CLIENT TALKING POINTS
UK
UK PM Theresa May yesterday refused to commit to giving MPs a vote on her Brexit strategy before triggering the process of leaving the EU, but did allow Conservative MPs to back a Labour call for “proper scrutiny” of the process. Expect this “road show” to be drawn out with much indecision along the way, and to influence the GBP/USD (which is down -20% YTD) to the downside.
#Narratives
The latest government groupthink narrative centers around “production cuts” in crude oil. Whether it’s from an OPEC quota preliminary agreement or Putin’s mouth the data suggests the opposite. This week’s monthly oil market report from the IEA reveals a post-soviet record from a production standpoint while OPEC countries are producing at record levels. The incremental +400K B/D increase from Russia accounted for a majority of the increase – A stronger USD this week has overruled geopolitics as it always does.
#China
"Bottom is in" narrative under siege this morning w/ Exports dropping -10% in SEP. With Imports not offsetting at -1.9% Y/Y, it was a big slowdown in trade.
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 | |
|---|---|---|---|---|---|---|
| 10/12/16 | 48% | 8% | 3% | 14% | 27% | 0% |
| 10/13/16 | 48% | 8% | 3% | 14% | 27% | 0% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 10/12/16 | 48% | 24% | 9% | 42% | 82% | 0% |
| 10/13/16 | 48% | 24% | 9% | 42% | 82% | 0% |
THREE FOR THE ROAD
TWEET OF THE DAY
Cartoon of the Day: Economic "Growth" app.hedgeye.com/archives/54504… cc @KeithMcCullough #GDP #Economy
@Hedgeye
QUOTE OF THE DAY
“Rule #76: No excuses. Play like a champion!”
–Jeremy Grey, “Wedding Crashers” (2005)
STAT OF THE DAY
The Chicago Cubs are the 7/4 favorite to win the World Series.
