Short Low, Cover High, Capitulate, And Cry = 2&20
What a sad year it's been for our industry. According to Bloomberg (during one of Hedgeye's best years yet), hedge funds are on track for their worst first half since 2011. I can't for the life of me understand how hedge funds missed what has been so obvious to us all year. Instead of whining about the "macro environment," hedge funds should be up huge, long Utilities, short Financials.
Sure, 100 handle 3-day swings in SPY have been great for traders who can go both ways. It's also terrible for equity fund flows…
Most Pundits have completely missed the link between #GrowthSlowing and long the Long Bond (TLT) and Gold (GLD) vs. short U.S. Equities. Gold ripped another +1% higher to $1335/oz, clocking Global Equity Bull at +25.9% YTD. And TLT continues to rock the Bond Bear world, hitting new all-time highs.
It generally takes time for "stocks" people to figure out what the bond market is telling them. Patience, of course, is what the real #GrowthSlowing Bulls (Long: TLT, ZROZ, EDV, XLU, GLD) have understood, for a year.
But, but, Keith, what about the FTSE? 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…
Whoever is telling you Brexit doesn't matter is a macro moron - all-time lows in yields (and bank spreads) matter. Question: What’s next for banks after giving up of a lot of free market liberty for short-term centrally planned market gains?
- GERMANY: +0.6% DAX this morning, but to put this bear market bounce in context (DAX -21.4% from the 2015 cycle peak)
- ITALY: no bounce today as the stock market remains in crash mode, -33% from the Global Equity #Bubble High (July 2015)
- JAPAN: 5 straight up days on nothing fundamental; Nikkei still -24.9% from its Global Equity #Bubble high of 2015
All of this is going to end swimmingly because economic fundamentals are so strong...
For the record ... unlike most unaccountable Old Wall pundits, we actually have a real research team with a real process for making our calls. Old Wall and its media are in for a rude awakening. It's going to get a lot uglier before the entire edifice comes crashing down.