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investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

McCullough: 7 Of My Favorite Long & Short Ideas

What should investors buy or Sell today?

We’ve got some answers… 


Each morning, Hedgeye CEO Keith McCullough reviews our asset allocation model for subscribers then breaks down the changes we made versus the prior day. As McCullough says in the video excerpt from The Macro Show above:


“The two big buckets of asset allocation that we’d be net long are U.S. equities and foreign currencies.”

Oil, Dollar, Pound Versus Gold, Bonds, China...

Within U.S. equities, we like oil-related ETFs like Oil & Gas stocks (XOP) and the plain-old commodity Oil (USO). “We had oil and gas on sale earlier this week so XOP is our favorite high beta way to play energy stocks in particular.”


Essentially, after the -2% pullback in oil and gas stocks in the past week this is an efficient way to play our view that stocks are headed higher on U.S. growth is accelerating.


McCullough continues:


“Then on our favorite currency continues to be the ETF for the bullish position on the U.S. Dollar (UUP). Our second favorite currency is still FXB or the British Pound.”


The simple summation on these currency bets is that growth in both the U.S. and U.K. economies is accelerating.


We’d also short exposures that fall when the U.S. economy is growing, like Gold (GLD) and Long Bonds (TLT). Conversely, we think China is slowing so short big cap Chinese stocks (FXI).


Want to dig into each of these ideas further?

Click here to watch The Macro Show from which this clip is pulled, in its entirety. Also, here’s some required reading on each of the aforementioned long and short ideas.



Poll of the Day: Which Country Poses the Biggest Risk to Global Market Stability?

Takeaway: What do you think? Cast your vote. Let us know.

Poll of the Day: Which Country Poses the Biggest Risk to Global Market Stability? - thunderstorm image



5 Things To Watch Right Now In Washington

5 Things To Watch Right Now In Washington - z dmm

Presiding over a fiery press conference... 


...his first formal news conference since his Nov. 8 election victory, President-elect Donald Trump on Wednesday went after CNN and Buzz Feed hard for publishing what he called "fake news," denounced the publishing of claims he had been caught in a compromising position in Russia, and attacked U.S. intelligence agencies over the information leak.


Trump also discussed his plans to bring U.S. manufacturing jobs back from overseas plants and denounced drug companies for "getting away with murder" on pricing. Healthcare stocks took a hit following Trump's comments.


At a bare minimum, it's going to be an interesting and entertaining four years.


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



#Trump #Cabinet #ConfirmationHearings


5 Things To Watch Right Now In Washington - z tillerson


As confirmation hearings began yesterday, three Trump nominees will face the most scrutiny in the Senate starting with Secretary of State-designate Rex Tillerson who will face tough questioning for his well-publicized ties to Russia, but now will see questions about Exxon’s business dealings in Iran.


Secretary of Treasury-designate Steve Mnuchin will be probed for his over questionable business practices between a bank he ran and a movie studio he chaired. The last pick that may face the toughest time is Secretary of Labor Nominee Andrew F. Puzder who is an outspoken critic of raising the minimum wage and Obamacare.  


Despite the fireworks we expect all of Trump’s nominees to sail through -  especially with coverage over the next 24 hours focusing on President Obama’s farewell and President-elect Trump’s first press avail in months.



#TaxReform #Paul Ryan


5 Things To Watch Right Now In Washington - z paul ryan


In an effort to bring team Trump into the fold, senior advisors to the president-elect met with Speaker Paul Ryan regarding the House Republican plan for tax reform. Ryan, who is steeped in tax policy, is working from his “Better Way” tax proposal which will serve as the blueprint for the effort starting in the Ways and Means Committee.


While Congress is leading the charge, Ryan and incoming chief of staff Reince Preibus are looking to ensure that both sides are singing from the same hymnal - especially when it comes to border adjustability as well as territorial tax proposal ending taxation of overseas profits of U.S. multinational corporations.



#RegulationNation #RedTape


5 Things To Watch Right Now In Washington - z regulation


The little used and very powerful Congressional Review Act (CRA) will be dusted off in the early days of the Trump Administration. The law has only been used once in its 20-year history and will  make up for lost time the coming months. Trump and Congress both want to overturn many Obama era rules even though employing CRA will have a negative impact on executive power; once a rule is overturned by the CRA, a new rule that is substantially the same cannot be issued making it difficult for any future president to propose a rule that covers a similar area.





5 Things To Watch Right Now In Washington - z obamacare


What was thought to  be a quick and easy repeal of Obamacare has run into a buzzsaw of sorts.  A diverse mix of Hill constituencies from Libertarian KY Senator Rand Paul to conservative AR Senator Tom Cotton to moderate TN Senator Bob Corker have all expressed varying levels of discontent to repealing the law without a plan for replacement. All of them are now pushing for immediate replacement of the ACA.  And, just in time - President-elect Donald Trump is now calling for a replacement plan within weeks of repeal.





5 Things To Watch Right Now In Washington - z reset


Senator Ben Cardin (D-MD), Ranking Member of Senate Foreign Relations Committee is preparing a bill that would provide congressional authorization for economic sanctions against Russia. The bill has bipartisan support - notably from Senators John McCain and Lindsey Graham. This could cause an early faceoff between the Senate and President-elect Trump over the direction of U.S. policy with Russia.

the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

ICYMI: A Simple Way to Profit on Oil’s Bullish Trend


“I’m not just bullish on oil because oil is going up. On the up moves in oil, we’ve seen rising volume and breaking down volatility.”

–Hedgeye CEO Keith McCullough


Oil prices have been bouncing around lately on speculation about whether the 14-member country cartel OPEC can control its supply of oil and boost prices. For investors, that may be just a distraction. Prevailing macro trends suggest that Oil’s volatility, or the CBOE Crude Oil Volatility Index ETF (OVX) will continue to break down (-11% in the past 3 months).


That’s a bullish signal for oil prices and oil-related stocks.


As long as crude’s volatility stays below $37 (it’s currently $33.84), the signal on oil should remain bullish. “Oil’s volatility is now comfortably below the trend. And the trend is your friend provided that oil volatility is below 37,” says McCullough in the video above.


What to Buy

The Oil & Gas Exploration and Production ETF (XOP) is towards the low end of its risk range, $40.09 - $42.81. So buy it.


Cartoon of the Day: Japan's Hungry Bulls

Cartoon of the Day: Japan's Hungry Bulls - Nikkei bull munching cartoon 1.11.2017


Simple... Yen = Nikkei 


In the past three months, the Yen has weakened -10% against the U.S. Dollar. The Nikkei is up 15% over that same period.



Click here to receive our daily cartoon for free.

Cha-Ching! U.S. Wage Growth Hits Post-Recession High

Cha-Ching! U.S. Wage Growth Hits Post-Recession High - money money


After years of stagnation, worried Rust Belt Trump voters are finally getting the bump up in their pay stubs for which they've long yearned. More is coming. None of this has anything to do with Trump and everything to do with the U.S. economic cycle. Here's why.


Wage growth is finally breaking out. Average hourly earnings growth hit a post-recession high last Friday, of +2.9% year-over-year. This should come as no surprise to anyone really (and to the relief of Federal Reserve officials, who have been hoping for wage gains to justify further rate hikes). The dynamics are fairly simple. Ask yourself this simple question (below is our answer):


Q: What happens when the pool of available labor shrinks to new lows in both absolute and relative terms?


A: Employment growth slows because you can’t hire fast enough (i.e. the easy gains have been made) and wage growth accelerates because the negotiating dynamics shift from a buyers to a sellers’ market.


Let's run through the numbers.

Demand for Workers , Supply = Wages 

#JobsGrowth #NFP 


It's not entirely complicated.


"The typical progression of slowing employment growth and accelerating wage growth should make a ton of sense for anyone with some familiarity of ninth grade macroeconomics," writes Hedgeye Senior Macro analyst Darius Dale in today's Early Look.


As you can see in the Chart of the Day below, the ratio of available labor to job openings fell to 2.4 in November from 2.5 in the prior month. Jobs growth on a year-over-year basis continues to slow to +1.51%, down -77 basis points from its February 2015 peak of +2.28%.


Cha-Ching! U.S. Wage Growth Hits Post-Recession High - Chart of the Day 1 12 17

Wages  = Consumption 

#Wages #Earnings #Consumption #GDP


Wage gains will continue to filter down into consumption and provide further support to our view that the U.S. economy is accelerating. Consumption growth continues to track the broader economy and suggest that both have bottomed out and are now re-accelerating:


  • Real Consumption Growth (year-over-year): peak 3.64% (March 2015) to bottom 2.37% (March 2016) to re-acceleration 2.78% (September 2016)
  • U.S. GDP Growth (year-over-year): peak 3.3% (March 2015) to bottom 1.3% (June 2016) to re-acceleration of 1.7% (September 2016)


This relationship isn't altogether shocking since U.S. Consumption makes up 70% of GDP. Prior to this, the U.S. economy had been relying on revolving credit to fill in for slowing wage growth and help backstop consumption. With both now rising, the U.S. economy is poised to grow.

Bottom Line

Rust Belt voters may finally get the relief they so desperately deserve after a protracted recession in the industrial side of the economy. Don't praise Trump. Simply put, the U.S. economy is accelerating once again.