CLIENT TALKING POINTS
USD
Down Dollar has wicked correlation whip around the world, and it’s not just taking WTI +5% in an hour – Australian stocks +2.3% overnight to +8.7% year-to-date (they also cut rates earlier in the year), Russian stocks +3.3% this morning to the top-end of their immediate-term range; CRB Index up 2x the SPX yesterday (in % terms) on the day.
OIL
WTI is up another +1.1% this morning to $51.79 (USD is down on Euro up to $1.14) and the risk ranges for both Oil and the USD are now narrowing ($47.42-53.45) so you can look at that in more ways than one. Short term-top in OVX (Oil volatility), higher-lows of support, but also lower-highs of resistance.
EUROPE
All things considered a good GDP print out of Germany of +1.6% year-over-year (vs. +1.2%) so mainstream media will roll with that today, as Italy prints a recessionary GDP of -0.3% year-over-year and France says 0.2% year-over-year (vs. 0.4% – all Q4 numbers, and the JAN economic data in Europe this morning was #deflation101 (Swiss PPI -2.7% year-over-year, Spain CPI -1.3% year-over-year).
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 | 45% | US EQUITIES | 9% | |
| INTL EQUITIES | 7% | COMMODITIES | 0% | |
| FIXED INCOME | 31% | INTL CURRENCIES | 8% |
THREE FOR THE ROAD
TWEET OF THE DAY
***Game on at 8:30am ET Hedgeye CEO @KeithMcCullough hosting Morning Macro Call LIVE (Click below. It's free) https://www.youtube.com/watch?v=lFlc01Z5qWM
@Hedgeye
QUOTE OF THE DAY
You earn your reputation by the things you do every day.
-Dave Thomas
STAT OF THE DAY
Total U.S. Equity Market Volume, including dark pool, was down -17% yesterday vs. its 1 year average.