CLIENT TALKING POINTS
Yen
Day 2 of US signaling immediate-term TRADE overbought vs. both Euros and Yens; Japanese Equities love the smell of fresh burning Yen; Nikkei closes up big for the 2nd day in 3, +1%, but remains bearish TREND @Hedgeye.
Commodities
Long-term bear market in one of Bernanke’s Down Dollar asset bubbles remains firmly intact; after failing the “breakout” for the technicians > 200 in June, the CRB Index is down -7% from that lower-long-term high; it’s going to get decimated by Deflation’s Dominoes if the Fed tightens.
US 10YR
Incredible to watch, really – despite all the selling in anything equity that looks like a bond, the UST 10YR has oscillated between 1.46-1.62% for the last 3 weeks; ALL of Fed policy comes down to 1 number though (nice job making this a lottery ticket, Janet) with the jobs report (which is subject to huge revisions) on Friday.
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 | |
|---|---|---|---|---|---|---|
| 8/30/16 | 45% | 6% | 8% | 15% | 20% | 6% |
| 8/31/16 | 43% | 7% | 8% | 16% | 20% | 6% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 8/30/16 | 45% | 18% | 24% | 45% | 61% | 18% |
| 8/31/16 | 43% | 21% | 24% | 48% | 61% | 18% |
THREE FOR THE ROAD
TWEET OF THE DAY
.@JoeMcMonigle lifted the veil on #OPEC #oil "freeze". Here's what he told @KeithMcCullough app.hedgeye.com/insights/53321… pic.twitter.com/LXLSyX1cth
@Hedgeye
QUOTE OF THE DAY
“Dreaming, after all, is a form of planning”.
–Gloria Steinem
STAT OF THE DAY
Tim Tebow threw for 9285 yards and 88 touchdowns while at Florida.
