CLIENT TALKING POINTS
China
Gotta love these guys – they print perfectly synchronized 6.7% in Q2 and 6.7% in Q3 GDP reports, despite the world questioning their credibility! Hang Seng down -0.4% on the “news” and is teetering on a TREND break-down.
Copper
The Doctor doesn’t believe A) China’s government and/or B) the “global growth has bottomed” either – down -0.2% this morning to -2.3% YTD as Gold continues to stabilize, +0.6% to +19.7% YTD.
SP500
Finally had its bounce day (1st real up day in the last 6), but it was only +0.6% and doesn’t have follow through this morning; for the 1st time since Q116, SP500 is signaling bearish TREND @Hedgeye w/ TREND resistance = 2156.
TOP LONG IDEAS
GLD
See update on TLT.
VYM
See update on TLT.
TLT
One of our 3 major Macro Themes for Q3 centers on the past-peak nature of consumption and income growth and how the slowdown in credit expansion is an important recent additive to the consumer spending slowdown. This all equates to growth slowing and a late-cycle economy which we highlight and explain on a weekly basis with respect to our current active positions - you know the logic.
To highlight last week's Retail Sales report:
- The headline sales number increased +0.6% M/M, showing acceleration on a 1-year and 2-year basis with auto sales being a huge contributor to a positive number (+5% M/M which was largely expected from a comps perspective)
- 9 of 13 industry subgroups in the report improved on month-over-month basis with Building Materials, Gas Stations (simply higher gas prices) and food & Drink leading. On a year-over-year basis the breadth was more balanced with only 7 of 13 showing sequential acceleration
The Control Group (the GDP input) was positive m/m for September after falling in July and August. But aggregating the three months together, the numbers that go into the calculation of Q3 GDP, Retail Sales increased +0.3% on a quarter-over-quarter annualized basis after a +6.8% reading for Q2 – a sizable decline to a large GDP contributing data point.
Asset Allocation
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 10/18/16 | 53% | 6% | 4% | 13% | 24% | 0% |
| 10/19/16 | 54% | 4% | 3% | 13% | 24% | 2% |
Asset Allocation as a % of Max Preferred Exposure
| CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
|---|---|---|---|---|---|---|
| 10/18/16 | 53% | 18% | 12% | 39% | 73% | 0% |
| 10/19/16 | 54% | 12% | 9% | 39% | 73% | 6% |
THREE FOR THE ROAD
TWEET OF THE DAY
Netflix's Earnings: 6 Things You Need To Know app.hedgeye.com/archives/54653… $NFLX
@Hedgeye
QUOTE OF THE DAY
“Either write things worth reading or do things worth writing”
-Ben Franklin
STAT OF THE DAY
In October 1947, Chuck Yeager broke the speed of sound by going over 700 MPH.
