Trading Post The Jobs Report

Client Talking Points

USD

The USD is stabilizing in a narrowing risk range now (leading indicator for less FX volatility) and we think that takes out accelerating upside in both the CRB Index (+7% off the 213 lows) and Oil (WTI risk range = 43.07-53.88) from here, which would reverse plenty of sub-sector counter-TREND moves in the S&P 500 – we’ll see.

UST 10YR

Day 2 of consensus saying what they’ve been saying for a year (“rates up, litftoff, etc.”) and we guess we will have to endure this until the USA #deflation data (CPI and PPI) is reported for JAN (next week). China and Norway printed -4.3% and -12.4% year-over-year PPI’s this morning!

SPX

The S&P 500 (SPX) meandering at -0.6% year-to-date doesn’t exactly inspire fund flows, so it’s probably time to start adding to U.S. Equity exposures that are not affected by the #deflation factors coming back into the market place. We still like U.S. domestic consumption plays like XLY (Consumer) and ITB (Housing) on the long side.

Asset Allocation

CASH 50% US EQUITIES 7%
INTL EQUITIES 5% COMMODITIES 0%
FIXED INCOME 32% INTL CURRENCIES 6%

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

Going LIVE in 15 min. Send in your questions for @KeithMcCullough and @HedgeyeDDale via Twitter or the YouTube chat. https://www.youtube.com/watch?v=YmHcuyWSiH0

@Hedgeye

QUOTE OF THE DAY

Great works are performed not by strength but by perseverance.

 -Samuel Johnson

STAT OF THE DAY

The percentage of Russians whose opinion of the U.S. is very or mainly bad rose to a record 81% in January from 44% a year ago, according to the latest poll by the independent Levada Center, which has tracked attitudes since 1990.


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Neurofinance: The Psychology Behind When To Sell A Bull Market

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Cartoon of the Day: Hard-Headed Bears

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Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

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SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

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Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

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Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

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McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

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Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

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Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

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Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

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