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Mr. Rosengren, What Are You Thinking?

Takeaway: The Fed hatches (yet) another headscatcher.

Mr. Rosengren, What Are You Thinking? - z cbb

well Now you know


This is what your portfolio will look like if the Fed hikes (again) into a slowdown.


Boston Fed head Eric Rosengren's "time to hike" comments must be part of a new Federal Reserve policy initiative to be anti-data-dependent. In the face of very obvious U.S. #GrowthSlowing data, he just ramped the Fed Funds Futures on a SEP hike from 20% to 34%



That's why stocks and bonds are down. That's also giving you an immediate-term TRADE oversold signal in most things I like.


I'll leave you with the chart below. Wasn't this Janet Yellen's favorite indicator once upon a time?


Mr. Rosengren, What Are You Thinking? - z lmci

TIF: We Are Removing Tiffany From Investing Ideas

Takeaway: Please note we are removing TIF from Investing Ideas (short side) today.

"I'm booking it on this pullback," writes Hedgeye CEO Keith McCullough.


Our Retail team remains bearish on the luxury jewelry and specialty retailer. They believe sales should still slow, as its traditional customer gradually shifts away from the brand, sales per square foot weakens, and margins compress as the inability to sell successfully online while maintaining brand cache plagues the long-term story. Bottom line is numbers remain too high.


TIF: We Are Removing Tiffany From Investing Ideas - ztif

RTA Live | September 9, 2016

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September 9, 2016

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  • Bullish Trend
  • Bearish Trend
  • Neutral

10-Year U.S. Treasury Yield
1.63 1.51 1.61
S&P 500
2,166 2,190 2,181
Russell 2000
1,235 1,264 1,258
NASDAQ Composite
5,190 5,292 5,259
SPDR S&P Oil & Gas Explore
36.78 39.26 39.12
1,210 1,252 1,234
Nikkei 225 Index
16,399 17,215 16,958
German DAX Composite
10,508 10,790 10,675
Volatility Index
11.59 14.48 12.51
U.S. Dollar Index
94.50 96.41 94.97
1.11 1.13 1.12
Japanese Yen
100.27 104.38 102.49
Light Crude Oil Spot Price
42.86 48.61 47.62
Natural Gas Spot Price
2.61 2.95 2.81
Gold Spot Price
1,302 1,360 1,341
Copper Spot Price
2.05 2.12 2.10
Apple Inc.
104.03 108.60 105.52
Amazon.com Inc.
752 790 784
J.P. Morgan Chase & Co.
65.80 67.99 67.25
Intel Corp.
35.19 36.98 36.44
Las Vegas Sands Corp.
52.64 57.12 55.68
Chipotle Mexican Grill
399 441 436

Hedgeye's Daily Trading Ranges are twenty immediate-term (TRADE) buy and sell levels, along with our intermediate-term (TREND) view.  Click HERE for a video from Hedgeye CEO Keith McCullough on how to use these risk ranges.

Stocks and bonds down (at the same time) on “inflation rising” fears? Fade that.

Client Talking Points


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.


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.


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.

Asset Allocation

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

9/8/16 59% 6% 12% 18% 70% 18%
9/9/16 58% 9% 15% 21% 76% 6%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

Top Long Ideas

Company Ticker Sector Duration

See updates below.


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. 


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.   

Three for the Road


Live Q&A "Medicaid for the Middle Class?" @HoweGeneration @HedgeyeHC 12PM ET #ACA *Access: app.hedgeye.com/insights/53673… pic.twitter.com/V3XTH8mjrG



I think that the team that wins game five will win the series.  Unless we lose game five."

-Charles Barkley


Trevor Siemian completed 18 of 26 for 178 yards and 1 TD last night.

Rolex | Short the Rich

Takeaway: Rolex is evolving. We’re not so sure it should.

Editor's Note: This is a recent research note written by our Retail team. Email sales@hedgeye.com for more information.


Rolex | Short the Rich - z ro ro


We always pick up on anecdotes of private brands, as do most retail analysts. But here’s our take on an interesting one as it relates to Rolex (private) that we think serves as a good brand study.


Rolex is evolving. We’re not so sure it should.


  1. We’re seeing a number of developments with the brand. Specifically, the styling is very updated, but starting to look very much unlike the traditional Rolex that is the mainstay for a $20,000 anniversary gift that is ultimately passed down through generations. 
  2. We’re not suggesting that Rolex is coming out with a ‘me too’ iWatch, but simply that a brand like this with such an amazing cache has to be careful about changing it up too quickly. Check out the images below. The first image looks more like a Tag-Heuer 1990s knockoff than a Rolex. 
  3. Oh any by the way, distribution is evolving too. These things are selling in the secondary market in flash sales on sites like ‘Touch of Modern’ (which is admittedly a wicked site for men who have cash to burn and like toys – like a desk Jellyfish aquarium or a tactical Damascus Blade knifes handcrafted in Brazil). 
  4. Brand evolutions are not all created equal. For example – Kohl’s and Nordstrom have failed to allocate capital in a manner that allowed them to evolve. Now they’re as close to perma shorts as you can find in retail – barring a big capital infusion to dig out of the hole. That in itself is a negative stock event. 
  5. But then on the high end, there’s validity to not changing up a design. The best parallel to Rolex, we think, is the BMW 3-series. Check out a 3.25i from 2006. Then check out a 3.25xi from 2016. The styling is remarkably similar to the extent that non-owners probably cant tell the difference from a distance, which boosts aftermarket value. The same goes for a car like the Lexus RH300/450. Slight evolution, but no sudden movements. If it ain’t broke, don’t fix it. 
  6. Maybe this is why the late-model Rolex designs are selling for a 50-70% discount in the secondary market. 


Short the rich.


The best play here is Tiffany – though that call goes far beyond this Brand Study (it’s only the 446th ranked keyword on Tiffany.com). Sales should still slow, as its traditional customer gradually shifts away from the brand, sales per square foot weakens, and margins compress as the inability to sell successfully online while maintaining brand cache plagues the long-term story. Numbers remain too high.


Rolex | Short the Rich - 2 ro

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