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Daily Market Data Dump: Thursday

Takeaway: A closer look at global macro market developments.

Editor's Note: Below are complimentary charts highlighting global equity market developments, S&P 500 sector performance, volume on U.S. stock exchanges, rates and bond spreads, key currency crosses, and commodities. It's on the house. For more information on how Hedgeye can help you better understand the markets and economy (and stay ahead of consensus) check out our array of investing products

 

CLICK TO ENLARGE

 

Daily Market Data Dump: Thursday - equity markets 8 25

 

Daily Market Data Dump: Thursday - sector performance 8 25

 

Daily Market Data Dump: Thursday - volume 8 25

 

Daily Market Data Dump: Thursday - rates and spreads 8 25

 

Daily Market Data Dump: Thursday - currencies 8 25

 

Daily Market Data Dump: Thursday - commodities 8 25


On TRADE oversold signals, why not buy/cover stocks, bonds, gold...ahead of Yellen tomorrow?

Client Talking Points

Europe

After signaling immediate-term TRADE overbought last week, both the EuroStoxx50 (-1.1%) and German DAX (-1.3%) are signaling immediate-term TRADE oversold this morning; we remain bearish on both Japanese and European Equities, but surviving the bear-chop means you have to trade it, both ways.

Gold

There have been plenty “buying opportunities” (why is it that they never call them that in the Long Bond or Gold?) this year Gold – yesterday was one of them as we tapped the low-end of my immediate-term risk range = $1319-1365; anything that’s not hawkish from Janet should be bearish for Bond Yields; bullish for Gold and Platinum.

Healthcare

Does Hillary scare you? She does have the ability to scare this sector! Sector ETF (XLV) signaled immediate-term TRADE oversold yesterday too; fundamentally, we haven’t liked it all year long (Tom Tobin is bearish)… but from a policy risk perspective, our Healthcare Policy analyst, Emily Evans, thinks Big Pharma’s lobby trumps Hillary rhetoric, in the end.

Asset Allocation

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
8/24/16 52% 3% 5% 12% 16% 12%
8/25/16 50% 3% 5% 14% 18% 10%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
8/24/16 52% 9% 15% 36% 48% 36%
8/25/16 50% 9% 15% 42% 55% 30%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

Top Long Ideas

Company Ticker Sector Duration
GLD

See update on TLT below.

TLT

#Stagnation. With that being said there were small but marginal Euro tailwinds against a U.S. retail sales report and PPI release that was likely dovish on the margin (USD -~20bps on Friday and -~60bps on the week). 

 

In line with our #EuropeSlowing theme, Q2 preliminary GDP slowed across the Eurozone to +0.3% vs. +0.6% in the prior quarter and +1.6% Y/Y for Q2 which was flat on a rate of change basis from Q1.

Looking at specific country results:

  • German (0.4% vs 0.7% sequentially) GDP accelerated to +1.8% Y/Y from +1.6% which was probably a minor Euro FX tailwind
  • Italian GDP came in at +0.7% Y/Y which was a deceleration from +1.0% in Q1
  • Greece GDP accelerated to contraction again, printing a measly -0.1% Y/Y from -1.3% in Q1

The Southern Eurozone states continue to implode.

UUP

Recall that a strong retail sales report for June, driven by a positive trend in goods consumption, was a large contributor to our GDP revision for Q2. The headline number, for June, was up +0.6% sequentially with the sequential acceleration in the control group accelerating +7.2% (annualized). #Deflation  

Three for the Road

QUOTE OF THE DAY

“Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”

– Benjamin Franklin

STAT OF THE DAY

David Ortiz is batting .322 in his final year in the MLB.


MACAU | MASS TRACKER UPDATE

Takeaway: With Galaxy finally reporting we can say that our inaugural Hedgeye Mass Tracker seems to be working

Just a quick update on the Hedgeye Mass Tracker. Galaxy Entertainment reported Q2 this morning and it was solid and in line. More importantly for us, mass revenues grew 29% YoY in Q2. Galaxy's mass performance brings the Macau market to a total of 4.6% YoY growth in Q2, slightly ahead of our bold (at the time) Tracker estimate of +2-4%. We can tell you that we were conservative with in our +2-4% Tracker estimate given that it was already a bold call to predict positive growth (sell side was projecting flat to slightly down) and it was the inaugural Tracker estimate.

 

Looking ahead, we've already published our July Tracker estimate of +4-6% mass revenue growth in Macau. August GGR may come in positive which would be the first positive GGR growth month since May of 2014. Positive GGR growth would imply further mass growth acceleration from July.

 

We'll be publishing a post mortem on Macau's Q2 today so stay tuned for more details and analysis.


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CHART OF THE DAY | Housing: Return of the Jedi?

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. 

 

"... Notwithstanding the noise (Old Wall’s Media trumpeted New Home Sales like the Return of The Jedi, and barely mentioned #GrowthSlowing in Existing ones) I have a few contextual points to make about US Housing:

 

A) Existing Home Sales make up 90% of the US Housing market (vs. New Homes at 10%)

B) A -1.6% year-over-year decline is the slowest rate of change in 23 months"

 

 

CHART OF THE DAY | Housing: Return of the Jedi? - 08.25.16 chart


Chartist Heaven

“The chartists can at times be correct.”

-Benoit Mandelbrot

 

You want to see a guy or gal in this business who does “charts” (and no fundamental research) feel like they have some serious stroke? Give them an upward sloping moving average and smash the realized volatility of whatever it is they’re chasing.

 

Been there, sometimes do that. But, as anyone who has survived bear markets knows, a Phase Transition from bearish to bullish volatility has killed many a myopic monkey in this profession; particularly if a bullish TREND in volatility is sustained.

 

There’s no doubt that, from a Style Factor perspective, price momentum (single-factor charts) matters big time right now. But, as Mandelbrot taught me, “while it may work at times, it’s not a foundation of on which to build a global risk management system.”

 

Chartist Heaven - yellen concerned

 

Back to the Global Macro Grind

 

There’s still a week or so left in your summer. I challenge you to take a small amount of time to read Chapter 1 of The (Mis)Behavior of Markets (it’s titled “Risk, Ruin, and Reward”) and refute it as poppycock. I think it’s as brilliant as fractal patterns themselves.

 

“The financial industry has developed other tools. The second-oldest form of analysis, after fundamental, is “technical.” This is a craft of recognizing patterns, real or spurious – of studying reams of price, volume, and indicator charts in search of clues to buy or sell. The language of the chartists is rich: head and shoulders, flags and pennants, triangles (symmetrical, ascending, or descending. The discipline, in disfavor during the 1980s, expanded in the 1990s as thousands of neophytes took to the internet to trade stocks.” -The (Mis)Behavior of Markets (pg 8)

 

Now, instead of the 90’s internet, they call it the cloud. And we have many more neophytes turned into perceived neuroscientists of the Perma Bull than I have ever seen in my career. Markets that don’t go down (and stay down) are Chartist Heaven!

 

So let’s not call them chartists (I think it offends them) – let’s call some of them “systematic strategies” ok?

 

Yes. That’s definitely ok because that’s the buzz in all of Alternative Asset Management right now. ‘Yeah, we love you Captain Stock Picker, but we have these guys who have a “rules-based” strategy which doesn’t really allow them to think about fundamentals.’

 

I couldn’t make this up if I tried.

 

And no, I’m not suggesting that purely quantitative strategies (as long as they are dynamic, multi-factor, and multi-duration) aren’t awesome. Especially in raging bull markets, they can crush it. I’m not saying that picking stocks, bonds, or your nose is dead either.

 

I’m just letting you know, in case you didn’t know.

 

As anyone who has worked in this business, across cycles (this is my 3rd) knows, great strategies (“systematic” or not) come and they go. The best ones get copied, levered… and then de-levered. They make geniuses of fools and fools of geniuses.

 

Back to the path of “charts” vs. fundamental research – here’s a topic for you to noodle over this morning - US Housing:

 

  1. “New Home Sales Beat” (big, on Tuesday); housing stocks (ITB) rip, to lower-highs
  2. Then (yesterday), Existing Home Sales (JUL) slowed -3.2% sequentially to DOWN -1.6% year-over-year
  3. Housing Stocks (ITB) continued lower, after failing to break-out to new highs

 

Notwithstanding the noise (Old Wall’s Media trumpeted New Home Sales like the Return of The Jedi, and barely mentioned #GrowthSlowing in Existing ones) I have a few contextual points to make about US Housing:

 

A) Existing Home Sales make up 90% of the US Housing market (vs. New Homes at 10%)

B) A -1.6% year-over-year decline is the slowest rate of change in 23 months

 

So, Ex-Oil, Ex-Earnings, Ex-GDP of 1%, and Ex-90% of Housing having negative year-over-year fundamentals… what Janet really needs to do tomorrow is pivot back to double-hawkish, like she did in May, right?

 

“But Keith, the Housing chart (ITB) looks good, bro.”

 

Yep, for now, so do “charts” of Exxon (XOM) and Chevron (CVX). But all of big cap Energy and Housing stocks in the USA are making a series of lower-highs. And that, in rate of change terms, the one of the best leading indicators of a chart not looking “good.”

 

By my quantitative signal’s scorecard (baseline 3-factor model = PRICE, VOLUME, and VOLATILITY):

 

  1. US Housing (ITB) is within 0.9% of going bearish TREND
  2. Exxon (XOM) just broke my TREND signal line
  3. Chevron (CVX) is 1.3% above my TREND signal line

 

Well, what the heck is the difference between XOM and CVX if the “charts” look barely different and you don’t do any research on Oil, Saudi Policy, their balance sheets, cash flow statements, and/or capacity to borrow to pay their dividend?

 

Sorry to go all fundamental on you at the end here. But I kind of have to. Fundamentalists can at times be correct too.

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.49-1.59%

SPX 2168-2190

XOP 34.65-37.90

VIX 11.15-14.33
EUR/USD 1.10--1.13
Oil (WTI) 43.09-49.07

Gold 1
Copper 2.07-2.17

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Chartist Heaven - 08.25.16 chart


The Macro Show with Keith McCullough Replay | August 25, 2016

CLICK HERE to access the associated slides. 

An audio-only replay of today's show is available here.


the macro show

what smart investors watch to win

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.

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