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Ahead Of Friday's Jobs Report: Risk Range On 10-Year Treasury Yield

Takeaway: Ahead of the Friday Jobs Report, risk range on the 10-year Treasury yield is 1.45% to 1.62%.

Ahead of the jobs report the 10-year yield is sitting right in the middle of its risk range (1.45-1.62%) so I’d do nothing on that and/or yield chasing securities – bad jobs print gets you 1.45%; “good” gets you 1.62% and I’m not in the business of guessing the number – no one we know has process driven edge on nailing NFP consistently.

 

Ahead Of Friday's Jobs Report: Risk Range On 10-Year Treasury Yield - 10yr risk range

 

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


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

 

CLICK TO ENLARGE

 

Daily Market Data Dump: Thursday - equity markets 8 4

 

Daily Market Data Dump: Thursday - sector performance 8 4

 

Daily Market Data Dump: Thursday - volume 8 4

 

Daily Market Data Dump: Thursday - rates and spreads 8 4

 

Daily Market Data Dump: Thursday - currencies 8 4

 

Daily Market Data Dump: Thursday - commodities 8 4


CHART OF THE DAY: Understanding #TheCycle & #GrowthSlowing

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.

 

"... I’ll stop there. You get the point. Again, all I’m doing, every day, is measuring and mapping the immediate-term moves relative not only to themselves, but in the context of the entire macro market message… and then contextualizing it across durations.

 

This is Global Macro. There’s a lot of clutter. And lord knows there are a lot of politicized, ideological, and linear opinions that clutter the clutter. But, if we can have the patience to wait and watch, we’ll eventually find simple opportunities."

 

CHART OF THE DAY: Understanding #TheCycle & #GrowthSlowing - 08.04.16 chart


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Find Simplicity

“Out of clutter find simplicity.”

-Marc Benioff

 

That’s one of the many great business-builder quotes from Marc Benioff in Behind The CloudThe Untold Story of How Salesforce.com Went From Idea to Billion-Dollar Company – and Revolutionized an industry.

 

I’m just finishing the book now, but Benioff actually wrote it in 2009. No matter what you think of the guy as a person (I don’t know him), as an entrepreneur and innovator, his growth story is an incredibly powerful one. No matter what happens to CRM from here, he took on the establishment of the software industry, and won.

 

As a leader, he hammers home a lot of principles that resonate with me. He says we should all “have the courage to pursue our innovation before it is obvious to the market.” That might sound simple. Executing on it, repeatedly, is not. You have to foster a culture that isn’t afraid to fail fast, recover, and re-accelerate. I’m working on that too.

 

Find Simplicity - benioff

 

Back to the Global Macro Grind

 

Where do we go from here? What’s the next @Hedgeye Best Idea? Who is the next best hire? How are we going to keep pushing the envelope on not only the creation of original content, but how we present and deliver it?

 

So much to do.

 

When it comes to idea generation (particularly on the long side), there isn’t a lot of clutter to simplify. Especially when it comes to long-term sovereign bonds and/or any “safe-yield” equity (that looks like a bond), reality is that they’ve all gone up into the right.

 

To a degree, that’s accelerated our business. Lower and Slower-For-Longer used to be our original idea, inasmuch as the willingness to buy “expensive” and short what’s “cheap” was. Now, the deep simplicity associated with #GrowthSlowing is priced in.

 

So where do we go from here?

 

If growth was accelerating, I’d have a ton of “new” ideas. I’d basically reverse all of what I own and short it (Ex-Hedgeye and my wine). But it’s not. So I stay the course. Keep the winning team on the field, and pick my spots.

 

How do you pick your spots?

 

  1. Wait and watch for macro “events” that knock the Long Bond, Gold, Utilities, etc. to the low-end of their risk range
  2. Wait and watch for the Old Wall to “upgrade” stocks and/or asset classes we don’t like to the top-end of their range
  3. Wait and watch during the Morning Research Meeting for legitimately “new” ideas that I haven’t yet considered

 

And, all the while, grind…

 

That’s it really, so the rest of this note will be a line by line copy of my notebook this morning. That’s the grind.

 

I do the same thing, every morning. I measure and map price/volume/volatility, across asset classes and across durations. Eventually something simple jumps off the page as “new.” And new is what I’m looking for…

 

  1. US Dollar Index is testing the low-end of my 94.50-96.60 risk range and remains bullish TREND
  2. UST 10yr Yield is in the middle of my 1.45-1.62% immediate-term risk range and remains bearish TREND
  3. SP500 tested and held the low-end of my immediate-term 2153-2178 risk range (bullish TREND)
  4. Nasdaq tested and held the low-end of my immediate-term 5038-5196 risk range (bullish TREND)
  5. US Equity Volatility (VIX) backed off the top-end of my 11.77-15.32 risk range (bullish TREND)
  6. Utilities (XLU) are still in correction mode (bullish TREND), with a risk range of 51.04-52.99
  7. Financials (XLF) are still in squeeze mode (bearish TREND), with a risk range of 23.13-23.99
  8. Japanese Equities bounced off the low-end of my risk range and remain bearish TREND
  9. Chinese Equities bounced off the low-end of my risk range and remain bearish TREND
  10. Malaysian Equities bounced off the low-end of my risk range and remain bullish TREND
  11. Spanish Equities bounced off the low-end of my risk range and remain bearish TREND
  12. Italian Equities bounced off the low-end of my risk range and remain bearish TREND
  13. Russian Equities bounced off the low-end of my risk range and are testing a bearish TREND break-down
  14. Commodities (CRB Index) have already broken down back into bearish TREND mode
  15. Oil (WTI) bounced off the low-end of my $38.71-41.90 immediate-term risk range and remains bearish TREND
  16. Gold is correcting off the top-end of my $1 immediate-term risk range and remains bullish TREND
  17. Platinum is correcting off the top-end of my risk range and remains bullish TREND
  18. Copper failed at the top-end of my immediate-term risk range and remains bearish TREND
  19. EUR/USD failed at the top-end of my $1.09-1.12 risk range and remains bearish TREND
  20. GBP/USD failed at the top-end of my $1.29-1.34 risk range and remains bearish TREND

 

I’ll stop there. You get the point. Again, all I’m doing, every day, is measuring and mapping the immediate-term moves relative not only to themselves, but in the context of the entire macro market message… and then contextualizing it across durations.

 

This is Global Macro. There’s a lot of clutter. And lord knows there are a lot of politicized, ideological, and linear opinions that clutter the clutter. But, if we can have the patience to wait and watch, we’ll eventually find simple opportunities.

 

I’m not finding one today that I’d consider new. So here’s to what tomorrow might bring!

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.45-1.62%

SPX 2153-2178

VIX 11.77-15.32
USD 94.50-96.60
EUR/USD 1.09-1.12
Oil (WTI) 38.74-41.90

Gold 1

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Find Simplicity - 08.04.16 chart


August 4, 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
1.62 1.45 1.55
SPX
S&P 500
2,153 2,178 2,163
RUT
Russell 2000
1,193 1,225 1,212
COMPQ
NASDAQ Composite
5,038 5,196 5,159
NIKK
Nikkei 225 Index
16,041 16,499 16,083
DAX
German DAX Composite
9,991 10,388 10,170
VIX
Volatility Index
11.77 15.32 12.86
USD
U.S. Dollar Index
94.50 96.60 95.53
EURUSD
Euro
1.09 1.12 1.12
USDJPY
Japanese Yen
99.90 104.19 101.25
WTIC
Light Crude Oil Spot Price
38.74 41.90 40.83
NATGAS
Natural Gas Spot Price
2.55 2.92 2.84
GOLD
Gold Spot Price
1,330 1,380 1,364
COPPER
Copper Spot Price
2.15 2.24 2.19
AAPL
Apple Inc.
99.54 108.85 105.22
AMZN
Amazon.com Inc.
725 773 754
NFLX
Netflix Inc.
84.01 94.93 93.10
JPM
J.P. Morgan Chase & Co.
62.17 64.78 64.66
FB
Facebook Inc.
119.97 125.81 122.51
TSLA
Tesla Motors
215 235 225


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.


ICI Fund Flow Survey | One-Two Punch

Takeaway: In the past two weeks, domestic equity mutual funds have experienced their two largest withdrawals so far in 2016.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

Two weeks ago, domestic equity's -$10.3 billion withdrawal set a new low for the largest outflow year-to-date. Investors then followed that with a -$8.2 billion withdrawal last week, the second largest domestic equity withdrawal YTD. Additionally, all other active equity categories experienced withdrawals, contributing to the total equity mutual fund category losing -$11.2 billion. Meanwhile, the reallocation to passive products continued with equity ETFs winning +$3.5 billion. In fixed income, investors defensively contributed +$4.9 billion to total bond mutual funds. Bond ETF flows were also positive but fairly low at +$129 million.

 


ICI Fund Flow Survey | One-Two Punch - ICI1

 

In the most recent 5-day period ending July 27th, total equity mutual funds put up net outflows of -$11.2 billion, trailing the year-to-date weekly average outflow of -$3.6 billion and the 2015 average outflow of -$1.6 billion.

 

Fixed income mutual funds put up net inflows of +$4.9 billion, outpacing the year-to-date weekly average inflow of +$2.6 billion and the 2015 average outflow of -$475 million.

 

Equity ETFs had net subscriptions of +$3.5 billion, outpacing the year-to-date weekly average outflow of -$170 million and the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net inflows of +$129 million, trailing the year-to-date weekly average inflow of +$1.8 billion and the 2015 average inflow of +$1.0 billion.

 

Mutual fund flow data is collected weekly from the Investment Company Institute (ICI) and represents a survey of 95% of the investment management industry's mutual fund assets. Mutual fund data largely reflects the actions of retail investors. Exchange traded fund (ETF) information is extracted from Bloomberg and is matched to the same weekly reporting schedule as the ICI mutual fund data. According to industry leader Blackrock (BLK), U.S. ETF participation is 60% institutional investors and 40% retail investors.



Most Recent 12 Week Flow in Millions by Mutual Fund Product: Chart data is the most recent 12 weeks from the ICI mutual fund survey and includes the weekly average for 2015 and the weekly year-to-date average for 2016:

 

ICI Fund Flow Survey | One-Two Punch - ICI2

 

ICI Fund Flow Survey | One-Two Punch - ICI3

 

ICI Fund Flow Survey | One-Two Punch - ICI4

 

ICI Fund Flow Survey | One-Two Punch - ICI5

 

ICI Fund Flow Survey | One-Two Punch - ICI6



Cumulative Annual Flow in Millions by Mutual Fund Product: Chart data is the cumulative fund flow from the ICI mutual fund survey for each year starting with 2008.

 

ICI Fund Flow Survey | One-Two Punch - ICI12

 

ICI Fund Flow Survey | One-Two Punch - ICI13

 

ICI Fund Flow Survey | One-Two Punch - ICI14

 

ICI Fund Flow Survey | One-Two Punch - ICI15

 

ICI Fund Flow Survey | One-Two Punch - ICI16



Most Recent 12 Week Flow within Equity and Fixed Income Exchange Traded Funds: Chart data is the most recent 12 weeks from Bloomberg's ETF database (matched to the Wednesday to Wednesday reporting format of the ICI), the weekly average for 2015, and the weekly year-to-date average for 2016. In the third table are the results of the weekly flows into and out of the major market and sector SPDRs:

 

ICI Fund Flow Survey | One-Two Punch - ICI7

 

ICI Fund Flow Survey | One-Two Punch - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors pulled -$309 million or -4% from the industrials XLI ETF.

 

ICI Fund Flow Survey | One-Two Punch - ICI9



Cumulative Annual Flow in Millions within Equity and Fixed Income Exchange Traded Funds: Chart data is the cumulative fund flow from Bloomberg's ETF database for each year starting with 2013.

 

ICI Fund Flow Survey | One-Two Punch - ICI17

 

ICI Fund Flow Survey | One-Two Punch - ICI18



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$12.7 billion spread for the week (-$7.7 billion of total equity outflow net of the +$5.0 billion inflow to fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52-week moving average is -$4.0 billion (negative numbers imply more positive money flow to bonds for the week) with a 52-week high of +$20.2 billion (more positive money flow to equities) and a 52-week low of -$19.0 billion (negative numbers imply more positive money flow to bonds for the week.)

  

ICI Fund Flow Survey | One-Two Punch - ICI10 2

 


Exposures:
The weekly data herein is important for the public asset managers with trends in mutual funds and ETFs impacting the companies with the following estimated revenue impact:

 

ICI Fund Flow Survey | One-Two Punch - ICI11 



Jonathan Casteleyn, CFA, CMT 

 

 

 

Joshua Steiner, CFA

 

Patrick Staudt, CFA







Early Look

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Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

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