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.
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
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.
Asset Allocation
CASH | 47% | US EQUITIES | 8% | |
INTL EQUITIES | 6% | COMMODITIES | 0% | |
FIXED INCOME | 32% | INTL CURRENCIES | 7% |
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.