CLIENT TALKING POINTS
Pound
Why is it that every time something crashes faster than it’s already been crashing (in this case for months), everyone calls it a “flash crash” and blames the algos? #1 to blame here is the Bank of England who has an explicit policy to devalue (crash) the purchasing power of the people in exchange for FTSE, etc. asset inflation that isn’t driven higher by algos?
GILTS
Big ramp in the 10yr UK Bond Yield this morning, +8 bps to 0.95% as the aforementioned economic reality sinks in as a real consumption risk – this is the lowest level of British Purchasing power since 1985; if you thought it was expensive to live in London for the last 3-5 yrs, try getting paid in Pounds this year…
Gold
#1 reason why I own it is what you see happening in the Global FX market – crashing currencies for short-term safety in stock markets is turning into an obviously bearish catalyst for real #GrowthSlowing – the #BeliefSystem in central market planning is finally breaking down; US Dollar and Gold should win the Currency War, until the Fed starts cutting again.
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 | |
|---|---|---|---|---|---|---|
| 10/6/16 | 48% | 8% | 4% | 15% | 25% | 0% |
| 10/7/16 | 48% | 8% | 4% | 15% | 25% | 0% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 10/6/16 | 48% | 24% | 12% | 45% | 76% | 0% |
| 10/7/16 | 48% | 24% | 12% | 45% | 76% | 0% |
THREE FOR THE ROAD
TWEET OF THE DAY
Why a Fed Rate Hike On "Strong" Jobs Data Is A (Really) Bad Idea app.hedgeye.com/archives/54357… cc @KeithMcCullough #Fed #JobsReport #NFP
@Hedgeye
QUOTE OF THE DAY
“Only a man who knows defeat can reach down to the bottom of his soul & come up with the extra ounce of power it takes to win”.
–Muhammad Ali
STAT OF THE DAY
Wade Boggs hit only 118 HR's during his 18 year MLB career.
