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CHART OF THE DAY: Can Trump Win?

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Director of Research Daryl Jones. Click here to learn more.

 

"... Despite the punditry and career politicians missing the rise of Trump, the vast majority of voters are unhappy, so it shouldn’t have been terribly surprising. According to a recent poll from Rasmussen, 70% of likely voters believe the country is on the wrong track and a mere 24% believe the country is going in the right direction. The spread is near the highest level of the last 8 years.

 

So, despite his flaws, errant tweets, and narcissistic moments, it’s not difficult to see why a candidate that has never held political office is doing so well. The people are frustrated. Very frustrated. But can Trump win?"

 

CHART OF THE DAY: Can Trump Win?  - 7 29 16 chart of day


#WhoAreYouWith?

“Any American who is prepared to run for president should automatically, by definition, be disqualified from ever doing so.”

-Gore Vidal

 

The political conventions are officially behind us. That’s the good news. The bad news is that we have more than three months to go before the almost satirical 2016 election is in the books.   

 

Over time we’ve been accused of being partisan Democrats, partisan Republicans, or just plain disinterested Canadian hockey bros. The truth is that we are none of the above. We look at and analyze politics to the extent it will impact markets. And without doubt, there will be investment outcomes that develop into next year based on who is elected this fall.

 

#WhoAreYouWith? - trump and hillary

 

Back to the Global Macro Grind

 

In our sweet spot of policy analysis – healthcare, defense, energy, and telecom – there is likely to be a lot of change. As the candidates further define the specific policies they will implement, that cabinet members may put in place, our policy team will be commenting real time on the potential investment implications. In the meantime, though, it’s time to start thinking about who will win the Presidency.

 

The 10,000 foot view coming from the nominating conventions is that both parties are creating starkly different narratives about the country. Trump is emphasizing everything that is broken and needs fixing (or building as it relates to his wall). Clinton is painting a much more optimistic view of the future and effectively running for the 3rd Obama term.

 

In effect, it is the incumbent versus the change-making rabble rouser, but which narrative will carry the day? Much has been made about the rise of Trump and the fact that literally no mainstream pundit believed he would get the Republican nomination. 

 

Despite the punditry and career politicians missing the rise of Trump, the vast majority of voters are unhappy, so it shouldn’t have been terribly surprising. According to a recent poll from Rasmussen, 70% of likely voters believe the country is on the wrong track and a mere 24% believe the country is going in the right direction. The spread is near the highest level of the last 8 years.

 

So, despite his flaws, errant tweets, and narcissistic moments, it’s not difficult to see why a candidate that has never held political office is doing so well. The people are frustrated. Very frustrated. But can Trump win?

 

The short answer is that Trump can win. In fact, if the election were held today it is basically a coin toss. According to the Real Clear Politics poll aggregate, Trump is ahead of Clinton by +0.9 points. He literally established his first lead this week and while it is in part due to a convention bounce, numbers don’t lie.

 

The convention helped Trump, but it is also important to note that the race was narrowing for the weeks leading into the convention. Trump support bottomed on June 16th at about 38.3 and is now at 45.6 with a little under half the gain coming before the convention. Meanwhile, Clinton has held steady over that period in a range of 44 – 45.

 

One of the most astute observers of polling and electoral data is Nate Silver from FiveThirtyEight.com. Silver runs three scenarios on the outcome of the Presidential race utilizing all of the polling data available (#WisdomOfCrowds). Two of his scenarios are projections on what will happen on November 8th and one scenario is what would happen if the election were held today. In that scenario, Silver predicts that Clinton would win the popular vote by a small margin and Trump would garner more electoral-college votes and become President.

 

The success of Trump and/or Clinton will ultimately come down to a few key factors:

 

  1. Ohio (or could it be Pennsylvania) – Since 1896, the candidate that won Ohio in the electoral college went on to win the Presidency 28 out of 30 times, or 93% of the time. This makes Ohio the best state predictor of the next President. Further, since 1896 no Republican has won the Presidency without winning Ohio. Since 1980 Ohio has only deviated from the national vote for the winning candidate by 1.2%, which is the tightest margin of any state. So watching Ohio will be a critical focus and it is likely a must-win state for Trump, unless he can win Pennsylvania. There would certainly be no irony if Trump’s protectionist views help him carry Pennsylvania and he became the first Republican in 120 years to get elected President without Ohio. Just one more thing that the pundits missed.
  2. Demographics – Trump is basically dominating among white voters without a college degree. This is the sole reason the national polls are so close. A New York Times study showed that in six polls conducted this month that broke out vote preference by race, Trump led by a margin of 58 – 30 in white registered voters without a college degree. Romney did about 10 points worse in the last polls before the 2012 election with a spread of 55 – 37. If Trump can hold and or expand this “base”, the race will be very close on Nov. 8th.
  3. Favorability – Rightly or wrongly, both candidates have a likeability issue. According to poll aggregates, both candidates are running at about 56%+ unfavorable ratings. The Republican convention helped Trump on the margin and the Democratic convention should help Clinton. The key for both will be to create a more favorable view of themselves with voters and continue to engender the unfavorable view of their opponent. The undecided voters currently in the 10 – 15 percentage range and improvement in favorability rating will be a key in capturing these currently undecided voters.

 

One point that has surprised many of us at Hedgeye, even if anecdotal, is that in many of our one-on-one conversations, there appears to be a lot of liberals that are reluctant or unwilling to support Clinton and many conservatives that are reluctant to support Trump. So, we are curious, who are you going to support and why?

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.48-1.63%

SPX 2138-2179  

VIX 11.70-15.69
USD 96.25-97.93 
Oil (WTI) 40.35-43.81

Gold 1 
Copper 2.16-2.28

 

Keep your head up and stick on the ice,

 

Daryl G. Jones

Director of Research 

 

#WhoAreYouWith? - 7 29 16 chart of day 


Daily Market Data Dump: Friday

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

 

CLICK TO ENLARGE

 

Daily Market Data Dump: Friday - equity markets 7 29

 

Daily Market Data Dump: Friday - sector performance 7 29

 

Daily Market Data Dump: Friday - volume 7 29

 

Daily Market Data Dump: Friday - rates and spreads 7 29

 

Daily Market Data Dump: Friday - currencies 7 29

 

Daily Market Data Dump: Friday - commodities 7 29


It’s a good thing all the chart chasers perfectly timed this...

Client Talking Points

YEN

Kuroda came down from the Japanese heavens and reminded us that he can part the seas – “negative rates have not reached their limit” – but the day trade of short Yen may have! Another +1.6% Yen ramp in his face; #ouchy day for the #BeliefSystem.

China

Remember we used to talk about global #GrowthSlowing (Ex-USA for one more GDP print this morning)… China, Europe, Oil? Let’s just ex-that-out in Q3 ok? Chinese stocks down another -0.5% overnight (Hang Seng -1.3%) w/ CNOOC leading the way this time (Shanghai Comp remains in #crash mode, -41% from the 2015 Global Equity #Bubble Top).

OIL

Double #ouchy here - don’t look now by this morning’s drop towards the $40-handle for WTI puts it down -15% in the last month alone; was it the Dollar? Supply? Demand? A bird or a plane? with Durable Goods and Capex careening to the downside, the bullish narrative on “Global Cyclical Demand has bottomed” is very hard to follow.

Asset Allocation

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
7/28/16 66% 2% 6% 8% 8% 10%
7/29/16 66% 4% 6% 6% 6% 12%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
7/28/16 66% 6% 18% 24% 24% 30%
7/29/16 66% 12% 18% 18% 18% 36%
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

BREAKING: #Fed leaves rates unchanged in the 0.25% to 0.5% range. pic.twitter.com/UwNCUNNF8b

@Hedgeye

QUOTE OF THE DAY

"Tower, this is Ghost Rider requesting a flyby."

-Top Gun

STAT OF THE DAY

Bobby Bonilla hit 287 homeruns over his 16 year MLB career.


Oil Bulls Are Getting Pummeled as Long-Term Bears Get Paid

Takeaway: Oil bulls are getting pummeled while the long-term bears continue to get paid.

Double #Ouchy here - don’t look now but this morning’s drop towards the $40-handle for WTI puts it down -15% in the last month alone; was it the Dollar? Supply? Demand? A bird or a plane? With Durable Goods and Capex careening to the downside, the bullish narrative on “Global Cyclical Demand has bottomed” is very hard to follow. 

 

Oil Bulls Are Getting Pummeled as Long-Term Bears Get Paid - Oil cartoon 04.07.2016 

 

Editor's Note: The snippet above is from a note Hedgeye CEO Keith McCullough wrote for subscribers this morning. Click here to learn more.


July 29, 2016

Want more from Daily Trading Ranges? CLICK HERE to submit up to 4 tickers you'd like to see on the list. 

 

  • Bullish Trend
  • Bearish Trend
  • Neutral

INDEX BUY TRADE SELL TRADE PREV. CLOSE
UST10Y
10-Year U.S. Treasury Yield
1.63 1.48 1.52
SPX
S&P 500
2,138 2,179 2,170
RUT
Russell 2000
1,189 1,223 1,217
COMPQ
NASDAQ Composite
5,020 5,168 5,154
NIKK
Nikkei 225 Index
16,107 16,860 16,476
DAX
German DAX Composite
9,948 10,378 10,274
VIX
Volatility Index
11.70 15.69 12.72
USD
U.S. Dollar Index
96.25 97.93 96.72
EURUSD
Euro
1.09 1.11 1.10
USDJPY
Japanese Yen
102.99 107.12 105.28
WTIC
Light Crude Oil Spot Price
40.35 43.81 41.14
NATGAS
Natural Gas Spot Price
2.59 2.89 2.87
GOLD
Gold Spot Price
1,315 1,356 1,332
COPPER
Copper Spot Price
2.16 2.28 2.20
AAPL
Apple Inc.
99.91 104.70 104.34
AMZN
Amazon.com Inc.
730 761 752
NFLX
Netflix Inc.
81.84 93.98 91.65
JPM
J.P. Morgan Chase & Co.
62.01 64.54 64.10
FB
Facebook Inc.
118.49 126.16 125.00
GOOGL
Alphabet Inc
739 785 765


Hedgeye's Daily Trading Ranges are twenty immediate-term (TRADE) buy and sell levels, along with our intermediate-term (TREND) view.  Click HERE for a video from Hedgeye CEO Keith McCullough on how to use these risk ranges.


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.45%
  • SHORT SIGNALS 78.37%
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