[From The Vault] Cartoon of the Day: Currency Wars

[From The Vault] Cartoon of the Day: Currency Wars - currency wars large


Our inimitable, in-house cartoonist Bob Rich is on a much-deserved summer vacation. While he kicks back and relaxes, we're going into the Hedgeye Vault and highlighting some of his best work. The top 50 central banks have cut interest rates 672 times since September 2008, triggering a global race to the bottom in currency devaluation terms. In light of all the monetary policy shenanigans, we bring you another audience favorite.


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The Most Significant U.S. Political Development In Over 30 Years

Takeaway: The rise of Trump and Sanders is the most significant development in American politics going back to the early 1980s.

Editor's Note: Below is a brief excerpt from an institutional research note written by Hedgeye Demography Sector head Neil Howe. This is the first of several pieces he is writing about the election. To access our institutional research email


The Most Significant U.S. Political Development In Over 30 Years - trump bernie


Let me say at the outset that I get a lot of questions from readers about how Clinton v Trump fits into the predictive schema laid out in a couple of books I co-authored in the 1990s (Generations in 1991 and The Fourth Turning in 1997). I will respond to these questions in my upcoming notes.


Let me just say here, as a preview, that I regard the rise of Donald Trump and Bernie Sanders to be the most significant development in American politics going back to the early 1980s—not because of who Trump or Sanders are personally, but because of what their popularity says about a decisive mood shift in the electorate. (And not just here in America, but around much of the world.) In our earlier books, we foresaw this shift as driven by generational aging and occurring on a “seasonal” timetable that has demonstrated remarkable regularity through history.


In brief, since the middle of 2000-2010 decade, America has been moving into a “fourth turning era,” a winter season of history in which there arises a surging popular demand for community, public authority, national priorities, cultural tradition, and bottom-line results. There is an equivalent ebbing of popular interest in goals that had earlier been esteemed—such as individualism, personal rights, globalization, cultural transgression, and fair process.


Already, the Trump and Sanders movements have radically realigned the American political firmament. Trump, in one blow, has obliterated the party of culture-war social values, imperial globalism, and unregulated free agency. The new GOP stands for pragmatic social solutions, America-first isolationism, and solidarity with the working class.


Sanders, meanwhile, has pulled the Democratic Party far to the economic left and endowed its platform with vast new public agendas (including single-payer health, a universal right to college, and soak-the-rich tax rates) that few Democratic leaders previously contemplated, even as recently as 2012. And what Sanders started in the Democratic makeover, the sheer threat of Donald Trump has completed. Can anyone in living memory recall a Democratic convention with so many American flags and “USA” chants, so much talk about “American greatness,” so many appeals to “faith,” “family values” (thanks, Michelle), and law and order. At the same time the party is moving leftward economically, it is moving rightward socially.

ISM Employment: So Bullish You Have To Buy Stocks!

Takeaway: We're kidding.

ISM Employment: So Bullish You Have To Buy Stocks! - ism mfg 8 1


Today's ISM Employment number is back to contraction. That 49.4 reading? It marks the 7th month in the last 8 in which the Employment index has been sub-50. Meanwhile, the headline ISM Manufacturing reading of 52.6 also fell from the prior month. That's not going to end The Bull that remains The Long Bond. 


In other words, the #GrowthSlowing trend remains firmly intact.


Still bullish?

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6 Charts: Begging For Bailouts Hits An All-Time High

6 Charts: Begging For Bailouts Hits An All-Time High - Bear crossing cartoon 09.29.2015 


Bailouts and central market planning galore.


That's the macro morning update today.


On Friday, Italy's oldest bank, Monte dei Paschi, announced it had found a "definitive solution" for solving its legacy of bad loans, which would raise €5 billion from private investors and sell €9.2 billion of bad debts. Shortly thereafter it was announced that Italy's third largest bank had failed EU stress tests. If the global economy and financial markets came under pressure, Monte dei Paschi's financial position would be wiped out.


European markets did not respond kindly to the news, with equity markets down between -0.4% and -1.2% today.





Meanwhile, in Asia...


Central-market planning isn't working out so well. Nevertheless, the begging for bailouts continues. Despite rumors that the BOJ could ultimately end up pursuing helicopter money, the Nikkei is up a whopping 0.4% overnight, bringing its year-to-date performance to -12.6%.


6 Charts: Begging For Bailouts Hits An All-Time High - nikkei 8 1

Over in China


The politburo is trying to manufacture a soft landing for its slowing economy but hasn't been able to prevent carnage in the Chinese stock market. The crash continues...




Oil is down -16% in the past month, as reflation continues to deflate. 


Bull Markets?


Gold, on the other hand, continues its rally as blind faith in central bankers continues to wane. That's long been our case for holding gold and it is gaining increasing credence among investors as money managers like DoubleLine Capital CEO Jeffrey Gundlach say "sell everything," buy gold.



The other bull market worth watching, which has also been our favorite Macro position for some time now, is Long Bonds (TLT). On that front, the year-to-date scorecard is as follows:


  • TLT: +16%

  • S&P 500: +6%


Bottom Line...


Central market planners have been doing their damndest to mask their country's underlying economic issues but when reality sets in the resulting carnage is often sharp and painful. 

Daily Market Data Dump: Monday

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




Daily Market Data Dump: Monday - equity markets 8 1


Daily Market Data Dump: Monday - sector performance 8 1


Daily Market Data Dump: Monday - volume 8 1


Daily Market Data Dump: Monday - rates and spreads 8 1


Daily Market Data Dump: Monday - currencies 8 1


Daily Market Data Dump: Monday - commodities 8 1

Still Crashing... Rolling The Dice In China's Shanghai Comp Casino

Takeaway: China's Shanghai Comp is down another -0.9% overnight after dropping -1.1% last week, taking its crash to -43% from its 2015 high.

I'm having a hard time seeing a “bottom” in any non-made-up time series. After falling another -1.1% last week, Shanghai Comp loses another -0.9% overnight (taking its crash to -43% since June 2015) as the Yuan continues to hit new lows.



Still Crashing... Rolling The Dice In China's Shanghai Comp Casino - China crash cartoon 08.25.2015 large 


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

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