CLIENT TALKING POINTS
Japan
If you’re still looking for clues on how this grand-central-market-planning-experiment ends, it’s Yen Up, and Nikkei down for the 4th day in a row, -1.1% overnight, taking its crash in the #BeliefSystem to -27.7% since this time last year.
Commodities
What if the jobs print is “good” (albeit slowing in TRENDING rate of change terms)? Dollar Up, Commodity Reflation Down? With CRB Index and Oil -5% and -10%, respectively, in the last month I’m sure glad I didn’t chase those April-May reflation charts. To be continued…
VIX
This 13-15 range for front-month US Beta Chasing Vol (VIX) has been a bear of a spot to be beta-shifting to levered long, so we’ll see what happens on the news this morning, but no matter what it is … I’ve been a seller of all beta chases for a year now in this VIX range and have no reason to change that Fading Beta strategy.
TOP LONG IDEAS
TLT
Since equity markets peaked last summer, TLT has been a resilient and less volatile source of absolute alpha, and the good news is that spotting the opportunity requires a daily data grind and a wrestling with reality more than a sky-high IQ:
- S&P 500: +0.1% Y/Y
- TLT: +22.0% Y/Y
Brexit, Frexit, Yuan devaluation – whatever the story, investors are paying higher premiums for the safety and appreciation potential of the long bond, a source of long-standing outperformance in this #GrowthSlowing environment. Moving into 2015, net futures and options positioning shows that traders had the largest net short position in the 10-year Treasury of the entire cycle, as most were positioned for rate hikes and a “lift-off economy."
GLD
It was another week of all-time lows in long-term Treasury yields and YTD highs in Gold (GLD), Treasury Inflation-Protected Securities (TIP), and Long Bonds (TLT is at a new all-time high!) as the rotation out of volatile equity markets continues.
TIP
See above update on TLT/GLD.
Asset Allocation
CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
---|---|---|---|---|---|---|
7/7/16 | 58% | 0% | 0% | 10% | 27% | 5% |
7/8/16 | 58% | 0% | 0% | 10% | 27% | 5% |
Asset Allocation as a % of Max Preferred Exposure
CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
---|---|---|---|---|---|---|
7/7/16 | 58% | 0% | 0% | 30% | 82% | 15% |
7/8/16 | 58% | 0% | 0% | 30% | 82% | 15% |
THREE FOR THE ROAD
TWEET OF THE DAY
No matter what the jobs report tells consensus, Hedgeye says short more Financials $XLF
QUOTE OF THE DAY
“We must take sides. Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented.”
-Elie Wiesel
STAT OF THE DAY
Nolar Ryan pitched 27 years in the MLB, his career ERA was 3.19