CLIENT TALKING POINTS
YIELDS
Plenty of email traffic (after the move) on this topic, but will we see any emails this morning on the same as UST10YR Yields around the world A) fail @Hedgeye TREND resistance and B) fall in unison as Global #GrowthSlowing data continues? The UK 10YR is down -6 basis points to 0.52%.
GOLD
Who said we weren’t bullish? On Gold – big time! Phelps wins #20 and #21 and Gold ramps another +1% to +28% year-to-date. Gold and Platinum are up +23% and +21% year-over-year, respectively (vs. TLT +11.9% and SPX +3.7%).
OIL
Oil fails (again) @Hedgeye TREND resistance as our Potomac Policy team reiterates their call on Saudi Supply. WTI is down -1.2% to $42.27 and there is no immediate-term support in the risk range to $39.12 (top end of the risk range = $43.70).
TOP LONG IDEAS
GLD
See update on TLT/UUP.
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
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 | |
|---|---|---|---|---|---|---|
| 8/9/16 | 64% | 3% | 3% | 9% | 13% | 8% |
| 8/10/16 | 61% | 3% | 3% | 10% | 14% | 9% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 8/9/16 | 64% | 9% | 9% | 27% | 39% | 24% |
| 8/10/16 | 61% | 9% | 9% | 30% | 42% | 27% |
THREE FOR THE ROAD
TWEET OF THE DAY
*REPLAY* Q&A with Neil Howe: The #GigEconomy is Alive and Growing https://app.hedgeye.com/insights/52976-about-everything-live-q-a-with-neil-howe-1pm-the-gig-economy-is-a … via @HoweGeneration
@Hedgeye
QUOTE OF THE DAY
"If you don't have confidence, you'll always find a way not to win."
-Carl Lewis
STAT OF THE DAY
Only about 3% of the 11 million containers that arrive at U.S. ports are screened with X-rays.