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Cartoon of the Day: All Aboard?

Cartoon of the Day: All Aboard? - Stocks Titanic cartoon 08.18.2016

 

Did you buy the all-time highs in U.S. equity markets?

 

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The BS Filter: Fed Following (& Other Nonsense)

Takeaway: Here's our take on some of today's top financial stories.

The BS Filter: Fed Following (& Other Nonsense) - Fed cartoon 01.11.2015

 

The Fed kicked off an action packed week of central planning with the release of its minutes and the regional Fed presidents trotted out any number of strange narratives. Here are a few.

New York Fed President Bill Dudley (8/18/2016):

"Let's imagine that the third quarter has very very strong productivity growth, accompanied by weak gains in payroll and employment... Well then you probably would not put much weight at all on the strength of GDP. At the end of the day, how the GDP growth translates in terms of employment gains is probably the more important element."

 

OUR TAKE: So Dudley wants us pay attention to the jobs market. Well, jobs growth put in its year-over-year peak in February 2015. It's been declining ever since.

 

The BS Filter: Fed Following (& Other Nonsense) - nfp 8 5

St. Louis Fed President James Bullard (8/17/2016):

In a presentation entitled “Normalization: A New Approach” today during the Wealth and Asset Management Research Conference at Washington University in St. Louis, Bullard said rates should remain flat over the next two and a half years. “If there are no major shocks to the economy, this situation could be sustained over a forecasting horizon of two and a half years," he said. "These facts suggest that it may be time to quit using the old narrative.” 

 

OUR TAKE: LOL

Atlanta Fed President Dennis Lockhart (8/16/2016):

“I’m not locked in to any policy position at this stage, but if my confidence in the economy proves to be justified, I think at least one increase of the policy rate could be appropriate later this year,” Lockhart said. "Early indications of third-quarter GDP growth suggest a rebound. I don't believe momentum has stalled. I remain confident about prospects in the second half of 2016 and 2017."

 

OUR TAKE: U.S. growth has slowed from 3-2-1%. What makes him so sure growth will accelerate. 

san Francisco Fed President John Williams (8/15/2016):

"There is simply not enough room for central banks to cut interest rates in response to an economic downturn when both natural rates and inflation are very low," Williams said in the latest issue of his regional Fed bank's Economic Letter on Monday. There are “limits to what monetary policy can and indeed, should do... the burden must also fall on fiscal policy do to its part."

 

OUR TAKE: Williams was calling for up to 5 rate hikes in 2016. Now he says we need fiscal policy because U.S. economic growth is sluggish. Thanks for coming out.


Is Investor Complacency Rising?

Takeaway: US market short-interest has been cut 13% since February and net long positioning is near a multi-year high pointing to investor exuberance.

Editor's Note: Below is a brief excerpt from an institutional research note written by Hedgeye Macro analyst Ben Ryan. For more information about our institutional research contact sales@hedgeye.com

 

Is Investor Complacency Rising? - trust my gut cartoon 10.14.2015  2

 

We speak of S&P 500 net non-commercial futures and options positioning regularly. Index + e-mini positioning has been cut the last couple of weeks, but it’s still pinned near a multi-year high.

 

Is Investor Complacency Rising? - sp pos

 

Along with futures and options positioning, total U.S. market short-interest has been cut 13% since February and the CBOE skew index indicates a market that is positioned much less cautiously than it was in the summer of 2014, at least in volatility terms.


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 80.65%
  • SHORT SIGNALS 78.63%

Is The Healthcare Bubble About To Burst?

In this brief excerpt from The Macro Show, Hedgeye CEO Keith McCullough and Demography Sector Head Neil Howe respond to a subscriber’s question about whether the healthcare sector is a bubble that’s about to pop.

 


PREMIUM INSIGHT

Gloom & Doom? No. But Short Healthcare On #ACATaper

Gloom & Doom? No. But Short Healthcare On #ACATaper - stormy

Pick your poison. Whether we’re talking about Fed rate hikes, leverage, slowing utilization or job openings, all spell trouble for Healthcare.


INSTANT INSIGHT | An Update On Spain, The ECB & #EuropeImploding

Takeaway: Spanish political drama leaves investors in the dark. Meanwhile, we suggest investors continue to fade the easy yet ineffectual ECB policy.

INSTANT INSIGHT | An Update On Spain, The ECB & #EuropeImploding - Spain cartoon 06.30.2016

And the political pain continues in Spain.

 

The latest update is acting PM Rajoy has once again convoluted the road to forming a government, this time going against his word to evaluate a series of reform demands from the centrist Ciudadanos party (which if agreed to by Rajoy would increase the likelihood of Ciudadanos joining Rajoy’s party to form a coalition government). Will this political indecision continue, leaving investors in the dark? 

 

You bet!

 

It has been for some time. Take a look at the Spanish IBEX's performance below.

 

INSTANT INSIGHT | An Update On Spain, The ECB & #EuropeImploding - spain bubble peak

 

On a related note, ECB Minutes from July 21 show continued use of phrase “it [ECB] would act by using all instruments available within its mandate.” We continue to fade the ECB policy stance that QE will fix the region’s underlying growth and inflation ails. Our short bias on the EUR/USD remains intact.

#EUROPEIMPLODING.

 

***Editor's Note: The snippet above is from a note written by our Macro team and sent to subscribers this morning. Click here to learn more.


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