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6 Videos: What's On HedgeyeTV

Our deep bench of analysts take to HedgeyeTV every weekday to update subscribers on Hedgeye's high conviction stock ideas and evolving macro trends. Whether it's on The Macro ShowReal-Time Alerts Live or other exclusive live events, HedgeyeTV is always chock full of insight.

 

Below is a taste of the most recent week in HedgeyeTV. (Like what you see? Click here to subscribe for free to our YouTube channel.)

 

Enjoy!   

 

 

1. ICYMI: Are You Bullish On The U.S. Dollar Yet? (1/6/2016)

 

 

Here's why this week's Jobs Report is bullish for the U.S. Dollar. (Click here to read a more detailed write-up.)

 

2. McCullough: This Book Is The ‘Bible’ of Financial Market Knowledge (1/6/2016)

 

 

Need to get up to speed on the complex, inner workings of financial markets? We’ve got the book for you. Check out The Misbehavior of Markets by deceased mathematician and deep-thinker Benoit Mandelbrot.

 

3. What to Watch Ahead of Tomorrow’s Jobs Report (1/5/2016)

 

 

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). (Click here for a more detailed write-up.)

 

4. How to Trade Gold Right Now (1/4/2016)

 

 

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.

 

(Click here for a more detailed write-up.)

 

5. Here’s The Only Emerging Market We Like Right Now (1/3/2016)

 

 

As Hedgeye Senior Macro analyst Darius Dale puts it succinctly in the video above, the Russian economy is growing and you could also get some “goodies from the Trump White House as well.”

 

6. ‘You Gotta Love Brexit’ (1/3/2016)

 

 

“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.

WHAT TO BUY...

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

 

 

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Guest Contributor: The Fed’s Impending Inflation Disaster? (Part 2)

by Dr. Daniel ThorntonD.L. Thornton Economics

 

Guest Contributor: The Fed’s Impending Inflation Disaster? (Part 2) - Inflation cartoon 07.22.2014

 

I have had a couple of responses to my impending-inflation-disaster essay suggesting that I’m the “boy who cried wolf.” They note that I (here) and others have been concerned about the potential inflation effects of the Fed’s QE policy for some time. But there’s been little smoke and no fire.

 

I am aware of the fact that the empirical relationship between money and inflation has been essentially nonexistent since the early 1980s. Indeed, early last year I argued (here) that neither the Phillips curve theory nor the monetary theory of inflation has credible empirical support.


Nevertheless, I am inclined to be concerned about inflation when money is growing abnormally fast; especially, when the rapid growth is the consequence of central bank monetary policy. The reason is the theoretical link between money and inflation is strong. Specifically, the price level is the price of goods and services in terms of money, so there is a direct link between money and prices.


According to the Phillips curve theory, inflation is related to the output gap (the gap between actual and potential output). The theory is based on the idea that there is a limit to how much an economy can produce or how fast an economy can grow. Hence, prices would rise whenever people tried to purchase more output than the economy could provide. Whether such limits exist and what they would be is an interesting metaphysical investigation.

 

Guest Contributor: The Fed’s Impending Inflation Disaster? (Part 2) - thornton figure 2

Economists have no idea what these limits are or how to measure them.

 

But, they try. No matter how potential output is estimated it turns out to be little more than a trend measure of real output. Hence, when output goes substantially above its previous trend for a period of time, as it did during the period 1995-2007 (see Figure 2 above), estimates of potential are ratcheted up. Because output has been significantly below estimates of potential since 2007, estimates of potential have been ratcheted down annually (see Larry Summers, Figure 1 below).

 

Guest Contributor: The Fed’s Impending Inflation Disaster? (Part 2) - summers figure 1

This doesn’t bother true believers.

The Phillip curve theory is nearly always wrong about inflation, but it’s never wrong! It’s a tautology. If the output gap is small and inflation accelerates, believers say “this proves the Phillip curve theory.” If the output gap is small and inflation decelerates, believes say, “the output gap is bigger than we thought.” With this kind of logic, you can never be wrong!


So here is the bottom line of this essay. I don’t know if the massive increase in M1 will ultimately result in an inflation disaster, that’s why the titled of the essay had a question mark. The relationship between M1 and inflation since the early 1980s suggests it won’t. Nevertheless, I believe it is reasonable to sound the alarm because:

  

  1. There is a direct theoretical link between central bank created money and prices
  2. The increase in M1 that has occurred is unprecedented, and
  3. M1 will continue to grow rapidly so long as the Fed’s balance sheet remains large.

EDITOR'S NOTE

This is a Hedgeye Guest Contributor research note written by Dr. Daniel Thornton. During his 33-year career at the St. Louis Fed, Thornton served as vice president and economic advisor. He currently runs D.L. Thornton Economics, an economic research consultancy. This piece does not necessarily reflect the opinion of Hedgeye.


4 Cartoons: This Week on Wall Street

Our cartoonist Bob Rich captures the tenor on Wall Street every weekday in Hedgeye's widely-acclaimed Cartoon of the Day. Below are his five latest cartoons. We hope you enjoy his humor and wit as filtered through Hedgeye's market insights. (Click here to receive our daily cartoon for free.)

 

Enjoy!

 

1. Truth (1/6/2016)

4 Cartoons: This Week on Wall Street - Wall Street cartoon

 

The truth? Wall Street's estimates of the number of jobs added by the U.S. economy in a given month are a joke

 

2. Eating Crow (1/5/2016)

4 Cartoons: This Week on Wall Street - Brexit cartoon 01.05.2016

 

"Oh have the Brexit Bears been wrong," writes Hedgeye CEO Keith McCullough. The FTSE hit yet another post-Brexit high today after the U.K.'s Services Purchasing Managers' Index (PMI) for December accelerated to 56.2 versus 55.2 in November. We still like the Pound on the long side, especially against the Euro.

 

3. Belly Up? (1/4/2016)

4 Cartoons: This Week on Wall Street - GOLDfish cartoon 01.04.2016

 

Gold prices are down -16% since peaking in early July. We say sell it.

 

4. "Euros Keep Falling On My Head" (1/3/2016)

4 Cartoons: This Week on Wall Street - Euro rain cartoon 01.03.2017

 

The Euro has weakened -11.5% versus the U.S. Dollar since last May, as the U.S. economy strengthens and Europe fumbles on fixing its many issues.

 

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Cartoon of the Day: Truth

Cartoon of the Day: Truth - Wall Street cartoon

 

The truth? Wall Street's estimates of the number of jobs added by the U.S. economy in a given month are a joke.

 

 

Click here to receive our daily cartoon for free.


ICYMI: Are You Bullish On The U.S. Dollar Yet?

 

“Mr. Macro Market is reading today's Jobs Report as bad for long-term bonds, Gold, etc. It’s bullish for the US Dollar, Higher Beta and Cyclical Stocks, etc.”

–Hedgeye CEO Keith McCullough

 

The December Jobs Report released today showed the U.S. economy added 158,000 net new jobs. On a year-over-year basis, jobs growth was 1.51%. In other words, the growth rate slowed from 1.58% for the month of November. This is a continuation of the downward trend for jobs growth (which peaked at 2.3% in February 2015).

 

Still, the number may be reaching an inflection point, in which the growth rate bottoms or even reaccelerates (click here to read more). The labor market is one of the only economic indicators not accelerating.

 

In other words, if the bottom is coming, that’s a bullish signal for #GrowthAccelerating macro positions. 

WHAT TO BUY

Plain and simple… buy the U.S. Dollar (UUP). It will trade up too on stronger U.S. growth.

 

(Note: A stronger dollar also lifts U.S. equities. Check out the 0.78 positive correlation, over the past 90 days of trading, between the dollar and the S&P 500 in the video above. This means they generally trade up (or down) together.)


5 Things to Watch In Washington as Inauguration Day Draws Near

5 Things to Watch In Washington as Inauguration Day Draws Near - z tru oba

 

Just two weeks away .. Donald Trump will be inaugurated and take control of the White House. As an exuberant U.S. stock market continues to power ahead, the question becomes will Trump deliver the promised goods? He has vowed to make a number of significant changes -- from building a wall with Mexico to rolling back Obamacare.

 

Here's a quick look at key issues investors should keep an eye on.

 

the RUSSIAN RIFT

#Moscow #Putin

 

5 Things to Watch In Washington as Inauguration Day Draws Near - z hack

 

Maverick Republican Senators John McCain and Lindsey Graham look to continue their foreign policy criticism of whomever the occupant at 1600 Pennsylvania Avenue may be. Both Senators are pushing for full investigations into the Russian hacks. And they will challenge Trump on his negative assessments of the U.S. intelligence community.

 

Other Senators are not ready to criticize Donald Trump in this realm, exposing a rift between those who aren’t quite ready to stand up to the president-elect.

 

THE RACE TO REPLACE

#Obamacare

 

5 Things to Watch In Washington as Inauguration Day Draws Near - z denied

 

In what could be the biggest surprise of the early legislative session is the Republicans plan for a 2017 ACA replacement bill. Previously it was expected that the replacement would take two to three years to be unveiled, but the looming threat of +20 million people without health care seems to have lit a fire under the new Congress. HHS Secretary-designate Tom Price and Hill Republicans will have their work cut out for them in the coming months.

 

TO PAY OR NOT TO PAY?

#Mexico #Immigration #Wall

 

5 Things to Watch In Washington as Inauguration Day Draws Near - z mex 

After spending sixteen months on the campaign trail insisting that Mexico would pay for a border wall, President-elect Trump acknowledged that the U.S. taxpayer may end up footing the bill after all. Using a bill passed during the Bush Administration, Republicans believe they can attach wall funding to a spending package in April potentially forcing a government shutdown showdown with the Democrats. Don’t worry - Trump took to Twitter insisting that Mexico will foot the bill at the end of the day.

 

NOMINATION AMALGAMATION

#Cabinet #Trump #WhiteHouse

 

5 Things to Watch In Washington as Inauguration Day Draws Near - z cap o

 

In five days multiple Senate committees will be all hands on deck on what is slated to be an unprecedented and busy day on Capitol Hill holding hearings for Trump’s cabinet nominees. The not-so-secret goal of holding five of the hearings in one day is to prevent any one pick from dominating the news cycle - some of Trump’s nominations have attracted unwelcome scrutiny and Senate Leadership is hoping to put it all out there on one day making coverage difficult.

 

SCHUMER SHOOTS FIRST

#SupremeCourt #Senate

 

5 Things to Watch In Washington as Inauguration Day Draws Near - z boys

 

The war of words between Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer has already begun over the Supreme Court vacancy. After Schumer announced that Democrats will not settle for just any nominee, McConnell claimed that America will not support the blocking of a nominee.

 

The list of potential Trump nominees makes Senate Democrats cringe potentially forcing McConnell to pull the “nuclear option.”

 


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