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Daily Market Data Dump: Thursday

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, rates and bond spreads, key currency crosses, and commodities. 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

 

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Daily Market Data Dump: Thursday - equity markets 7 21

 

Daily Market Data Dump: Thursday - sector performance 7 21

 

Daily Market Data Dump: Thursday - volume 7 21

 

Daily Market Data Dump: Thursday - rates and spreads 7 21

 

Daily Market Data Dump: Thursday - currencies 7 21

 

Daily Market Data Dump: Thursday - commodities 7 21


CHART OF THE DAY: The Top 10% vs Everyone Else

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.

 

"... In today’s Chart of The Day is slide 48 of our current Q3 Macro Themes deck. It’s titled “The High-End Matters” and it shows that the Top 20% of US Households account for 39% of US Consumer Spending. That’s not a typo."

 

CHART OF THE DAY: The Top 10% vs Everyone Else - 07.21.16 EL Chart


High End Money

“I like my money right where I can see it: hanging in my closet.”

-Carrie Bradshaw

 

Post Trump parading around Cleveland, we’re all well aware of what it looks like to be big time. And I mean big time. Big Daddy Rich. Money oozing out of their flow. Really expensive shoes and suits. These people are so rich, they don’t need helicopter money.

 

Admittedly, it doesn’t always go over well… but in all of my macro meetings these days, I delve into what I think is one of our better ideas in Consumer Discretionary right now – shorting a certain kind of rich people.

 

And not just people who have money – that means we’d be shorting ourselves! I mean the people who, fully levered and lathered up in the illusion of their “wealth”, are about to meet their maker – it’s called mean reversion.

 

High End Money - trumppic

 

Back to the Global Macro Grind

 

In today’s Chart of The Day is slide 48 of our current Q3 Macro Themes deck. It’s titled “The High-End Matters” and it shows that the Top 20% of US Households account for 39% of US Consumer Spending. That’s not a typo.

 

Looking at the percentage of annual aggregate US consumer expenditures by decile of income:

 

  1. Top 10% = 23.5% of consumer spending
  2. Ninth 10% = 15.5% of consumer spending
  3. Bottom 30% = 10.6% of consumer spending

 

Yeah. The Top 10% is killing it. They own 84.5% of US Financial Assets. The poor bastards in the Bottom 50% (lots of peeps) own 1%. That’s probably why plenty of card carrying Republicans are becoming politically “flexible” enough to associate with Trump.

 

You see, when you have to start every sentence with how big time you are – you know, how rich and famous … and generally just nailing it in everything that you do… there’s some implied insecurity in that. And there should be.

 

Another chart that we often show to remind you of the mean reversion risks associated with someone who acts like they are big time (all of the time) is US Household Wealth as a % of Disposable Income:

 

A) It just rolled off an all-time high of around 655%

B) When it rolls off #TheCycle high, it always crashes

 

To be fair, there’s always a chance that “it’s different this time”… and nothing (other than US Equity Volume, European and Japanese Equities, etc.) ever crashes again… but I don’t buy lottery tickets.

 

Measurable mean reversion risks complimented by real-time data is how I roll.

 

On an economy-wide basis, the “wealth effect” (i.e. how sweet the Trump Jr. slick back flow is looking at the highs) is in the process of rolling off its Q1 2015 #CyclePeak. That’s why the Fed has been desperate to protect the SPY house.

 

Newsflash: the super-high-end ballers I’m talking about didn’t make it with their daddy’s Long Bond fund. When their net worth slows, their spending slows. That’s why US Luxury Goods Spending is running at a cycle-low of down -2.7% year-over-year.

 

That’s probably why you’re seeing headlines like:

 

  1. “Christie’s and Sotheby’s High-End Art Sales -25-33% year-over-year”
  2. “This is bs. We demand helicopter-money!”

 

One of the super-rich places that my colleague and Sector Head of Demography Research, Neil Howe, has written about lately is Silicon Valley. I know. They know everything.

 

I’m sure they know Tech Employment is slowing and VC funding to the area was down -14% year-over-year in the 1st half of 2016. There’s definitely not a bubble in “wealth” there.

 

That said, with the recent addition to our Research TeamTechnology Sector Head, Ami Joseph – we’re going to ham & egg it for the next traverse of Nasdaq 5100 and see if we can find ourselves some obscene corporate behavior to sell into.

 

Not to be confused with the Nasdaq all-time-bubble-high that you could have got sucked into when “the chart looked good” at this time last year (Nasdaq 5219 turned into a -19.3% draw-down by FEB 2016), this one is a lower-high on decelerating volume.

 

Yep. Yesterday’s Total US Equity Volume was down -17% and -22% vs. it’s 1-month and 1-year averages, respectively. At the all-time highs, who is crushing it? Or, are they about to get crushed again? From this stage of #TheCycle, crush or be crushed, I guess.

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.36-1.65%

SPX 2125-2184

NASDAQ 4

VIX 11.53-16.93
USD 95.99-97.45

Gold 1311-1370

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

High End Money - 07.21.16 EL Chart


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Nasdaq just signaled immediate-term TRADE overbought, at a lower-high…

Client Talking Points

Yen

Heli-Ben $$ hits a wall with Kuroda saying “no need or possibility for helicopter money” – doesn’t that suck. Reiterating short Nikkei as the Yen just popped +1.1% on that after failing to break-down through 108 vs. USD.

Italy

Protracted recession pending in Europe? What’s the catalyst to get Italy, France, etc. out of one? Reiterating the short call on both European Equities (Germany, Spain, and Italy… in that order) and the Euro vs. USD (Italian stocks haven’t joined the helicopter party, -0.3% this am and -30% vs. where you could have bought them at this time last year),

Volume

No all-time highs for Nasdaq or Russell, but we’ve got another one for SPY beta, baby! And … volume continues to crash into these consecutive highs. Yesterday’s Total US Equity Volume (including dark pool) was -17% and -22% vs. its 1-month and 1-year avg volume, respectively.

Asset Allocation

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
7/20/16 53% 0% 2% 13% 24% 8%
7/21/16 60% 0% 3% 14% 17% 6%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
7/20/16 53% 0% 6% 39% 73% 24%
7/21/16 60% 0% 9% 42% 52% 18%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

Top Long Ideas

Company Ticker Sector Duration
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.

Three for the Road

TWEET OF THE DAY

NEW GUY! Tech Research Veteran Ami Joseph Joins Hedgeye app.hedgeye.com/insights/52471

@KeithMcCullough

QUOTE OF THE DAY

“Great acts are made up of small deeds.”  

–Lao Tzu        

STAT OF THE DAY

Pedro Martinez had a career record of 219-100.


The Macro Show with Keith McCullough Replay | July 21, 2016

CLICK HERE to access the associated slides. 

 

An audio-only replay of today's show is available here.


JT TAYLOR: Capital Brief

JT TAYLOR:  Capital Brief - JT   Potomac banner 2

“Politics makes me sick.”

-  William Howard Taft

 

THIRD TIME’S THE CHARM?: Day three of the Republican convention concluded with a positive shift with a speech by veep nominee Mike Pence who focused on introducing himself to an unfamiliar nation, while building on party unity and important policy ideals. Pence’s role will be simple in the coming months, he’ll provide a balance between Donald Trump and the Republicans, adding much-needed substance and value to both the party and the ticket. But it wouldn’t be a day at a 2016 Republican convention without some drama or controversy. In what we think will be remembered as political miscalculation, Senator Ted Cruz called on Republicans to “vote your conscience” without endorsing Trump and was booed off stage (of course, with Trump seizing the opportunity to step on Cruz’s message by entering the convention hall at just the right time) providing Trump with the singlemost unifying moment of the convention so far.   

 

THE KIDS ARE ALRIGHT: Most of America knows Trump for his real estate deals and from his reality tv show, but they don’t know him personally and he may actually be a good guy. As his most trusted advisers and surrogates, his family has moved to humanize him, bring him down to earth, and show his sensibility. Trump’s family has provided audiences nationwide with a different view of the man running for president – with the hope that he’s someone they can relate to on a personal level. Melania’s speech missed it for obvious reasons, but Donald Jr., Tiffany, and Eric have been the messengers he’s needed all along - and Ivanka, the most anticipated of the five, will have her turn tonight.

 

SCORN OVER SUBSTANCE: Given Republican discord on a number of policy positions, the convention has lacked substance and style in favor of endless attacks on Hillary Clinton. Let’s face it, Republicans are more comfortable uniting against her and she’s been in their crosshairs and in the spotlight for three full days – even overshadowing support for Trump. What could’ve been a strong speech by NJ Governor Chris Christie played more like an episode of Judge Judy. We expected Clinton to be a target, but not the main focus. We think Republicans are missing the opportunity to tell the nation what they stand for - Pence got the ball rolling last night and Trump may be the only one who can pull that off tonight.

 

MISSED OPPORTUNITIES: Tonight will be give Trump the opportunity to turn the page on a Republican convention that has been part coronation, part Keystone Cops, part soap opera. We’re beating a dead horse into the ground, but his campaign continues to be late to the game on everything - missing opportunity after opportunity to shore up the base before the convention even started as he’s been the presumptive nominee since winning Indiana on May 3. Now, instead of focusing their attention on critical undecideds and independents at the convention given a captive national audience, Trump and Republicans keep finding themselves struggling to unify, stay on message (see Trump’s comments on NATO yesterday) and offer up a positive vision for the country.

 

CALL INVITE | BREXIT IMPLICATIONS – A 360° ANALYSIS: Please join us tomorrow, July 22nd at 11:00 AM EST as we begin a series of calls on post-Brexit implications. Our first call, in conjunction with the international law firm of Squire Patton Boggs, will examine Brexit’s legal and procedural implications. You can find call details here.

 


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