The War On Active Management - Part 2

Takeaway: Lipper is reporting another -$4B in outflows from U.S. equity mutual funds while passive equity funds took in another +$4.3B WoW.

The war on active management continues with U.S. equity beta trouncing most strategies YTD.


This morning, Lipper is reporting another -$4B in outflows from U.S. equity mutual funds while passive equity funds took in another +$4.3B WoW. We’ve written extensively about the upside capitulation we’re seeing in the SPX futures and options data and via the reversal in style factor performance – which itself reeks of a massive career-risk driven chase.


With high beta stocks up +19% and Utes down -30bps since the June 27th Brexit v-bottom, we’re again starting to see opportunity on the long side of lower-for-longer strategies for those investors who’ve missed the big move.


Take a look at the style factor breakdown below:


The War On Active Management - Part 2 - style factor 8 19


***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.

CHART OF THE DAY: Doh! A Closer Look At Faulty Fed Forecasts

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Director of Research Daryl Jones. Click here to learn more. 


"... In the Chart of the Day, we show the course of Federal Reserve GDP projections over the course of the last years. As the chart shows, they have been down and to the right. For those newish to reading charts, that means that growth has been gradually slowing and so the Fed's projections have been coming in."


CHART OF THE DAY: Doh! A Closer Look At Faulty Fed Forecasts - 2 dj

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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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 80.47%
  • SHORT SIGNALS 78.70%

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.” 



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


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.

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.


the macro show

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Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.