Japan, The Euro and Oil

Client Talking Points


Another horrendous economic data point with Auto Sales -14.2% year-over-year in FEB, so Japanese stocks make another fresh 15 year high on that at +8% year-to-date for the Nikkei moving up +2.3% on the week (S&P 500 was -0.3% last week); Nikkei loves Burning Yens.


The Euro is oversold to fresh year-to-date lows of $1.11 last week (-7% vs. USD year-to-date) and bouncing small +0.2% this morning on a mixed bag of PMI prints (Italy better, Germany in line, France sucking wind) – Italian stocks +2.3% last week (+0.6% this morning) = +18.2% year-to-date!


WTI was down -2.1% last week on #StrongDollar +1.1% (back to its JAN highs) and the Oil #deflation continues this morning -1.4%  with next immediate-term TRADE support of $47.66/barrel and a risk range of 47.66-53.08 (no $60-70 price deck from us). 

Asset Allocation


Top Long Ideas

Company Ticker Sector Duration

WTI was down -2.1% last week on #StrongDollar +1.1% (back to its JAN highs) and the Oil #deflation continues this morning -1.4%  with next immediate-term TRADE support of $47.66/barrel and a risk range of 47.66-53.08 (no $60-70 price deck from us). 


Low-volatility Long Bonds (TLT) have plenty of room to run. Late-Cycle Economic Indicators are still deteriorating on a TRENDING Basis (Manufacturing, CapEX, inflation) while consumption driven numbers have improved. Inflation readings for January are #SLOWING. We saw deceleration in CPI year-over-year at +0.8% vs. +1.3% prior and month-over-month at -0.4% vs. -0.3% prior. Growth is still #SLOWING with Real GDP growth decelerating at -20 basis points to +2.5% year-over-year for Q4 2014.The GDP deflator decelerated -40 basis points to +1.2% year-over-year.


Hologic (HOLX), at this stage in their product cycle and in the current stage of the economic cycle, has some very impactful tailwinds emerging to their revenue growth and the implied growth in the future. A stock generally will perform really well when doubt about future growth turns to optimism while the most recent data confirms the optimism. So far, we have a little bit of both; recent positive data like the December 2014 quarter upside and consensus estimates and ratings starting to move off of multi-year lows. A less-worse trend in Pap testing and rising patient volume can combine to get us close to flat for HOX’s Cytology (Pap) business. As the growth in Cytology improves and is less of a drag, the 3D Mammography growth can flow through. We think the outlook is bright, and with a few more data points, we think a lot more investors will agree with us.

Three for the Road


In today's Early Look "Hairy Little Forecasters" I show you the flow-through from Global #Deflation to sector returns



We must find time to stop and thank the people who make a difference in our lives.

-John F. Kennedy


Consumer Discretionary stocks (XLY) led gainers, +0.7% on the week to +5.3% year-to-date and Energy stocks (XLE) led losers -1.9% on week-over-week at -0.2% year-to-date.

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more