CLIENT TALKING POINTS
USD
Down Dollar, Down Yields on that ISM print of 49.4 AUG vs. 52.6 JUL (with New Orders tanking from 56.9 to 49.1); my thought was ISMs and PMIs would trace the rate of change in that Oil chart, and I guess I got lucky with that.
US 10YR
Globally, long-term yields are rightly concerned that Yellen tightens into a slow-down (in the last 5 yrs, she and Trichet are two of the few who have tried it – both moves damn near blew up capital markets); while the JGB 10yr is the most consistent long-term #GrowthSlowing chart in economic history, even its +2bps this am to -0.04%.
Commodities
Anything in-line to “missing” this anchoring-bias “expectation” for NFP should = Down Dollar, Down Rates, Up Oil and Commodities – no reason why CRB Index cant ramp back to 184 on that (or Oil back to $45-46 for that matter).
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 | |
|---|---|---|---|---|---|---|
| 9/1/16 | 42% | 8% | 8% | 16% | 20% | 6% |
| 9/2/16 | 42% | 8% | 8% | 15% | 21% | 6% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 9/1/16 | 42% | 24% | 24% | 48% | 61% | 18% |
| 9/2/16 | 42% | 24% | 24% | 45% | 64% | 18% |
THREE FOR THE ROAD
TWEET OF THE DAY
Cartoon of the Day: Once Upon A Time... app.hedgeye.com/insights/53516… cc @KeithMcCullough #Fed #GDP #AutoSales pic.twitter.com/h0UpVP0sV4
@Hedgeye
QUOTE OF THE DAY
“To improve is to change; to be perfect is to change often.”
-Winston Churchill
STAT OF THE DAY
The Tennessee Volunteers only gained 319 yards of offense last night against Appalacian State.