In this excerpt from The Macro Show, Hedgeye CEO Keith McCullough explains why Fed policy is a joke (with a little help from our incomparable cartoonist Bob Rich).
The epidemic that's sweeping over Wall Street has been officially dubbed by physicians, "Fed-Induced Hyperventilation."
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Takeaway: Foundation Damage; Immigration Transformation; Shoring Up The Base
Editor's Note: Below is a brief excerpt from Hedgeye Potomac Chief Political Strategist JT Taylor's Capital Brief sent to institutional clients each morning. For more information on how you can access our institutional research please email firstname.lastname@example.org.
"In the time of darkest defeat, victory may be nearest."
The never-ending saga continues with a new batch of emails showing Hillary Clinton and her lieutenants consistently coordinated with State Department officials and Clinton Foundation aides to reward major donors with access to the powers-that-be at State. The situation poses an extraordinary risk for ethics challenges if elected president, though Clinton continues to brush off the release as politically motivated. We don’t expect the mess to go away without answers, and the longer she lets it go, the more damage is done.
Democrats may think they have November in the bag, but they shouldn’t underestimate the fickleness of the American voter. Donald Trump and Republicans, who grab much of the media’s attention, are happy to let this be the gift that keeps on giving.
Trump’s bid for presidency was built on a promise to build a "great, great wall" along the Mexican border, have them pay for it, and deport 11 million undocumented immigrants from U.S. soil - all while portraying Mexican immigrants, as criminals and rapists. Trump is now scheduled to hold his second meeting with his new Hispanic advisory board, leaving little doubt that he will shift his longstanding views, and his hard-nosed supporters are embracing it so far, calling it a more feasible approach to deportation without undermining his mainstay position.
His softening tone may be an appeal to minorities and moderates, but the message hasn’t resonated just yet. It’s still hard to see them throwing their weight behind Trump after the past 14 months of heated rhetoric.
SHORING UP THE BASE?
Trump may be massaging his message, but he hasn’t adjusted his campaign strategy just yet - he’s spending valuable time in states that will not provide him the votes he needs on Election Day. After canceling campaign stops in CO, NV, and OR, Trump stumped in TX and MS – two reliably red states that support him and the past nine Republican nominees. There’s money to be made in these states, but at a time when he needs to extend his reach to everyone, he’s focusing on shoring up the base.
Trump craves high energy rallies and feeds off the enthusiasm, but the aforementioned stops will not put him over the top in the Electoral College and propel him into the White House. Once Labor Day hits, expect to see his camp refocus on battleground states like OH, PA, NC, and FL…but it may prove to be too late.
Risk Managed Long Term Investing for Pros
Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.
In this brief excerpt from The Macro Show earlier today, Hedgeye CEO Keith McCullough explains what will happen to bond, stock and commodity markets if the Fed raises interest rates.
Pandora (P) is currently on our Internet & Media analyst Hesham Shaaban's Best Ideas List as a long. He is hosting a call today at 1pm ET to update his thesis and dissect the company's latest quarterly report. Here are the key discussion points.
Takeaway: The Fed nonsense is just starting to heat up.
There's a curious rhyme to Fed policy that's worth noting. Year-to-date, the Fed has pivoted from...
- Hawkish, December
- Dovish, March
- Hawkish, May
- Dovish, June
- Hawkish, July
Even more interesting is the effervescent hopes and dreams of most regional Fed governors about raising interest rates. That manifests most foolishly in San Francisco Fed head John Williams who forsaw as many as five rate hikes in 2016.
It doesn't end there...
Here's the latest nonsense from Dallas Fed president Robert Kaplan which reaffirms our #LowerForLonger call on interest rates:
8/25/16: Dallas Fed head Kaplan sees rate hike in the "not too distant future."
4/16/16: Dallas Fed head Kaplan sees rate hike in the "not too distant future."
Rather than studying the basic history of economic cycles, Fed officials are digging in their heels and clenching onto their dogmatic economic ideas. Central bankers from all over the world are dogpiling into Jackson Hole for this week's Fed-sponsored economic symposium. The theme of the meeting is "Designing Resilient Monetary Policy Frameworks For The Future."
In other words, if you're hoping the central planning will stop, don't hold your breath.
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