CLIENT TALKING POINTS
Japan
Unfortunately the “there’s no alternative to stocks” narrative hasn’t held this yr in China, Europe, or Japan – Nikkei down another -1.2% overnight taking its crash from the 2015 high to -21.7% (Japanese Gov Pension fund just lost $52B being long stocks in Q2, with the BOJ buying them!).
Italy
“rates are at all-time lows” (because growth is slowing), so “buy stocks” (Ex-Italy), where recession probability rising is reality; MIB Index leads losers this am in light European trading, -0.6%, taking its crash from the 2015 high to -30.9%.
USA
USA! USA! Has the Goldilocks Medal this yr because growth isn’t as slow as it is in Japan/Italy? Is what it is; for an immediate-term TRADE off the low-end of my current 2168-2193 risk range I’m in the buy/cover “stocks” (and bonds… and platinum… and Gold, etc.) camp; 10yr Yield has immediate-term downside to 1.49%.
TOP LONG IDEAS
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
Asset Allocation
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 8/25/16 | 50% | 3% | 5% | 14% | 18% | 10% |
| 8/26/16 | 50% | 3% | 5% | 14% | 18% | 10% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 8/25/16 | 50% | 9% | 15% | 42% | 55% | 30% |
| 8/26/16 | 50% | 9% | 15% | 42% | 55% | 30% |
THREE FOR THE ROAD
TWEET OF THE DAY
NEW VIDEO The Big Joke: Animated Cartoon Nails Squirrely #Fed app.hedgeye.com/insights/53364… @KeithMcCullough #JacksonHole pic.twitter.com/1jYpUCjZHC
@Hedgeye
QUOTE OF THE DAY
“You find that you have peace of mind and can enjoy yourself, get more sleep, and rest when you know that it was a one hundred percent effort that you gave-win or lose.
-Gordie Howe
STAT OF THE DAY
Ken Griffey Jr. (HOF) hit 630 HR's and batted .284 over his 22 year career.