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Client Talking Points

JAPAN

No more mo-mo for those expecting the Bank of Japan to get looser than the 60-70 TRILLION Yen per year (“We are not considering any kind of additional easing now” – Kuroda). So, not surprisingly, the Yen is up and Nikkei is down another -1.4% (-3.1% in 2 days to -9.7% year-to-date). Needless to say, we remain bearish on both Japanese growth and equities.

EMERGING MARKETS

Buy every Bernanke Bubble that imploded in 2013 (Gold, Bonds, Emerging Markets). Brazil is up another +2.1% in a nasty US equity tape yesterday – you gotta love that divergence – and Turkey is up +1% to +9.3% year-to-date. Consensus macro bets are not in the area code of being positioned for this.

COMMODITIES

Nasdaq is down -6.4% since March 5th. What did the CRB Index (19 Commodities) do on that yesterday? #Nothing. It was flat on the day at 305 as #InflationAccelerating continues to get paid. Gold? It is up +1.2% this morning too, which is cool. Our Q2 Macro Themes call is today at 11 a.m. EST.

Asset Allocation

CASH 34% US EQUITIES 4%
INTL EQUITIES 8% COMMODITIES 16%
FIXED INCOME 18% INTL CURRENCIES 20%

Top Long Ideas

Company Ticker Sector Duration
HOLX

Hologic is emerging from an extremely tough period which has left investors wary of further missteps. In our view, Hologic and its new management are set to show solid growth over the next several years. We have built two survey tools to track and forecast the two critical elements that will drive this acceleration.  The first survey tool measures 3-D Mammography placements every month.  Recently we have detected acceleration in month over month placements.  When Hologic finally receives a reimbursement code from Medicare, placements will accelerate further, perhaps even sooner.  With our survey, we'll see it real time. In addition to our mammography survey. We've been running a monthly survey of OB/GYNs asking them questions to help us forecast the rest of Hologic's businesses, some of which have been faced with significant headwinds.  Based on our survey, we think those headwinds are fading. If the Affordable Care Act actually manages to reduce the number of uninsured, Hologic is one of the best positioned companies.

OC

Construction activity remains cyclically depressed, but has likely begun the long process of recovery.  A large multi-year rebound in construction should provide a tailwind to OC shares that the market appears to be underestimating.  Both residential and nonresidential construction in the U.S. would need to roughly double to reach post-war demographic norms.  As credit returns to the market and government funded construction begins to rebound, construction markets should make steady gains in coming years, quarterly weather aside, supporting OC’s revenue and capacity utilization.

DRI

Darden is the world’s largest full service restaurant company. The company operates +2000 restaurants in the U.S. and Canada, including Olive Garden, Red Lobster, LongHorn and Capital Grille. Management has been under a firestorm of criticism for poor performance. Hedgeye's Howard Penney has been at the forefront of this activist movement since early 2013, when he first identified the potential for unleashing significant value creation for Darden shareholders. Less than a year later, it looks like Penney’s plan is coming to fruition. Penney (who thinks DRI is grossly mismanaged and in need of a major overhaul) believes activists will drive material change at Darden. This would obviously be extremely bullish for shareholders and could happen fairly soon driving shares materially higher.

Three for the Road

TWEET OF THE DAY

#StrongPound $1.67 vs USD - I'll take Carney vs Yellen on protecting the currency all day long @KeithMcCullough

QUOTE OF THE DAY

"Don't be afraid to be unique or speak your mind, because that's what makes you different from everyone else." - Dave Thomas

STAT OF THE DAY

The hunt for missing Malaysian Airlines Flight MH370 is on track to cost hundreds of millions of dollars, becoming the most expensive search in aviation history with 26 countries contributing planes, ships, submarines and satellites. A month into the search for the jet, estimates compiled by Reuters show that at least $44 million has already been spent on the deployment of military ships and aircraft in the Indian Ocean and South China Sea. (NBC News)