Client Talking Points
Don’t take my word for it – the bond market has had this nailed for 4.5 months. The 10-year yield of 2.65% (with immediate-term TRADE resistance of 2.67%) couldn’t care less about what high-multiple momo stock bounced on no volume yesterday.
There are crickets in the currency market this morning as the Euro/Pound/Yen complex moves like 10 beeps. That’s not going to cut it in arresting the bearish TAIL risk the US Dollar Index has developed in 2014...neither will it slow #InflationAccelerating in the US.
Calling total US Equity Volume a cricket yesterday wouldn’t be giving it its due credit! On the “all-time-high” CNBC Dow cheers (RUT and QQQ are down -5% to -6% from their year-to-date highs) volume was down -10% and -31% versus one-month and three-month averages, respectively.
|FIXED INCOME||24%||INTL CURRENCIES||22%|
Top Long Ideas
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.
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.
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
Italy's consumer prices remain relatively low as CPI comes in at +0.6% y/y APR #StrongEuro @KeithMcCullough
QUOTE OF THE DAY
“You miss 100% of the shots you don’t take.” – Wayne Gretzky
STAT OF THE DAY
49, the number of points LeBron James scored for the Miami Heat last night in a playoff victory against the Brooklyn Nets. That tied his career playoff high for points.