Editor's Note: Below is a complimentary Early Look written recently by Hedgeye CEO Keith McCullough. Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.
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“I cancelled today’s meeting with the failing @NYTimes.”
-Donald Trump
Yep. Just in case you cared. That’s the update. Trump was tweeting something about the New York Times being “not nice” to him. My heartfelt sympathy goes out to you, Donald. Be strong. You’ll get through this. The media isn’t nice to me either.
In other breaking news, last night Trump gave us a peek into the first 100 days of his pending Presidency. While I’m not sure it had the kind of pop the US stock market was looking for, there seems to be a plan. That’s nice.
It looks like, in addition to cancelling today’s meeting, he’s going to cancel TPP (Transpacific Partnership). He said he’s going to cancel US shale production restrictions too. There’s a lot of cancelling going on this morning.
Back to the Global Macro Grind…
Fortunately, my flight home from Chicago is not cancelled. While I prepare for my market day, it looks like I’m being told to consider an “emphasis on US domestic production of cars, trucks, and steel.”
Cool. These must be “nice” businesses that are not failing.
What was really nice yesterday was seeing the all-time high in the US stock market. Although it was only its 6th up day in the last 19, the SP500 shot +0.75% higher to close at an all-time high of 2198.
As we like to remind everyone who is nice to us @Hedgeye, “all-time is a long time.”
Since I’d be hard pressed to believe that the all-time high in US stocks doesn’t reflect an economic optimism associated with Trump, I’m surprised he’s not in a better mood this morning. He just made the US stock market great again!
Why am I writing about Trump?
At least ½ of each meeting we did with Institutional Investors in Chicago yesterday had to do with Trump’s economic plans, probability of executing on them, timing, etc.
How would I summarize the meetings?
- Skeptically optimistic on taxes, de-regulation, and capital spending
- Convinced it’s going to make the stock market great into year end
- Less convinced everything is great in 2017, especially if the labor market continues to slow
While the market is starting to price in that the low of #TheCycle is in, it’s harder to get there on the latest components of the economic cycle (employment and consumption).
That’s why the shorter term data might matter more than the longer-term outlook. Or will it? Some clients are convinced that the “data doesn’t matter” and “every dip needs to be bought, because everyone is off-sides.”
Since I’m into the measuring and mapping of data (in rate of change terms), I may have a confirmation bias towards being data dependent. But I do think the data will matter inasmuch as politically optimistic biases probably will.
So what do we do next?
- I’m not changing from the view we changed to last week
- I’m still bullish on the US Dollar, across my TRADE, TREND, and TAIL investment durations
- I’d be long US Equity Beta until some economic data point disrupts the bullish TREND
- I’d be underweight #GrowthSlowing exposures (Treasuries, Gold, Utes, etc.)
- I’d be really nice to Donald
Our immediate-term Global Macro Risk Ranges with intermediate-term TREND Research Views (in brackets) are now:
UST 10yr Yield 1.80-2.48% (bullish)
SPX 2145-2205 (bullish)
RUT 1233-1348 (bullish)
NASDAQ 5175-5383 (bullish)
XOP 36.01-40.07 (neutral)
RMZ 1066-1115 (bearish)
Nikkei 16621-18615 (bullish)
DAX 10600-10791 (neutral)
VIX 12.03-17.21 (bullish)
USD 98.85-101.95 (bullish)
EUR/USD 1.05-1.07 (bearish)
YEN 105.11-111.41 (bearish)
Oil (WTI) 42.94-48.25 (bearish)
Nat Gas 2.58-2.99 (bearish)
Gold 1185-1255 (bearish)
Copper 2.34-2.59 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
