Go With The Flow

Client Talking Points

The 10-Year Fight

The 10-Year US Treasury is testing its TAIL risk line of 1.84% this morning after flirting with 2.0% last week. Our current risk range for the 10-year is 1.84-1.94%, so a lot can happen today. You have to be ready to move with the markets and the newsflow at a moment’s notice and we’ll be prepared to buy or short Treasuries when our models tell us to do so. The big risk to #Growth right now is our government and the debt ceiling debacle that will occur in mid-Feb/early-March. Boehner vs ‘Bama will be the ultimate catalyst for the 10-year, so keep your eyes open and vision clear.

The Big Three

Our Q1 2013 Global Macro Themes call takes place at 1PM today. We’ll be live-tweeting it to our Twitter followers on @Hedgeye as we embrace social media and get feedback from our subscribers/followers. We’ll be focusing on #GrowthStabilizing, the housing market, and Japan’s economy and how they’re so keen on devaluing the yen. These three topics will become the focal point of our discussions over the next few weeks in addition to our regular commentary on the markets. One important thing to remember is that if you want to buy stocks, buy the ones that aren’t at 52-week highs; buy the names that have plenty of room to move to the upside.

Asset Allocation

CASH 55% US EQUITIES 15%
INTL EQUITIES 15% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 15%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

ADM

ADM has significantly lagged the overall market in 2012 over concerns that weakness in the company’s bioproducts (ethanol) and merchandise and handling segment will persist. Ethanol margins suffered from higher corn costs, as well as weak domestic demand and low capacity utilization across the industry. Merchandising and handling results were at the mercy of a smaller U.S. corn harvest. Both segments could be in a position to rebound as we move into 2013 and a new crop goes into the ground. With corn prices remaining at elevated levels, the incentive to plant corn certainly exists, and we expect that we will see corn planted fencepost to fencepost.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

“Ugly Empire Fed... prices paid skyrockets; New Orders fall deeper into -ve territory, labor measures continue to be in contraction.” -@BergenCapital

QUOTE OF THE DAY

“A billion here, a billion there, pretty soon it adds up to real money.” -Senator Everett Dirksen

STAT OF THE DAY

U.S. December retail sales increase 0.5%; ex-autos rise 0.3%


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