CLIENT TALKING POINTS
EUR/USD
With both the Euro and the Yen signaling immediate-term TRADE oversold vs. the USD, now things get interesting ahead of AUG US economic data; bad data is “good” for stocks don’t forget (i.e. Down Dollar is, short term).
Oil
We’ve been bearish on Oil at the top-end of its current $44.96-49.29 risk range, but there’s no reason why it can’t retrace the top-end of that range if USD sells off (current 2wk inverse correlation is -0.84, so USD matters, short term).
VIX
Front month had its ramp to the top end of its 11.25-14.36 risk range and backed off right where it should have; now we have month-end and no volume (total US Equity Volume -26% vs. the 1yr avg yest); though tape to be short towards 2192 SPX.
TOP LONG IDEAS
GLD
On the other side of the USD expectation, Gold (GLD) lost -1.5% w/w. Again we still like UUP and GLD as a basket against other centrally-planned currency regimes elsewhere.
TLT
Long Bonds (TLT), which has been on Investing Ideas since August 4th, 2014, finished the week -0.25%. We continue to believe that growth is the main catalyst for the curve amidst all the central planning noise. Slower growth gets discounted in a flatter curve so even if rates are hiked into a late cycle slow-down, the yield curve pancakes (the long-end of the yield curve fall and the short-end goes up).
UUP
Strength in the U.S. dollar, with renewed rate hike expectations back in the mix over the last few weeks, gave a good boost to U.S. Dollar (UUP) which finished +1.1% on the week. The bid-yield of December Federal funds futures has ticked 10 bps higher in August to 0.55% to close out the week.
Asset Allocation
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 8/29/16 | 43% | 7% | 7% | 15% | 22% | 6% |
| 8/30/16 | 45% | 6% | 8% | 15% | 20% | 6% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 8/29/16 | 43% | 21% | 21% | 45% | 67% | 18% |
| 8/30/16 | 45% | 18% | 24% | 45% | 61% | 18% |
THREE FOR THE ROAD
TWEET OF THE DAY
NEW VIDEO (1 MIN): Remember What Happened Last Time The #Fed Raised Rates? app.hedgeye.com/insights/53431… @KeithMcCullough pic.twitter.com/iTP0RHygEX
@Hedgeye
QUOTE OF THE DAY
“The best revenge is massive success.”
–Frank Sinatra
STAT OF THE DAY
Will Fuller had 62 receptions for 1258 yards at Notre Dame last season.
