Feeling Fresh

Client Talking Points

Flying High

Fresh new year-to-date highs in the S&P 500 and Russell 2000 from yesterday’s close? You betcha. Same goes for Japan and China, too. You have to keep in mind that #GrowthStabilizing is part of the global macroeconomic picture; it’s not just the United States that reaps the benefits of a bull market. What’s important is that you don’t get caught up in the frenzy and lose sight of your goals and the amount of risk you’re comfortable with. Our models tell us the following is happening:

 

  • US Stocks (SP500) immediate-term TRADE overbought in the 1510-1513 range
  • US Equity Volatility (VIX) immediate-term TRADE oversold in the 11.98-12.04 range
  • US Dollar Index immediate-term TRADE oversold at $79.41
  • US Treasury Yields (10yr) immediate-term TRADE overbought at 2.04%

 

Guess what? China and Japan are overbought, too. Same goes for the Euro and the DAX. Markets go up and until they don’t and with Brent Crude oil approaching $115 a barrel very quickly, that kind of problem can cause growth to slow, causing consumption to slow. See where we’re going here? Still, any market bears are in for a rude awakening if they stick to their plan to short everything and not take advantage of the rallies. 

Asset Allocation

CASH 46% US EQUITIES 18%
INTL EQUITIES 18% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 18%

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.

FDX

With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view.

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

“So I guess New Jersey is responsible for 2% plus in GDP. That's a lot of tomatoes.” -@ThemisSal

QUOTE OF THE DAY

“The world is full of willing people, some willing to work, the rest willing to let them.” -Robert Frost

STAT OF THE DAY

Jan. ADP Employment Report: Prior 215k, Market Expects 175k , Actual 192k


Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

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

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more