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THE INTERVENTION

CLIENT TALKING POINTS

THE INTERVENTION

When you think of an intervention, perhaps a friend who drinks too much comes to mind. But we’re thinking of an intervention that’s far too big to control and one that involves Big Government. Ben Bernanke’s intervention in the global marketplace has given us false markets with gilded data. We now have shorter economic cycles (per each QE announcement) and heightened market volatility. Keep in mind that each announcement related to QE is NOT a good thing. Just because you have a short-term gain doesn’t mean you’ll escape the long-term pain. Stocks are down for the last 8 out of 10 days; does that sound awesome to you?

THOSE POLITICIANS

After watching HBO’s latest hit “Boardwalk Empire” last night, we ask ourselves: who’s more crooked? The politicians of today or yesteryear? At this rate, it doesn’t even matter anymore. Romney should be out there saying he’ll get rid of Bernanke and returning strength and trust to the US dollar. Meanwhile, Obama is doing much of the same old nonsense we’ve experienced for the last four years. As long as the market is up according to some metric, that’s good in an election year. Keith summed it up quite nicely this morning in his Early Look:

The Obama/Bernanke money printing theory suggests that if A) you devalue your currency, B) you’ll see “exports” rise. Whereas, in the real world, when you print money A) input + consumer costs rise, and B) real-inflation-adjusted growth slows.”

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ASSET ALLOCATION

Cash:                UP

U.S. Equities:   DOWN

Int'l Equities:   DOWN   

Commodities: Flat

Fixed Income:  Flat

Int'l Currencies: Flat  

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TOP LONG IDEAS

NIKE (NKE)

Nike’s challenges are well-telegraphed. But the reality is that its top line is extremely strong, and the Olympics has just given Nike all the ammo it needs to marry product with marketing and grow in the 10% range for the next 2 years. With margin pressures easing, and Cole Haan and Umbro soon to be divested, the model is getting more focused and profitable.

  • TRADE:  LONG
  • TREND:  LONG
  • TAIL:      LONG            

PACCAR (PCAR)

Emissions regulations in the US focusing on greenhouse gases should end the disruptive pre-buy cycle and allow PCAR to improve margins. Improved capacity utilization, truck fleet aging, and less volatile used truck prices all should support higher long-run profitability. In the near-term, Paccar may benefit from engine certification issues at Navistar, allowing it to gain market share. Longer-term, Paccar enjos a strong position in a structurally advantaged industry and an attractive valuation.

  • TRADE:  LONG
  • TREND:  LONG
  • TAIL:      LONG

LAS VEGAS SANDS (LVS)

LVS finally reached and has maintained its 20% Macau gaming share, thanks to Sands Cotai Central (SCC). With SCC continuing to ramp up, we expect that level to hold and maybe, even improve. Macau sentiment has reached a yearly low but we see improvement ahead.

  • TRADE:  LONG
  • TREND:  NEUTRAL
  • TAIL:      NEUTRAL

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THREE FOR THE ROAD

TWEET OF THE DAY

“I can't wait for Friday's Jobs Report to see how many jobs QE3 created already #sarcasm” -@jfahmy

QUOTE OF THE DAY

“Facts do not cease to exist because they are ignored.” -Aldous Huxley

STAT OF THE DAY

Spanish government bonds rose for the third straight day post-stress tests with the 10-year yield dropping six basis points to 5.88%.