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Client Talking Points

OIL

Yes - oil prices like Putin. Brent Oil broke its immediate-term momentum line of $115.11 last week. But it held our TREND support line and bounced right where it should have. Higher oil prices remain the biggest risk to global consumption growth. There’s only one real way for President Obama to fight Vladimir Putin on this – weapons of mass US currency appreciation. #StrongDollar

GOLD

It's right back into crash mode for Gold and Silver this morning (Gold is down -20% year-to-date) after Gold saw its highest net long position since January. Remember, these are commodities – people chase price. The TREND resistance is firmly intact up at $1485/oz; TRADE resistance now $1389.

BONDS

This is the first morning in weeks where Treasuries, Bunds, Gilts, and JGBs all have a bid (at the same time). They havve been getting absolutely killed, so this bounce was inevitable. But it is something to watch as US, German, British, and Japanese stocks all signal immediate-term TRADE overbought within my risk range model.

Asset Allocation

CASH 32% US EQUITIES 22%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 26%

Top Long Ideas

Company Ticker Sector Duration
WWW

WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow. We think that the prevailing bearish view is very backward looking and leaves out a big piece of the WWW story, which is that integration of these brands into the WWW portfolio will allow the former PLG group to achieve what it could not under its former owner (most notably – international growth, and leverage a more diverse selling infrastructure in the US). Furthermore it will grow without needing to add the capital we’d otherwise expect as a stand-alone company – especially given WWW’s consolidation from four divisions into three -- which improves asset turns and financial returns.

HCA

Health Care sector head Tom Tobin has identified a number of tailwinds in the near and longer term that act as tailwinds to the hospital industry, and HCA in particular. This includes: Utilization, Maternity Trends as well as Pent-Up Demand and Acuity. The demographic shift towards more health care – driven by a gradually improving economy, improving employment trends, and accelerating new household formation and births – is a meaningful Macro factor and likely to lead to improving revenue and volume trends moving forward.  Near-term market mayhem should not hamper this  trend, even if it means slightly higher borrowing costs for hospitals down the road.

TROW

Financials sector senior analyst Jonathan Casteleyn continues to carry T. Rowe Price as his highest-conviction long call, based on the long-range reallocation out of bonds with investors continuing to move into stocks.  T Rowe is one of the fastest growing equity asset managers and has consistently had the best performing stock funds over the past ten years.

Three for the Road

TWEET OF THE DAY

If there is a sector more universally loved... with more groupthink than MLPs, let me know. I don't think there is. @HedgeyeENERGY

QUOTE OF THE DAY

“I would rather be vaguely right than precisely wrong.”

- Keynes

STAT OF THE DAY

The number of new applications for U.S. jobless benefits fell below 300,000 for the first time since 2006.