Biderman to McCullough: Beware the 'Ides of April'

ICI Fund Flow Survey, Refreshed

Takeaway: YTD weekly average inflow for equity mutual funds is now $4.7 billion, an improvement from the $3 billion weekly average inflow for 2013.

Total equity mutual funds produced another week of inflow with $3.1 billion of net subscriptions, a deceleration from the $5.3 billion inflow the week prior.


The $3.1 billion inflow had a domestic fund bias during the most recent 5 day period ending March 12th, with $1.9 billion flowing into U.S. equity funds and $1.2 billion flowing into international stock funds.


The 2014 running weekly average inflow for equity mutual funds is now $4.7 billion, an improvement from the $3.0 billion weekly average inflow for 2013.


ICI Fund Flow Survey, Refreshed - flowbie


Of note, the most recent ICI fund flow survey relayed the strongest taxable bond fund flow in well over 3 quarters since May of 2013


Continued positive equity mutual fund inflow currently supports our long recommendation on T Rowe Price (TROW) which benefits from this trend with a leading retail equity mutual fund franchise.


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Editor’s note: TROW was added to Investing Ideas in late August. Click here to learn more about this product and how you can subscribe. 

Cartoon of the Day: Punishing Savers

Takeaway: Damn the long-standing American principle of "Franklin Frugality." America continues to destroy its citizens' hard-earned currency.

Cartoon of the Day: Punishing Savers - Saver03.21.2014

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Fresh Bubble Highs

Client Talking Points


After testing Bull patience for a few weeks, both the EuroStoxx50 and EuroStoxx600 have recovered Hedgeye TREND supports. Over in Germany, the DAX has too this morning (TREND support = 9315) as EUR/USD holds $1.37 TRADE support. Short USD versus long EUR.


VIX front-month is toying with all-time-SPY high emotion here this morning. And it should. While my model says Volatility makes a lower-high on the selloff, the breakdown through 14.72 TREND support is bullish for another SPY ramp to overbought highs. #PainTrade.


I love that Goldman Sachs is saying $1,050 gold, because nothing in my notebook agrees with that. Nothing. Gold tested and tried $1,318 support (TREND support underpins that at $1,278) and held it like a champ (long). The 10-year yield is < 2.81% TREND resistance.

Asset Allocation


Top Long Ideas

Company Ticker Sector Duration

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.


We remain bullish on the British Pound versus the US Dollar, a position supported over the intermediate term TREND by prudent management of interest rate policy from Mark Carney at the BOE (oriented towards hiking rather than cutting as conditions improve) and the Bank maintaining its existing asset purchase program (QE). UK high frequency data continues to offer evidence of emergent strength in the economy, and in many cases the data is outperforming that of its western European peers, which should provide further strength to the currency. In short, we believe a strengthening UK economy coupled with the comparative hawkishness of the BOE (vs. Yellen et al.) will further perpetuate #StrongPound over the intermediate term.

Three for the Road


TREASURIES: no follow through to the 1-day ramp in bond yields this wk, 10yr = 2.76% (buy bonds) @KeithMcCullough


"Nothing is a waste of time if you use the experience wisely." - Auguste Rodin


Mt. Gox said it found 200,000 "forgotten" bitcoins on March 7, a week after the Tokyo-based digital currency exchange filed for bankruptcy protection, when it lost nearly all the 850,000 bitcoins it held ($500 million at today's prices). The exchange said the bitcoins were found in an old-format online wallet which it had thought no longer held any bitcoins, but which it checked again after its bankruptcy filing. (Reuters)

VIDEO | Keith's Macro Notebook 3/21: EUROPE VIX GOLD

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