CLIENT TALKING POINTS
USD
Currently Fed Fund futures on a DEC hike are going with the recent hawkish pivot, but what comes after hawkish if we’re right on a #DoubleDipRecession in cyclicals and 0.4% Q4 q/q GDP? A: dovish, but the USD doesn’t believe that yet as it’s still squeezing the consensus short position that was built on the dovish SEP Fed meeting pivot!
UST 10YR
Yields, globally, have had a post Brexit Part II bounce (Pound crashing, UK 10yr up, German 10yr goes “positive” again, etc.) but quieting down some this am with 10yr Gilt yield -3bps to 0.99% and the US 10yr tapping the top-end of its 1.49-1.79% immediate-term risk range.
VIX
Continues to make a series of higher-lows as US Equity Beta continues to signal a series of lower-highs; VIX immediate-term risk range = 12.28-16.20 and the SP500 risk range = 2144-2174 on the eve of what we think will be another disappointing (i.e. recessionary) profit cycle season for cyclicals (see HON, PPG, DOV… so far).
TOP LONG IDEAS
GLD
Industrial production, capital goods orders, and factory orders continue to look recessionary. Specifically, all three series have experienced negative growth for the longest period ever without a recession.
VYM
Growth Slowing...
TLT
Growth Slowing...
Asset Allocation
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 10/10/16 | 44% | 9% | 4% | 16% | 27% | 0% |
| 10/11/16 | 46% | 8% | 4% | 15% | 27% | 0% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 10/10/16 | 44% | 27% | 12% | 48% | 82% | 0% |
| 10/11/16 | 46% | 24% | 12% | 45% | 82% | 0% |
THREE FOR THE ROAD
TWEET OF THE DAY
Double Dip Industrial Recession? Yup. Just Ask Honeywell & Dover app.hedgeye.com/archives/54436… via @Hedgeye
@KeithMcCullough
QUOTE OF THE DAY
“When you can't make them see the light, make them feel the heat.”
–Ronald Reagan
STAT OF THE DAY
Nick Saban and Bear Bryant are the only coaches to win an SEC championship at two different schools.
