CLIENT TALKING POINTS

US Dollar

Next to Gold, USD remains our favorite currency right now after closing up another +0.7% last week taking it’s 3-month run to +2.6%; Euro (vs. USD) down -0.8% last wk (-2.8% in last 3 months) still favorite short in our Q3 Macro Themes.

UST 10TR

Headline jobs # “good” (rate of change in NFP slowed again to 1.72% vs. 2.10% in JUL 2015) and that got UST 10yr to tap the top-end of my 1.45-1.60% risk range; signal says that’s probably it w/ 1% GDP being goldilocks, for now.

Equities

Globally, straight up this am (Nikkei loved the Up Dollar, Down Yen move) and this rarely happens all on the same day but SPY, DAX, Nikkei are all signaling immediate-term TRADE overbought this morning - everything is awesome at all-time highs.

TOP LONG IDEAS

GLD

GLD

See update on TLT/UUP

TLT

TLT

Back to growth ... we’ll refrain from commenting on Friday’s headline non-farm payrolls number in isolation, and rather offer some perspective on the cyclical nature of the non-farm payroll data series (you’ve heard it before):

  • On a Y/Y rate of change basis, Non-Farm Payrolls peaked in February of 2015;
  • Once growth in this series peaks and rolls over, it doesn’t return and we move toward economic contraction on the margin. Read: Bullish for Long Bonds (TLT);
  • A print of +282K jobs was needed for July to avoid another Y/Y sequential deceleration in the series. NFP additions were +255K. While this beat expectations of +180K (which was cheered by just about every mainstream media outlet), the TREND in this series remains slow-moving, predictable, and most importantly past peak

UUP

UUP

Our team’s macro process is both fundamental and top-down, and we get the top-down signals in real-time. The bottom-line is that both the CRB Commodities Index and crude oil have recently broken down from a quantitative risk management perspective. While this is a key factor contributing to our recent addition of the PowerShares DB US Dollar Index Bullish Fund (UUP), it also signals that TIP does not have as much upside as we thought. As Keith McCullough wrote to subscribers this week:

“Changing my mind on longer-term longs has happened infrequently this year, but it should happen. That’s how the game goes.”

Asset Allocation

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
8/7/16 64% 4% 6% 6% 10% 10%
8/8/16 66% 3% 3% 8% 12% 8%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
8/7/16 64% 12% 18% 18% 30% 30%
8/8/16 66% 9% 9% 24% 36% 24%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

THREE FOR THE ROAD

TWEET OF THE DAY

Daily Market Data Dump: Monday app.hedgeye.com/insights/52944… cc @KeithMcCullough #Stocks #Bonds #FX #Commodities $SPY $USD

@Hedgeye

QUOTE OF THE DAY

“The world breaks everyone, and afterward, some are strong at the broken places.”  

–Ernest Hemingway

STAT OF THE DAY

Michael Phelps has won the most Olympic medals with 23 (19 gold, 2 silver, 2 bronze).