Follow The Counter-TREND Move

Client Talking Points

USD

It didn’t take much to get the machines to chase a reversal of what was an epic 6 month inverse correlation move between the USD and Oil. It’s all about rate of change, and the USD arresting its ascent was evidently enough – now it gets whippier. 

 

OIL

The USD Index trades down, but only to the middle of its 93.41-95.82 risk range, but WTI bounces right to the top-end of its 42.84-51.31 range, so we like shorting Oil right here more than shorting U.S. Dollars, but we would keep moving.

EUROPE

Greek stocks go from -13% at the end of last week to -2% year-to-date now, so we guess everything is fine again? While it’s having no economic results (Italy just printed a new low #deflation print of -0.6% year-over-year CPI for JAN), the performance divergence between DAX +11.2% vs SPX -1.8% year-to-date is eye popping – maybe U.S. stocks really do need another QE to compete!

Asset Allocation

CASH 57% US EQUITIES 2%
INTL EQUITIES 4% COMMODITIES 3%
FIXED INCOME 30% INTL CURRENCIES 4%

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

$WEN is going to look more like $QSR (BK) where does this leave $MCD? #NEWCEO needs to shake things up!

@HedgeyeHWP

 

 

QUOTE OF THE DAY

Money is not the most important thing in the world. Love is. Fortunately, I love money.

-Jackie Mason

 

 

STAT OF THE DAY

The average American office worker spends nine hours each week in meetings or thinking about meetings, up 14 percent from four years ago.


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