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This Country Makes Our Global Equity Long List

Takeaway: A new addition to our (very short) list of countries added to the Global Equity long side: Taiwan.

Yep. Long Taiwan (TAIEX Index or EWT). We added that to our Global Equity LONG list while I was away last week. Standard Hedgeye GIP Model process reasoning as Taiwan moves into what we call Quad 1 (or 2) in the back half of 2016. Not many countries are…

 

Here's the brief breakdown of Taiwan, as it looks in our GIP (Growth, Inflation, Policy) model via Senior Macro analyst Darius Dale: 

 

  • Growth: generally trending higher across the preponderance of key high-frequency data
  • Inflation: generally trending higher across the preponderance of key high-frequency data
  • Policy: getting easier at the margins

 

 

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


CHART OF THE DAY: U.S. Productivity At Generational Lows? Yup

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.

 

"... The productivity point is one that one of the world’s largest asset managers made to us in recent meetings in California. The PM asked whether all this “Fed Watching” was distracting companies from investing in real things as opposed to the next frontier of rumors…

 

Even if you go Ex-Energy, Ex-GAAP-Earnings, Ex-GDP with your narrative that everything ZIRP, NIRP, TWIRP is good, you’ll still have a very hard time convincing a rational human being who isn’t bought and paid for by the system that US Productivity at generational lows is…"

 

CHART OF THE DAY: U.S. Productivity At Generational Lows? Yup - 08.23.16 chart


Cartoon of the Day: The Fed Game

Cartoon of the Day: The Fed Game - Fed cartoon 08.22.2016

 

Year-to-date Fed policy:

 

Hawkish DEC

Dovish MAR

Hawkish MAY

Dovish JUNE

Hawkish JULY

 

Click here to receive our daily cartoon for free.


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How Slowing Chinese Housing Demand Is Affecting Global Real Estate Markets

Takeaway: The bottom just dropped out of Vancouver, as the home sales Y/Y growth rate fell from +0.6% in June to -18.9% in July.

Editor's Note: Below is a brief excerpt from the second edition of our Hedgeye Canada Tracker research product. Spearheaded by Josh Steiner, the goal is to help investors understand the trends and spot inflection points in the Canadian housing market by tracking 10-12 different housing data series across Canada and 8 different series at the metro level in Toronto, Vancouver, Calgary and Montreal, and presenting them in a hyper-simple format. Email sales@hedgeye.com for more info and how you can subscribe.

 

How Slowing Chinese Housing Demand Is Affecting Global Real Estate Markets - for sale

 

As Steiner writes:

 

“We track Chinese FX reserves as a proxy for foreign real estate demand. The view is that $2.75 Trillion is the threshold above which China needs to maintain its FX Reserves in order to prevent a disorderly devaluation of the Yuan. As those FX reserves converge on that threshold, the pace of money leaving the country -- our proxy for foreign real estate demand -- will slow out of necessity as China clamps further down on loopholes and avoidance of the $50,000/per person/per year limit.”

 

How Slowing Chinese Housing Demand Is Affecting Global Real Estate Markets - china forex

Why does this matter?

 

According to recently released Canadian economic data for the month of May, real estate has emerged as the third largest component of the Canadian economy, accounting for half of all GDP growth.

 

As such, housing sector weakness could negatively impact growth.

 

And it’s happening. “Vancouver home sales put up a massive deterioration, as the bottom dropped out of the Y/Y growth rate,” Steiner writes. “The Y/Y rate went from +0.6% in June to -18.9% in July. Importantly, this decline occurred even before the August implementation of a 15% foreign buyer tax, which should further drag down sales.”



It Ain't Over Till The Fed Lady Sings But...

It Ain't Over Till The Fed Lady Sings But... - Fed lady cartoon 06.25.2016

 

It ain't over 'til the Fed lady sings (at Jackson Hole on Friday) but it seems like a hawkish consensus if emerging on the FOMC.

 

In a speech at the Aspen Institute in Aspen, Colorado on Sunday, Federal Reserve Vice Chairman Stanley Fischer told reporters “we are close to our targets” in the jobs market and inflation. Not growth, though. On that front, the Fed's long-run GDP estimates have been consistently revised to the downside.

 

It Ain't Over Till The Fed Lady Sings But... - 2 dj

 

No matter, Fischer says, everything's great. In the footnotes to Sunday's speech, the vice chairman writes, “Looking ahead, I expect GDP growth to pick up in coming quarters, as investment recovers from a surprisingly weak patch and the drag from past dollar appreciation diminishes.” 

 

Fischer's comments are generally in-line with his colleagues. Last week, New York Fed head Bill Dudley also laid out a case for ignoring lackluster growth and hiking on "strong" labor market data. (We question just how strong the labor market is here.) On that, the market has bid up rate hike probabilities for December back to pre-Brexit levels. 

 

It Ain't Over Till The Fed Lady Sings But... - fed hike brexit

What do you do with that?

 

Here you go. 

(Buy Long Bonds)


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