CLIENT TALKING POINTS
Japan
Whether it was the short selling opportunity in the Financials or Japanese Equities in the last 24hrs (I just re-shorted both in Real-Time Alerts), it’s all one big FX/Rates correlation trade: Dollar/Rates Up, Yen Down, Nikkei Up to 16,899, signaling immediate-term TRADE overbought within our bearish intermediate-term TREND view
Oil
Not surprisingly, OPEC’s latest central plan to smooth price volatility worked… in the very short-term… but what does it do in the intermediate-term? Oil’s Volatility (OVX) has maintained a range of 35-45 (its currently at the low-end of that range at 36) and WTI’s at the top of its refreshed (and widening!) risk range of $43.82-50.65
Themes
We’ll host our Q4 Global Macro Themes Call today at 1PM EST, where I’ll go right back to the wood on the longer-term call that is #TheCycle, outlining the double-dip recession expectations both cyclicals and #LateCycle sectors should have in Q4 and Q1, and give you a scenario analysis on tangible Trump vs. Clinton post-election policies
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 | |
|---|---|---|---|---|---|---|
| 10/5/16 | 50% | 8% | 4% | 14% | 24% | 0% |
| 10/6/16 | 48% | 8% | 4% | 15% | 25% | 0% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 10/5/16 | 50% | 24% | 12% | 42% | 73% | 0% |
| 10/6/16 | 48% | 24% | 12% | 45% | 76% | 0% |
THREE FOR THE ROAD
TWEET OF THE DAY
A 2 minute insight on a disconcerting economic development app.hedgeye.com/insights/54346… via @Hedgeye @KeithMcCullough #economy
@Hedgeye
QUOTE OF THE DAY
“Commitment is an act, not a word.”
-Jean-Paul Sartre
STAT OF THE DAY
Madison Bumgarner has now pitched 23 consecutive scoreless innings in elimination playoff games.