CLIENT TALKING POINTS

UK

“but UK stocks are up”… yeah, lol – for a trade… and they had to eviscerate both the Pound (back down to $1.32 this am) and UK Bond Yields to all-time lows (UK 10yr -57bps in the last month alone to 0.84%) to get there… what’s next for banks with the giving up of a lot of free market liberty for short-term centrally planned market gains?

UST 10YR

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! 

Gold

We've never seen so many celebrate being back to “up” on the year (are you?), when the real proxies #GrowthSlowing are absolutely crushing it, for epic absolute and relative gains – Gold up another +1% this AM to $1335/oz = +26% YTD after Utilities (XLY) ramped another +2.2% yesterday to an eye-popping 21.2% YTD (vs. Financials XLF -4.1% YTD).

TOP LONG IDEAS

TLT

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

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

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
6/30/16 58% 0% 0% 12% 26% 4%
7/1/16 58% 0% 0% 12% 26% 4%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
6/30/16 58% 0% 0% 36% 79% 12%
7/1/16 58% 0% 0% 36% 79% 12%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

THREE FOR THE ROAD

TWEET OF THE DAY

Who #Trump May Tap for Veep (and Why a #Clinton/#Warren Ticket Is Unlikely) app.hedgeye.com/insights/52097… @HedgeyePotomac pic.twitter.com/5lrZuhNsct

@Hedgeye

QUOTE OF THE DAY

“In matters of style, swim with the current; in matters of principle stand like a rock. 

–Thomas Jefferson 

STAT OF THE DAY

Lenny Dykstra had a career batting average of .285, his best year was in 1990 when he hit .325.