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ICYMI: What to Watch Ahead of Tomorrow’s Jobs Report


If we see a positive Jobs Report tomorrow, we think Gold and the 10-year Treasury get smoked.”

–Hedgeye CEO Keith McCullough

Get ready. It’s Jobs Day tomorrow.

And we think most investors are missing a critical opportunity ahead of Friday’s labor market check-up.


The Federal government’s Non-Farm Payroll report, as the jobs report is called, will give us an update on the number of jobs added for the month of December. Since February 2015, the year-over-year growth (or rate of change) in jobs has been slowing, from that peak of 2.58% to the November reading of 1.58% (see the brief video above for more).


It’s one of the few U.S. economic indicators that’s still slowing.


But this could change. Especially as we head deeper into 2017 and jobs growth “compares” get easier. This means last year’s absolute jobs number, over which tomorrow’s December reading will be compared to calculate year-over-year growth, is a lot lower. So, essentially, labor market growth isn’t as hard to come by, particularly heading into the first and second quarter of 2017.


Sell Gold (GLD) and Long-Term Treasury Bonds (TLT) ahead of the report. These are classic slower economic growth macro exposures. In other words, they could get crushed tomorrow if tomorrow’s jobs report is better than expected.

ICYMI: How to Trade Gold Right Now

Takeaway: The U.S. economy is growing. Interest rates and the U.S. Dollar are rising. That’s an explicit signal to do what? Sell gold.


“If you want to get Gold right, you have to get rates and the U.S. Dollar right.”

—Hedgeye CEO Keith McCullough


As you can see in the video above, the U.S. Dollar has a negative correlation of -0.97 to Gold over the past 90 days, meaning their prices move in direct opposition to each other. Pay attention to the 10-year Treasury yield and direction of the U.S. dollar — both are expressions of future growth expectations.


Recently reported economic data including U.S. GDPISM Manufacturing and Durable Goods orders all suggest that U.S. economic growth is accelerating.


We agree.


And at the right level, you sell gold.


Our proprietary model signals gold is overbought. It suggests Gold has almost 4% downside at current prices to $1121 per ounce. However, an even better spot to sell, McCullough says, is when the 10-year Treasury yield hits 2.41%. That would imply Treasuries (and hence other asset classes that benefit from slower U.S. economic growth) are also overbought.


Here’s The Only Emerging Market We Like Right Now




That’s right. We like Russia, even after Russia’s RTSI stock index rose 52.2% in 2016 and after President Barack Obama’s recent retaliatory sanctions against the country for alleged interference in the 2016 presidential election.




Our predictive tracking algorithm – the GIP model (which stands for Growth, Inflation, Policy) – suggests the Russian economy will continue growing while inflation slows through the first half of 2017. We call this setup Quad 1 and it is very bullish Russian stocks, explains Senior Macro analyst Darius Dale in the video above. (Click here to learn more about how we model global economies.)


As Dale wrote recently in a note to subscribers:


“Part of our bullish thesis on Russia – which is the only emerging market we like here – is the deepening of Trump/Putin relations that may eventually lead to an unwind of sanctions on trade and capital flows which have helped perpetuate one of Russia’s most protracted recessions in the modern era.”


Or as Dale puts it more succinctly in the video above, the Russian economy is growing and you could also get some “goodies from the Trump White House as well.”

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.37%
  • SHORT SIGNALS 78.32%

ICYMI: ‘You Gotta Love Brexit’

Takeaway: Not the gloom and doom that many predicted, the FTSE 100 is up +14.6% since Britain’s E.U. referendum.


“In sharp contrast to the politicized-fear-mongering about Brexit, the British economy chugged along at +2.2% year-over-year growth in Q3. That was even better than the USA’s +1.7% year-over-year growth rate,” Hedgeye CEO Keith McCullough wrote recently. In other words, the U.K. economy is accelerating.


We like Britain’s pound on the long side (especially against the euro).

Dale: Strong Dollar = Strong America



Here’s an obvious statement: The U.S. is a consumer-driven economy. Duh, right?


So that’s why we’re scratching our heads over recent mainstream media headlines suggesting a rising dollar is going to handicap U.S. industries. It’s illogical. A strengthening dollar means Americans have more purchasing power (i.e. they can buy more goods).


Here are a few reports we’ve seen recently:


(Note: The U.S. Dollar hit a 14-year high against the euro recently and the U.S. Dollar index is up 7.5% quarter-to-date.)


All of this postulating misses the mark. Think about it. Exports account for just 9% to 10% of U.S. GDP. Sure, a stronger dollar hurts exporters because companies are forced to sell their goods to foreigners whose currencies are relatively weaker against the dollar.


But, conversely, U.S. consumers can buy more goods with their stronger currency. And since consumption makes up roughly 70% of GDP, explains Hedgeye Senior Macro analyst Darius Dale, when the dollar is strengthening American consumers get a boost and so too does the U.S. economy.


There’s more. “If you think about U.S. exports, 50% are capital goods. In other words, we export production,” Dale explains in the video above. Here’s what that means in using a real world example, according to Dale:


“So we send China the stuff they need to make iPhones and they send us back more iPhones that we can buy in the Apple store. Now, if we’re buying more iPhones in the Apple store, well guess what? We’ll probably need to ship more capital goods to China.”


BOTTOM LINE: Strong Dollar = Strong America.


A Deep Dive Into Our 4 Favorite Healthcare Shorts

A Deep Dive Into Our 4 Favorite Healthcare Shorts - TMS KM AF SHORTS 12 27 2016

There is still plenty juice out there for savvy Healthcare short sellers. Hedgeye CEO Keith McCullough and Healthcare analyst Andrew Freedman discuss our top four shorts in the sector.