First Call - Hedge Fund Telemetry

S&P futures down 0.3% after US equities finished mostly higher on Monday with S&P snapping a four-day losing streak. Asian equities mixed overnight. Japan outperformed, while China was on the defensive again. European markets mostly weaker, giving back some early gains. Treasuries weaker across the curve. Dollar firmer vs yen and euro. Gold slightly lower. WTI crude up 0.2%.
Pretty quiet from a headline perspective. US-EU trade talks made some progress, but no meaningful breakthroughs and press discussed myriad challenges ahead. US-China relations may be about to deteriorate further with report White House considering sanctions over Muslim detention camps. Reuters also reported China to ask WTO for permission to impose sanctions on US.
Not much on the data front. US small business optimism hit record high. German ZEW surprised to upside. UK wage growth faster than expected. Also quiet in terms of corporate news. IDTI to be acquired by Japan’s Renesas for $6.7B. Bloomberg reported Chinese consortium has scrapped pursuit of YUM China. Sonos results and guidance largely in line, but elevated expectations a headwind on stock.
Path of least resistance for US equities has recently been lower. Blame has gone to expected escalation of trade tensions between US and China, EM worries and widening economic performance gap between US and RoW, all of which have boosted dollar. Rotation out of popular longs in tech, weak seasonality and renewed bond yield backup also flagged as stumbling blocks.
Hurricane Florence is set to hit the east coast as a Category 4, with the bigger risk being how slow it’s moving (and subsequent risk of flooding from rain). Bloomberg already quoting $25B+ in potential damage as over 1M people have been asked to evacuate
British Pound is making fresh 6 week highs given ongoing optimism that a Brexit deal with Europe is "realistic and possible" per the EU chief negotiator yesterday. Also Mark Carney has agreed to stay on at Bank of England until 2020.
US rates drifting higher post Friday’s strong NFP wage gains. The 10 Yr yield is now +2 bps to 2.95%, highest level in over a month.
On today's Daily Note I am going to look at how Jeff Gundlach "The Bond King" might have it all wrong with his analysis of the Commitment of Traders large speculator short position in the US 10 Year Bond.

The new website will launch this weekend as we are nearly finished but we want to do a little more testing to avoid any potential bugs.

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