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Client Talking Points

YEN

Yen experienced textbook counter-TREND bounce on Monday (in Gold too) to lower-highs, so keep those Burning Yen shorts on as the Japanese prepare for CTRL+Print (again). There is no support to $121.27 vs. USD and we like the Weimar Nikkei long on that, +1.7% overnight after holding @Hedgeye 16,884 support.

 

OIL

Drowning out the knife catchers, call options buyers, etc. and trying to establish higher-lows in WTI’s immediate-term risk range all the while – that’s currently $47.22-52.63, so keep that in mind when you look at some of these counter-TREND bounces in Russian and Brazilian stocks (+3-5%).

 

S&P 500

Smoked some of the December 29th (SPX = 2090) momentum chasers (and call option buyers) out of their holes (95 handles lower), so we should see some follow through and a test of 2046; if it fails there and that jobs report isn’t pristine tomorrow, this gets more volatile, faster.

Asset Allocation

CASH 49% US EQUITIES 10%
INTL EQUITIES 4% COMMODITIES 0%
FIXED INCOME 27% INTL CURRENCIES 10%

Top Long Ideas

Company Ticker Sector Duration
EDV

The Vanguard Extended Duration Treasury (EDV) is an extended duration ETF (20-30yr). As our declining rates thesis proved out and picked up steam over the course of the year, we see this trend continuing into Q1.  Short of a Fed rate hike, there’s no force out there with the oomph to reverse this trend, particularly with global growth decelerating and disinflationary trends pushing capital flows into the one remaining unbreakable piggy bank, which is the U.S. Treasury debt market.

TLT

As growth and inflation expectations continue to slow, stay with low-volatility Long Bonds (TLT). We believe the TLT has plenty of room to run. We strongly believe the dynamics in the currency market are likely contribute to a “reflexive deflationary spiral” whereby continued global macro asset price deflation and reported disinflation both contribute to rising investor demand for long-term Treasuries, at the margins.

HOLX

Hologic (HOLX) is a name our Healthcare Sector Head Tom Tobin has been closing monitoring for awhile. In what Tom calls his 3D TOMO Tracker Update (Institutional Research product) of U.S. facilities currently offering 3D Tomosynthesis, month-to-date December placements signaled a break-out quarter after a sharp acceleration in October and slight correction to a still very high rate in November. We believe we are seeing a sustained acceleration in placements that will likely drive upside to Breast Health throughout FY2015. Tom’s estimates are materially ahead of the Street, but importantly this upward trend in Breast Health should lead not only to earnings upside, but also multiple expansion and a significant move in the stock price.

Three for the Road

TWEET OF THE DAY

McDonald’s cuts 63 jobs at headquarters http://nrn.com/mcdonalds/mcdonald-s-cuts-63-jobs-headquarters … via @NRNonline

@HedgeyeHWP

 

QUOTE OF THE DAY

Always do your best.  What you plant now, you will harvest later.

-Og Mandino

 

STAT OF THE DAY

In 2014, only 15.6% of the several hundred advisers monitored by the Hulbert Financial Digest outperformed the Wilshire 5000 Index. Five years ago, the proportion stood at 33.1%.