CLIENT TALKING POINTS
USD
While the no volume ramp in equity futures (total U.S. equity volume -22% vs 1 year average yesterday) provides for a nice narrative, most of that was driven by a massive counter-TREND move on Down Dollar; on a bad jobs report (Dollar Down, Rates Down), will they rip again?
UST 10YR
A) good jobs report = 1.89%, B) bad jobs report = 1.64% - we’ll take B) only because every jobs data point we have for the last 6 weeks has been bearish, on the margin. Since the government makes up the number, anything can happen here - remember, jobs are late-cycle, and accelerated at the end of the cycle (slowing now).
CHINA
The Shanghai Composite was down another -1.9% overnight, down 8 of the last 9 days, and -4.9% year-to-date – so the China ramp won’t be followed by mainstream media anymore, but leaves one to wonder what central plannings really do for markets after their short-term pops as economies continue to slow...
TOP LONG IDEAS
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.
Asset Allocation
| CASH | 56% | US EQUITIES | 4% | |
| INTL EQUITIES | 4% | COMMODITIES | 2% | |
| FIXED INCOME | 30% | INTL CURRENCIES | 4% |
THREE FOR THE ROAD
TWEET OF THE DAY
In today's Early Look "Alternative Market Medicine" I explain what to do once you see the jobs report
@KeithMcCullough
QUOTE OF THE DAY
The two most powerful warriors are patience and time.
-Tolstoy
STAT OF THE DAY
54 million tons of freight move across our country each day.
