CLIENT TALKING POINTS
SP500
On the latest “rate hike” fears (i.e. when the SP500 was down for 8 of 10 days in AUG), we got as net long as we’ve been in all our products, all year – conviction in #GrowthSlowing was the call. Now, after the move, we say you sellem’ – yep, just a trade (for now), but SP500 all-time high is the best price in market history to book some gains.
Euro
If you think it’s all about naval gazing at the Dow, Bro – it’s not. In fact, it’s Draghi Day! He’s back from extended vaca to remind you that the FX War is very much on… and while the Down Dollar, Down Rates thing is fun for anyone who is long anything (other than Japanese Stocks); we think he tries very hard to back the EUR/USD off at $1.13-1.15.
Copper
The Doctor, once again, is checking out of this Bad Data = Good Reflation Rally, 1st – Copper -0.1% this morning, resuming its crash and genuine disinterest that global demand (vs. Bernanke’s supply bubbles) has “bottomed”.
TOP LONG IDEAS
GLD
See updates below.
TLT
Income & Consumption
Slowing employment growth + a decline hours worked + deceleration in earnings growth will = a deceleration in aggregate income growth when the official data are reported at the end of the month. Absent a significant decline in the savings rate and/or significant re-acceleration in credit growth, consumption growth can be expected to track income growth lower.
UUP
Industrial Activity
The -14K decline in manufacturing employment in August accords with the retreat in the employment subcomponent in the ISM manufacturing report. Lower manufacturing employment and a slowdown in manufacturing hours worked also points to a sequential decline in Industrial Production when that data is reported later in the month. In short (and in the short-term), bad economic data is good as falling rate hike expectations support asset price inflation. Over the intermediate-term, "slower-and-lower-for-longer" continues to characterize the growth, inflation and interest rate outlook and support #GrowthSlowing allocations in bonds, gold, and dollars. While incremental dovishness from the Fed may serve as a short-term headwind to the dollar, the structural case for the $USD amidst ongoing policy divergence between the U.S. and the balance of global DM markets remains intact.
Asset Allocation
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 9/7/16 | 58% | 4% | 4% | 7% | 23% | 4% |
| 9/8/16 | 59% | 2% | 4% | 6% | 23% | 6% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 9/7/16 | 58% | 12% | 12% | 21% | 70% | 12% |
| 9/8/16 | 59% | 6% | 12% | 18% | 70% | 18% |
THREE FOR THE ROAD
TWEET OF THE DAY
Cartoon of the Day: Raging Bull app.hedgeye.com/insights/53638… via @Hedgeye #stocks $SPY #Yellen #Fed #markets pic.twitter.com/SflKrvdrvk
QUOTE OF THE DAY
“Everybody loves success, but they hate successful people.”
–John McEnroe
STAT OF THE DAY
Daniel Murphy leads the MLB in BA, hitting .345.
