“Coming together is the beginning; keeping together is progress; working together is success.”
-Henry Ford
Our thoughts and prayers this morning go out to the folks that are in the path of Hurricane Irma. It seems that with the combination of Hurricane Harvey, Hurricane Irma and the 8.1 magnitude earthquake off the coast of Mexico early this morning we have about hit our limit on natural disasters.
The silver lining of these events is that they naturally lead people to work together and come out stronger on the other side. The quote from Henry Ford above is apropos in that regard. But working collaboratively is not natural for many of us.
In a recent article in the Harvard Business Review Ron Ashkenas discussed the challenges academic research teams face in working together and concluded the following:
“They did what came naturally, which is to work either completely or partially on their own. … [T]rue collaboration … requires subordinating individual goals to collective achievement; it means engaging in tough, emotional give-and-take discussions with colleagues about strategies and ideas; and it often leads to working in new ways that may not be comfortable or easy. So given these difficulties, most teams find it easier to talk about collaboration rather than do it.”
No doubt we have all experienced this. Working as an effective team is difficult, but it has also proven to improve both the performance of individuals and their organizations. Professors Susan Cohen and Diane Bailey from the University of Southern California reviewed six years of studies on teamwork and their conclusion from the review was, unsurprisingly, that:
“Organizations which emphasize more on teams have results in increased employee performance, greater productivity and better problem solving at work.”
As John Donne famously wrote “No man is an Island” and, as the research shows, if he (or she) is an island they are likely to be a less productive one than their team oriented colleagues.
Back to the Global Macro Grind…
Speaking of teamwork, the Hedgeye team has a number of noteworthy upcoming events that feature many of our teammates, specifically:
- September 27th – We are hosting a half day Macrocosm conference in Boston. We’ve included the agenda as the Chart of the Day, but the speakers include our resident Demographer Neil Howe, Jurrien Timmer who is the Director of Global Macro at Fidelity Investments, and David Hoppe who was Paul Ryan’s former Chief of Staff;
- October 4th – We are co-hosting a short idea conference in London, which will feature new short ideas from our Energy Sector Head Kevin Kaiser and Retail Sector Head Brian McGough;
- October 11th – We are hosting an energy policy conference in New York. The confirmed speakers so far include His Excelllency Chakib Khelil who is the former President of OPEC and the Honorable Robert Powelson who is the current Commissioner of the Federal Energy Regulation Commission; and
- November 8th – We are hosting a half day Macrocosm conference in NYC. The speakers will include among others Joseph (Jody) LaNasa III, Founder and CIO of Serengeti Asset Management, LTG (Ret.) Dan Christman, senior counselor to the President of the U.S. Chamber of Commerce, and Axel Merk, President and CIO of Merk Investments.
For details on all of these and to reserve a spot, please email .
We saw a glimpse of teamwork from Washington, DC in the last 24 hours. As my colleague JT Taylor highlighted this morning, Trump and his new “teammates” sealed the deal to raise the debt ceiling, extend government funding and provide further disaster relief for Hurricanes Harvey and Irma. The deal cleared the Senate by a vote of 80 – 17 and we think will clear the House, albeit with an ironic Democratic majority. #Teamwork
For the time being the potential for a negative market catalyst due to gridlock over the debt ceiling and government appears to be off the table, so it’s back to the economy and corporate earnings. But of course, there is also North Korea.
Perversely, the North Korean situation is also shaping up to be a positive teamwork catalyst for leaders and nations that normally have more conflicting interests. The most recent example of this is German Chancellor Angela Merkel and Chinese President Xi Jinping agreeing on a call last night on the need to tighten sanctions on North Korea.
Converse to the idea of teamwork over the last 24 hours is commentary from our central bankers. A couple points to highlight:
- The New York Fed’s Dudley noted late Thursday that it is still appropriate to remove accommodation, the WSJ reported (presumably with some sources) that low inflation is giving the Fed second thoughts about raising rates in December, and the CME’s Fed Watch shows odds at 31% of a hike in December. Meanwhile the U.S. dollar is down almost 2% on the week . . . Further, according to a survey by the WSJ, 75% of economist expect a Fed hike in December. Confused yet?
- Meanwhile in Europe, it seems that the ECB has agreed on a stimulus cut, but even that comes with some caveats. It might cut asset purchases to $40 billion or $20 billion, it might occur over 6 or 9 months, but any decision should come with broad consensus. Meanwhile Bundesbank chief Weidmann emphasized “low inflation” and a “decision to wait”.
It really would be asking for too much for central bankers to agree on monetary policy at the same time as global leaders are cooperating on foreign policy and congressional leaders are cooperating with President Trump. So much for the perfect storm of global leadership!
Our immediate-term Global Macro Risk Ranges are now:
UST 10yr Yield 2.02-2.17% (bearish)
SPX 2 (bullish)
RUT 1 (bearish)
NASDAQ 6 (bullish)
XOP 29.09-31.29 (bearish)
Keep your head up and stick on the ice,
Daryl G. Jones
Director of Research
