year-to-date:

 

  • TLT: +16.5%

  • S&P 500: +3.0%

 

 


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 TO ENLARGE

 

Daily Market Data Dump: Friday - style performance 7 1

 

Daily Market Data Dump: Friday - sector performance 7 1

 

Daily Market Data Dump: Friday - volume 7 1

 

Daily Market Data Dump: Friday - rates and spreads 7 1


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

CHART OF THE DAY: Happy Canada Day From Your Canadian Buds At Hedgeye!

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Director of Research Daryl Jones. Click here to learn more. 

 

"... Happy Canada Day from your Canadian buds at Hedgeye!"

 

CHART OF THE DAY: Happy Canada Day From Your Canadian Buds At Hedgeye! - 07.01.16 EL Chart


Who Trump May Tap for Veep (and Why a Clinton/Warren Ticket Is Unlikely)

 

Hedgeye Potomac Chief Political Strategist JT Taylor discusses who Donald Trump may be eyeing for Vice-President and why a Hillary Clinton / Elizabeth Warren ticket is an unlikely proposition. 


Cartoon of the Day: Running Of The Bears

Cartoon of the Day: Running Of The Bears - Spain cartoon 06.30.2016

 

Spain's IBEX is down 32% from its 2015 peak.


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