Yen, Oil and Europe

Client Talking Points

YEN

Follow the Correlation Risk … BOJ guy says “further stimulus may be counter-productive” --> Yen bounces --> USD Down --> Oil bounces (again) --> Russian stocks rip +4% on the counter-TREND move … everyone is nailing it. 

OIL

Oil continues to trade with a hyper inverse correlation to the USD, and finally the risk range for WTIC is narrowing (not indicating a breakout, just narrowing) to $46.43-53.66 (former downside risk to our ranges was $42-43, so that’s off the table inasmuch as $57-59 is on the upside – lots to think about there). 

EUROPE

Greek stocks up +5%, down -5%, and what is going to happen next? Please central planners of the universe, tell us – because after 7 years of this...Greek unemployment is still 25.4%... oh and the poor Swedes just saw the rewards of cutting rates to -0.10%, an unemployment rate shooting up from 7.0% to 8.4% in JAN #awesome.

Asset Allocation

CASH 47% US EQUITIES 8%
INTL EQUITIES 6% COMMODITIES 0%
FIXED INCOME 32% INTL CURRENCIES 7%

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

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.

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

VIDEO | McCullough to Bartiromo: 'Short the Crap' https://app.hedgeye.com/insights/42305-mccullough-to-bartiromo-short-the-crap via @KeithMcCullough on @FoxBusiness 

@Hedgeye

QUOTE OF THE DAY

Do not consider painful what is good for you.

-Euripides

STAT OF THE DAY

Russian Trade Surplus Narrows for Second Month: The surplus fell 24% from a year earlier to $12.9 billion after plunging 21% the previous month, the central bank in Moscow said on its website Wednesday. 


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