CLIENT TALKING POINTS
Yields
Post yesterday’s Oil pop, broad-based pop on the long-end of the curves, globally, with 10yr JGB and Bund yields in a dead heat at -0.02% - isn’t that riveting? If the Fed raises rates on “inflation” (and ignores the #GrowthSlowing data), they’ll crash oil and commodities again anyway. Big buying opportunity in long-term bonds this morning.
Oil
Pop, drop, #WickedChop – WTI fails at the top end of the @Hedgeye risk range ($42.86-48.61) and drops -1.3% this morning; supply data aside, we didn’t want to be short oil at the low-end of the range into slowing US economic data (Fed forced to pivot back to dovish = reflation) inasmuch as we don’t want to chase it at the top-end of the range.
Volume
Big US Equity Volume day yesterday (+21% vs. the 1-month average) – why? It was a down day. Volume comes back on the down days but SP500 still looks range-bound in the 2166-2190 risk range to me. If math changes on that, we will.
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 | |
|---|---|---|---|---|---|---|
| 9/8/16 | 59% | 2% | 4% | 6% | 23% | 6% |
| 9/9/16 | 58% | 3% | 5% | 7% | 25% | 2% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 9/8/16 | 59% | 6% | 12% | 18% | 70% | 18% |
| 9/9/16 | 58% | 9% | 15% | 21% | 76% | 6% |
THREE FOR THE ROAD
TWEET OF THE DAY
Live Q&A "Medicaid for the Middle Class?" @HoweGeneration @HedgeyeHC 12PM ET #ACA *Access: app.hedgeye.com/insights/53673… pic.twitter.com/V3XTH8mjrG
@Hedgeye
QUOTE OF THE DAY
I think that the team that wins game five will win the series. Unless we lose game five."
-Charles Barkley
STAT OF THE DAY
Trevor Siemian completed 18 of 26 for 178 yards and 1 TD last night.