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PREMIUM INSIGHT

[UNLOCKED] Keith's Daily Trading Ranges

[UNLOCKED] Keith's Daily Trading Ranges - z baba

This is a special (free) look at our Daily Trading Ranges product. These are Hedgeye CEO Keith McCullough's "buy and sell" levels on major markets, commodities and currencies. Subscribers receive it weekday mornings before the market opens. FYI - Our special 50% off deal on this product and others is about to expire.


September 15, 2016

Want more from Daily Trading Ranges? CLICK HERE to submit up to 4 tickers you'd like to see on the list. 

 

  • Bullish Trend
  • Bearish Trend
  • Neutral

INDEX BUY TRADE SELL TRADE PREV. CLOSE
UST10Y
10-Year U.S. Treasury Yield
1.73 1.48 1.70
SPX
S&P 500
2,109 2,160 2,125
RUT
Russell 2000
1,197 1,231 1,211
COMPQ
NASDAQ Composite
5,110 5,228 5,173
XOP
SPDR S&P Oil & Gas Explore
35.05 36.93 35.71
RMZ
MSCI US REIT
1,150 1,210 1,171
NIKK
Nikkei 225 Index
16,306 16,699 16,614
DAX
German DAX Composite
10,288 10,562 10,378
VIX
Volatility Index
13.86 19.62 18.14
USD
U.S. Dollar Index
94.50 96.40 95.25
EURUSD
Euro
1.11 1.13 1.12
USDJPY
Japanese Yen
101.29 104.40 102.38
WTIC
Light Crude Oil Spot Price
42.44 46.49 43.58
NATGAS
Natural Gas Spot Price
2.64 2.97 2.89
GOLD
Gold Spot Price
1,305 1,358 1,326
COPPER
Copper Spot Price
2.05 2.16 2.15
AAPL
Apple Inc.
105.77 112.37 111.77
AMZN
Amazon.com Inc.
749 793 761
JPM
J.P. Morgan Chase & Co.
65.31 67.79 66.40
INTC
Intel Corp.
35.06 36.99 35.62
LVS
Las Vegas Sands Corp.
52.71 58.58 58.31
CMG
Chipotle Mexican Grill
399 439 414

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.


CHART OF THE DAY: This Is #1 Causal Factor on "Slower and Lower for Longer"

Editor's Note: This is an excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more. 

 

If you don’t get that Demographics is the #1 causal factor on slower and lower for longer, you’re definitely not reading Hedgeye’s Demography Research (see Chart of The Day for details on the rate of change in growth for the 35-54 year old US population). 

 

CHART OF THE DAY: This Is #1 Causal Factor on "Slower and Lower for Longer" - EL 15


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.46%
  • SHORT SIGNALS 78.35%

Free Money Mess

“Originals are people who take the initiative to make their vision a reality.”

-Adam Grant

 

Isn’t that the truth? That’s one of the opening volleys in one of the better books I’ve read this year called OriginalsHow Non-Conformists Move The World, by Adam Grant. Sheryl Sandberg (COO of Facebook) called it “one of the most important and captivating books I have ever read.” #OrderIt

 

Originals aren’t always positive influences that move the world. Ben Bernanke and Dick Fuld were originals, for example. Today is actually tricky Dick’s 8th anniversary. On this day in 2008, Lehman Brothers officially filed for bankruptcy. In 2011, The Post Growth Institute labelled today, Free Money Day. I’m hearing that Bernanke is taking a helicopter ride to commemorate it.

 

Since those days of many risk management lessons already lost, many central-market-planners, bankers, and pundits have borrowed the original ideas of Bernanke and Fuld. Adam Grant calls this “kleptomnesia” – i.e. “accidentally remembering the ideas of others as our own.” Especially on Wall Street, you know as well as I do that there’s no accident in self-interest.

 

Back to the Global Macro Grind

 

Were Bernanke and Fuld non-conformists? Big time. Did it end well? Obviously for bankers of Fuld’s ilk, no. But what about those who have followed the ideological path of money printing, currency devaluation, and market manipulation?

 

The story about that central-market-planning #BeliefSystem is still being told.

 

In the same opening chapter, Adam Grant reminds us of the risks of not changing our minds when going against the grain goes bad. He illuminates that reality using a great quote from George Bernard Shaw:

 

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

 

Since Draghi, Kuroda, Yellen, etc. took the baton from Bernanke and took us down this rat hole towards Free Money Forever have they adapted themselves to the world’s markets reactions? Or have they continued to try to tell markets to react to them?

Free Money Mess - central bank kool aid 06.09.2016

 

These are critical questions that I think most reasonable (and un-reasonable) central bankers would be held to account to if they were actually elected by The People. Instead, as long as no one forwards my notes, I’m one of the originals taking them to task.

 

I did it in 2008. I’m doing it now. I do it in print, on video, and in cartoons, every day. And I like it.

 

I do it on the road seeing Institutional Investors too. Between NYC and Kansas City, I just finished 2 days of meetings and I have to say that there’s nothing else people want to talk about other than the Federal Reserve, ECB, BOJ, PBOC, BOE, and the US election.

 

‘Good call on #GrowthSlowing Keith… but what’s the Fed going to do in response. How about the BOJ in response to the Fed? … can and will Draghi do more? … how about China? Who is Trump going to pick to run the Fed if Hillary’s man is Summers?’

 

And it goes on and on and on… so many questions that have so few answers as clear as #GrowthSlowing itself.

 

Meanwhile most establishment economists (non-originals) are sitting in their ivory towers confounded by things like the Philips Curve getting crushed and US Productivity being on its worst run since the 1970s.

 

Here’s a DCF model I built for them on productivity (please borrow it as your own!):

 

  1. D = Demographics
  2. C = Capex
  3. F = Federal Reserve

 

If you don’t get that Demographics is the #1 causal factor on slower and lower for longer, you’re definitely not reading Hedgeye’s Demography Research (see Chart of The Day for details on the rate of change in growth for the 35-54 year old US population). You didn’t need to know anything about Dick’s “level 3 assets” to know what that line going red in 2007 meant.

 

Capex is running negative -4.9% on a year-over-year basis (negative for 9 straight months) because most sane business people consider the Fed flip-flopping from hawkish to dovish (6x in 8 months) insane. Why in God’s good name would you “invest” at this stage of the #GrowthSlowing cycle as the #BeliefSystem that the Fed, ECB, BOJ, PBOC, BOE, etc. breaks down?

 

No. The answer isn’t “raise rates so that we can get out of this mess.” The entire capital market system is held up by this mess. And, especially for the original bankers who built the foundations of these non-free “markets”, as our Chief Compliance Officer, Moshe Silver, often reminds us… “it’s a lot easier to make a mess than to clean it up.”

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.48-1.73%

SPX 2109-2160

VIX 13.86-19.62
EUR/USD 1.11--1.13
Oil (WTI) 42.44-46.49

Gold 1

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Free Money Mess - EL 15


The #BeliefSystem in central-market-planning continues to break-down as Global Growth Slows…

Client Talking Points

Japan

This is the epicenter of all things “central-market-planning innovation” so watch it very closely; Nikkei down hard again overnight on a Yen move that did nothing – despite BOJ “buying” (every day into the close), the crash in the Nikkei (from the 2015 top in the Global Equities bubble) is back to -21.5%.

Italy

When growth slows and rates crash, “there’s no alternative to stocks”, Ex-China, Japan, Italy, Spain, etc… we get the US brokerage narrative, and we also get that if the US economy slows to Italy’s growth rate, stocks and bonds stop going up together too; MIB Index back on its knees this morning at -31.1% from that same Global Equity Bubble top of 2015.

Oil

Yet another chart chase that went bad – the @Hedgeye TAIL risk call on Oil remains firmly intact and all the Fed has to do is make another policy mistake and WTI will have a $3 in front of it; the SP500 “earnings have bottomed” call is a fancy fiction if commodity prices continue their long-term #Deflation from Bernanke’s inflated highs.

Asset Allocation

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
9/14/16 54% 4% 4% 7% 29% 2%
9/15/16 51% 5% 4% 8% 30% 2%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
9/14/16 54% 12% 12% 21% 88% 6%
9/15/16 51% 15% 12% 24% 91% 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
GLD

No update this week.

VYM

After a relative pull-back in large cap, low beta, liquid names (an exposure we’ve like for the balance of the year). We can now buy back that exposure lower. As you can see in the style factor table below, high debt, high beta, and small cap stocks in the S&P 500 have outperformed over the last month. As Keith McCullough wrote to II subs Friday:

 

“We've seen plenty a one-way chart chaser lose lots of other people's money doing it otherwise (they are chasing what’s worked recently). VYM has a 3% Yield and is signaling immediate-term TRADE oversold within our bullish intermediate-term @Hedgeye TREND view.”

TLT

No update this week.

Three for the Road

TWEET OF THE DAY

GOLD: the recipient of the central-market-planning #BeliefSystem breaking down = $1320/oz = +24.5% YTD pic.twitter.com/MnwsKYUwcG

@KeithMcCullough

QUOTE OF THE DAY

“When you gotta shot, you shoot.  Don’t talk.”

-The Good, the Bad and the Ugly

STAT OF THE DAY

Jameis Winston leads the NFL in QBR through week 1.


ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record

Takeaway: In week 37 of 2016, this year's trends in domestic stock funds are ~$40 billion worse than last year and twice as weak as 2008.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

With this week's -$4.5 billion withdrawal from domestic stock mutual funds, the category's losing streak is now the biggest on record at -$323 billion over the past 80 weeks (we define a streak as intact if not offset by 4 weeks of inflows). Through 37 weeks of 2016, this year is setting new outflow records previously set in 2015, with flows in U.S. stock funds -$37 billion worse than last year and shockingly over 2.2x worse than the outflow trends in the first 37 weeks of 2008. With equity markets at all time highs, there is no bigger indication of the secular shift out of the antiquated mutual fund structure (in the equity asset class at this point). Meanwhile, all bond mutual funds except for those with global mandates brought in net subscriptions this week, contributing to total fixed income mutual fund flows of +$6.2 billion. Bond ETFs did not fare as well, however, losing -$2.8 billion. Finally, investors pulled -$29 billion from money market funds.

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI1

 

Running annual recaps outlining the worst outflow on record for 2016:

 

<chart20>

 

In the most recent 5-day period ending September 7th, total equity mutual funds put up net outflows of -$6.1 billion, trailing the year-to-date weekly average outflow of -$4.1 billion and the 2015 average outflow of -$1.6 billion.

 

Fixed income mutual funds put up net inflows of +$6.2 billion, outpacing the year-to-date weekly average inflow of +$3.1 billion and the 2015 average outflow of -$475 million.

 

Equity ETFs had net redemptions of -$770 million, trailing the year-to-date weekly average inflow of +$309 million and the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net outflows of -$2.8 billion, trailing the year-to-date weekly average inflow of +$1.6 billion and the 2015 average inflow of +$1.0 billion.

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI19

 

Mutual fund flow data is collected weekly from the Investment Company Institute (ICI) and represents a survey of 95% of the investment management industry's mutual fund assets. Mutual fund data largely reflects the actions of retail investors. Exchange traded fund (ETF) information is extracted from Bloomberg and is matched to the same weekly reporting schedule as the ICI mutual fund data. According to industry leader Blackrock (BLK), U.S. ETF participation is 60% institutional investors and 40% retail investors.



Most Recent 12 Week Flow in Millions by Mutual Fund Product: Chart data is the most recent 12 weeks from the ICI mutual fund survey and includes the weekly average for 2015 and the weekly year-to-date average for 2016:

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI2

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI3

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI4

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI5

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI6



Cumulative Annual Flow in Millions by Mutual Fund Product: Chart data is the cumulative fund flow from the ICI mutual fund survey for each year starting with 2008.

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI12

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI13

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI14

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI15

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI16



Most Recent 12 Week Flow within Equity and Fixed Income Exchange Traded Funds: Chart data is the most recent 12 weeks from Bloomberg's ETF database (matched to the Wednesday to Wednesday reporting format of the ICI), the weekly average for 2015, and the weekly year-to-date average for 2016. In the third table are the results of the weekly flows into and out of the major market and sector SPDRs:

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI7

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors redeemed -3% or -$206 million from the utilities XLU ETF and -3% or -$222 million from the long duration treasury TLT ETF.

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI9



Cumulative Annual Flow in Millions within Equity and Fixed Income Exchange Traded Funds: Chart data is the cumulative fund flow from Bloomberg's ETF database for each year starting with 2013.

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI17

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI18



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$10.3 billion spread for the week (-$6.8 billion of total equity outflow net of the +$3.4 billion inflow to fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52-week moving average is -$5.0 billion (negative numbers imply more positive money flow to bonds for the week) with a 52-week high of +$20.2 billion (more positive money flow to equities) and a 52-week low of -$18.4 billion (negative numbers imply more positive money flow to bonds for the week.)

  

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI10

 


Exposures:
The weekly data herein is important for the public asset managers with trends in mutual funds and ETFs impacting the companies with the following estimated revenue impact:

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI11 



Jonathan Casteleyn, CFA, CMT 

 

 

 

Joshua Steiner, CFA

 

Patrick Staudt, CFA







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