CLIENT TALKING POINTS
Pound
If you didn’t know that eviscerating the purchasing power of The People (their currency) gets a stock market to rip to new highs, now you know – new lows for the Pound -0.7% to $1.27 vs. USD and the FTSE ramps another +1.1% to test a 5yr high at +13.3% YTD (vs. SPY +5.8%); maybe every stock market needs a Brexit to pretend fundamentals matter.
UST 10YR
Another pretend “rate rise” on an ISM print of 51.5? That’s funny. The high for the year in the ISM was a whopping 53.2 in JUN (when Oil’s “chart” looked better) and the ISM employment component remains < 50; the 10yr should trade with the rate of change in this week’s jobs report and the risk range is currently 1.52-1.65%.
Gold
Rates Up, Dollar Up, Gold Down… and you buy more Gold. That’s been the play-book all year long and I see no reason to change that this morning with both the Pound and Yen signaling immediate-term TRADE oversold vs. a US Dollar that should fade on another rate of change slowing in NFP on Friday.
TOP LONG IDEAS
GLD
See update on VYM. #GrowthSlowing
VYM
If you’ve followed our #GrowthSlowing call, the connection between XLU, TLT, MUB, VYM should be is straighforward – low beta instruments, with fixed cash flows or dividend payments in the future that get discounted at lower rates when the yield curve flattens (a smaller denominator in a fraction = a higher number). And when rates go to zero globally, yield-seeking fund managers rotate from Treasuries, into corporates or munis. And then when rates move even lower they rotate to bond-like proxies like Utilities or High Dividend Blue Chips (VYM).
TLT
See update on VYM. #GrowthSlowing
Asset Allocation
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 10/3/16 | 55% | 4% | 4% | 11% | 21% | 5% |
| 10/4/16 | 54% | 6% | 4% | 12% | 22% | 2% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 10/3/16 | 55% | 12% | 12% | 33% | 64% | 15% |
| 10/4/16 | 54% | 18% | 12% | 36% | 67% | 6% |
THREE FOR THE ROAD
TWEET OF THE DAY
CHART OF THE DAY: Do You Believe In (OPEC/Fed) Centrally-Planned Markets? app.hedgeye.com/archives/54262… via @KeithMcCullough #OPEC #Oil #Fed
@Hedgeye
QUOTE OF THE DAY
“Success is not final, failure is not fatal: it is the courage to continue that counts.”
-Winston Churchill
STAT OF THE DAY
Nolan Arenado has 133 RBI's this season, he only has 376 for his career.