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HEDGEYE 2

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LEGAL

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4/11/2014 THE MACRO SHOW

June 7, 2016

HEDGEYE ASSET ALLOCATION

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4/11/2014 THE MACRO SHOW

June 7, 2016

0%

10%

20%

30%

40%

50%

60%

70%

80%

CASH U.S.EQUITIES

INT'LEQUITIES

COMMODITIES FOREIGNEXCHANGE

FIXED INCOME

74%

0% 0%

12%

24%

42%

HEDGEYE ASSET ALLOCATION

The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other asset classes is 33%.

1 2 3

USD

COMMODITIES

EUROPE

USD Burn baby burn: hawkish, dovish, hawkish, dovish – the U.S. Dollar continues to drive asset reflation. The buy signal – in U.S. Dollar being immediate-term TRADE oversold at 93.62 on the USD Index with an immediate-term range of 93.62-95.48 and a EUR/USD risk range of 1.10-1.14…is a good spot to raise cash (again) in USD.

COMMODITIES Not surprisingly, a USD oversold signal registers overbought signals in the CRB Index, Gold, and Copper. WTI’s overbought level is right around $49.99/barrel (CRB Index overbought level = 193); Copper backing off 1st, as it’s the weakest of the reflation hands short-term traders are willing to hold.

EUROPE Big mean reversion move higher this morning for European Equities (which got hammered again last week). Italian stocks are leading +1.8% on the MIB Index (after falling another -3.8% last week to -19% YTD); that’s helping U.S. Equity futures, but #EuropeSlowing is not (yet) the latest bull case for U.S. stocks.

HEDGEYE 9

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

THE GRIND LOWER OF VOL THIS CYCLE IS STARTING TO BACK UP AND INFLECT HIGHER

DATA SOURCE: BLOOMBERG

HEDGEYE 10

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

THE GRIND LOWER OF VOL THIS CYCLE IS STARTING TO BACKUP AND INFLECT HIGHER

DATA SOURCE: BLOOMBERG

HEDGEYE 11

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

PERVERSELY A U.S. RECESSION IS BEST FOR THE BIGGEST DRIVER OF EXCHANGE TRADED ACTIVITY (VOL)

DATA SOURCE: BLOOMBERG

HEDGEYE 12

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

GOLDMAN’S U.S. FINANCIAL CONDITIONS INDEX HAS RISEN INTO RECESSION THE PAST 2 CYCLES

DATA SOURCE: BLOOMBERG

HEDGEYE 13

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

AND RISING (TIGHTENING) GS FINANCIAL CONDITIONS INDEX OVERLAYS TIGHTLY WITH THE VIX

DATA SOURCE: BLOOMBERG

HEDGEYE 14

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

EUROPEAN VOL HAS THE SAME LINEAR RELATIONSHIP WITH ECONOMIC GROWTH

DATA SOURCE: BLOOMBERG

HEDGEYE 15

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

VOLATILITY IS THE CAUSAL FACTOR FOR EXCHANGE TRADING HERE SHOWN AGAINST U.S. CASH EQUITIES

DATA SOURCE: BLOOMBERG, HEDGEYE RISK MANAGEMENT ESTIMATES

HEDGEYE 16

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

STRONG RELATIONSHIP EXISTS BETWEEN EUROPEAN VOL AND EURO STOCK TRADING

DATA SOURCE: BLOOMBERG

HEDGEYE 17

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

LATE CYCLE MEANS GETTING CLOSER TO THE CLIFF AND CLOSER TO HIGHER SUSTAINED VOL

DATA SOURCE: BLOOMBERG, HEDGEYE RISK MANAGEMENT ESTIMATES

HEDGEYE 18

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

LATE CYCLE MEANS GETTING CLOSER TO THE CLIFF AND CLOSER TO HIGHER SUSTAINED VOL

DATA SOURCE: BLOOMBERG, HEDGEYE RISK MANAGEMENT ESTIMATES

HEDGEYE 19

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

AND THE $64,000 QUESTION OF DOES HIGHER VOL TURN INTO REVENUE ON BOTH SIDES OF THE POND?

DATA SOURCE: BLOOMBERG, HEDGEYE RISK MANAGEMENT ESTIMATES

HEDGEYE 20

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

CORPORATE SPREADS OVER TREASURY ALWAYS RISE INTO RECESSIONS PRESSURING CORPORATE LIQUIDITY

DATA SOURCE: BLOOMBERG

HEDGEYE 21

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

WHICH RESULTS IN AN ADVANTAGE IN LOWER COST OF CAPITAL FOR THE INDUSTRY

DATA SOURCE: BLOOMBERG

HEDGEYE 22

OLD FORMAT = $800/SQUARE FT NEW FORMAT = $1,300 SQ FT

THE FUTURES EXCHANGES SKEW THE COMPS BUT WE THINK #’S ARE TOO LOW AND MARKET CAP WILL GROW

DATA SOURCE: BLOOMBERG, COMPANY ESTIMATES

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June 7, 2016

HEDGEYE MACRO PROCESS: RATE OF CHANGE

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REUTERS/JEFFERIES CRB INDEX

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LABOR MARKET CONDITIONS INDEX

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THINK WE’RE LAPPING BAD COMPS BY Q2?

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HEDGEYE SECTOR PERFORMANCE

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HEDGEYE SECTOR RELATIVE PERFORMANCE

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HEDGEYE STYLE FACTOR PERFORMANCE

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HEDGEYE RATES & SPREADS

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CFTC NON-COMMERCIAL NET LONG POSITIONING

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MARKET SHARE VOLUME & TOTAL VALUE TRADED