CLIENT TALKING POINTS
USD
#StrongDollarmove continues as consensus remains A) bearish on USD (see net positioning in CFTC futures & options data) and B) finally too dovish on what the Fed might do in SEP – what slows this down if we’re right on the Q2 sequential GDP acceleration as European and Japanese economic data continues to slow? Still bearish on Euros.
Oil
Continues to break-down as the USD continues to threaten a breakout – WTI down -1.4% yesterday takes it -7.1% in the last month as the inverse USD correlation there remains as real as it is for the CRB Index (down -1.1% yesterday to 186 and signaling bearish TREND @Hedgeye); WTI immediate-term risk range now = $43.91-46.65.
UST 10YR
We signaled sell some on Zeroes (ZROZ) in Real-Time Alerts yesterday and I’ll keep taking down our asset allocation to Fixed Income (booking gains) on rallies until I see this US Q2 GDP print – consensus is very much long the Long Bond now (after being bearish on it for the last 6-12 months) and I don’t like being levered long consensus after an epic move in rates.
TOP LONG IDEAS
GLD
Gold (GLD) = Protection from global currency devaluation and inflation/down USD – You can travel anywhere on earth and get a quote in local currency.
TLT
Long Bonds (TLT) = #GrowthSlowing, yield curve compression.
TIP
Treasury Inflation-Protected Securities (TIP) = Combination of the above exposures.
Asset Allocation
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 7/19/16 | 50% | 0% | 0% | 13% | 30% | 7% |
| 7/20/16 | 53% | 0% | 2% | 13% | 24% | 8% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 7/19/16 | 50% | 0% | 0% | 39% | 91% | 21% |
| 7/20/16 | 53% | 0% | 6% | 39% | 73% | 24% |
THREE FOR THE ROAD
TWEET OF THE DAY
Cartoon of the Day: Going Nowhere app.hedgeye.com/insights/52463… cc @KeithMcCullough #HelicopterMoney #BOJ pic.twitter.com/fhA3enUU1d
@Hedgeye
QUOTE OF THE DAY
“The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.”
–Stephen Hawking
STAT OF THE DAY
Derek Lowe had a career W/L record of 176-157.