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$FXB: Don't Mess With The Pound

Takeaway: We remain bullish on the British Pound (via FXB).

After another blockbuster economic data point out of the UK this morning (November Construction PMI 62.6! vs 59.3 in October), the Pound continues to pound the Burning Buck at $1.64 versus the US Dollar.

 

$FXB: Don't Mess With The Pound - uk99

 

Guess what? It can go a lot higher from here.

 

Especially if the Fed engages in open-market storytelling about why the ISM growth data (best in 3 years) isn’t enough to taper.

 

Yes - we remain bullish on the British Pound (via FXB).

 

Incidentally, all of those Keynesian college professors who said austerity would kill the UK (Danny Blanchflower at Dartmouth)?

 

They are eating crow.

 

$FXB: Don't Mess With The Pound - UK Construction PMI



[podcast] mccullough: buy the damn bubble? (#btdb)

Hedgeye CEO Keith McCullough explains what he's thinking and doing on this morning's macro conference call and why Simon "Chartreuse" Potter at the NY Fed is a piece of work. 

 


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POUND

After another blockbuster economic data point out of the UK this morning (November Construction PMI 62.6! vs 59.3 in October), the Pound continues to pound the Burning Buck at $1.64 versus the US Dollar. Guess what? It can go a lot higher from here. Especially if the Fed engages in open-market storytelling about why the ISM growth data (best in 3 years) isn’t enough to taper. Unbelievable. 

GOLD

Rates down means Gold up this morning (following rates up and Gold getting slammed yesterday). ‘Tis the season and the end of a fantastic year of being long growth and short the anti-christ of it (Gold). Capitulation in Gold should happen as US growth expectations lock in 1-year highs. Thursday’s US GDP print for Q313 should be the top in growth, sequentially.

RUSSIA

Mother Russia remains in a body bag this morning. She's leading the European Equity decline (as it has all year). The RTSI is down -1.9% to -6.1% year-to-date. Now all we need is for Brent Oil to snap its TAIL risk line of $108.69 again. If that happens, Vladimir Putin will have more issues than the Ukraine. That's saying something.

Asset Allocation

CASH 58% US EQUITIES 4%
INTL EQUITIES 4% COMMODITIES 4%
FIXED INCOME 4% INTL CURRENCIES 26%

Top Long Ideas

Company Ticker Sector Duration
FXB

Our bullish call on the British Pound was borne out of our Q4 Macro themes call. We believe the health of a nation’s economy is reflected in its currency. We remain bullish on the regime change at the BOE, replacing Governor Mervyn King with Mark Carney. In its October meeting, the Bank of England voted unanimously (9-0) to keep rates on hold and the asset purchase program unchanged.  If we look at the GBP/USD cross, we believe the UK’s hawkish monetary and fiscal policy should appreciate the GBP, as Bernanke/Yellen continue to burn the USD via delaying the call to taper.

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.

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

The "January Effect" gets priced in in December with 9 of the 13 Decembers since 2000 being +1% for the S&P @hedgeyeJC

QUOTE OF THE DAY

"It's hard to beat a person who never gives up." -Babe Ruth

STAT OF THE DAY

Sony's PlayStation 4 may be turning into the hit the company needs. Global sales of the game console topped 2.1 million as of Dec.1, just two weeks after it was launched in the U.S. and Canada and three days after it was made available in other markets.


THE M3: H7N9 BIRD FLU

THE MACAU METRO MONITOR, DECEMBER 3, 2013

 

 

HONG KONG CONFIRMS 1ST HUMAN H7N9 BIRD FLU CASE WSJ

Hong Kong is on public-health alert after the city confirmed its first human case of the deadly H7N9 bird flu, with an Indonesian domestic worker hospitalized in critical condition.  Health secretary Ko Wing-man said the government has raised its influenza pandemic response level to "serious" from "alert."  The number of human H7N9 infections in China has dropped significantly in recent months.  As of early November, there were 139 confirmed human cases of H7N9 and 45 deaths reported since April, according to the WHO.

 




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