December Taper? "No Chance"

Client Talking Points

CHINA

The Shanghai Composite was down -0.45% overnight making it 6 straight down days and a snap of Hedgeye’s intermediate-term TREND line again (2196). The rest of Asia mixed with Nikkei +0.8 (up for only the second day in the last 6.

UK

What's that? Yet another rock-star economic data point out of the UK as consumer prices (CPI) fall to +2.1% year-over-year  (verssu 2.2% last month). That’s what #StrongPound gets you: purchasing power via a tax cut for The People – still love Cable.

US DOLLAR

It's sad sitting here watching the Dollar burn. The Greenback is now down for the 6th consecutive week ahead of Ben Bernanke’s final Buck Burning test. But don’t worry! At the Fed’s 100th year anniversary (which no one cared about) yesterday, Bernanke said “during the Fed’s finest hours, we stood up to political pressures.” Huh?

Asset Allocation

CASH 48% US EQUITIES 6%
INTL EQUITIES 6% COMMODITIES 8%
FIXED INCOME 8% INTL CURRENCIES 24%

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

if $LNCO trades up today, @jimcramer is a genius. If it trades lower, it's a #bearraid @HedgeyeEnergy

QUOTE OF THE DAY

"A ship is safe in harbour, but that's not what ships are for." -William Shedd

STAT OF THE DAY

Michael Jordan's 56,000-square-foot home failed to sell at auction Monday after lingering on the market for nearly two years. The former Chicago Bulls basketball star initially listed the home at $29 million in February 2012. Later, the asking price was cut to $21 million. The home was built in 1994. (CNN)


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Todd Jordan on Las Vegas Sands Earnings

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