CLIENT TALKING POINTS
EUR/USD
Our bearish bias on the EUR/USD remains and look to Friday’s announcement on the latest stress tests from 51 banks to put marginally more downside in the cross regardless of the headline “news” from the results. #EuropeImploding.
BOJ
The BoJ heads into its July 28-29 meeting with peak expectations of incremental monetary easing (22 of 28 analysts according to the latest Nikkei survey expect easing). If the policy board sticks with traditional QQE expansion, we would expect a short-lived JPY sell-off and Nikkei pop, but if the #beliefsystem in Japan was still intact then 10Y JGB Yields wouldn’t have come in by -9bps with 5Y5Y Forward Breakeven Rates declining -24bps MoM.
Durable Goods
While aggregate household spending remains relatively healthy, the trend in domestic durable goods orders continues to prove neither durable nor good. Headline Durable Goods fell -4.6% sequentially in June and declined to -6.4% YoY. While the -60% decline in private sector aircraft orders weighed on the headline, Durables ex-Defense and Aircraft – which aligns most closely with what actual households buy – remained negative year-over-year (-1.8%) for a 4th consecutive month. Meanwhile, Core Capital Goods Orders fell -3.7% YoY, extending its epic run of negative capital spending growth to 17 of the last 18 months = the most dismal non-recession/peri-recession streak basically ever.
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 | |
|---|---|---|---|---|---|---|
| 7/26/16 | 64% | 2% | 4% | 12% | 10% | 8% |
| 7/27/16 | 64% | 2% | 4% | 12% | 10% | 8% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 7/26/16 | 64% | 6% | 12% | 36% | 30% | 24% |
| 7/27/16 | 64% | 6% | 12% | 36% | 30% | 24% |
THREE FOR THE ROAD
TWEET OF THE DAY
CHART OF THE DAY: Can The BOJ Save Japan From Economic Reality? app.hedgeye.com/insights/52640… via @HedgeyeDDale #BOJ #helicoptermoney
@Hedgeye
QUOTE OF THE DAY
“When your team is winning, be ready to be tough, because winning can make you soft. On the other hand, when your team is losing, stick by them. Keep believing.”
– Bo Schembechler
STAT OF THE DAY
Brian McCann has batted over .300 two times over the course of his 12 year MLB career.
