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Client Talking Points

EURO

Euro...the collapse of a currency, testing 1.09 -1.08 literally straight down and in the face of that the USD is going straight up here. This only reinforces our Global #Deflation view (which is largely instructed from our USD view which is instructed by our European and Japanese policy view). To be clear we don’t think this will create any economic value.

YEN

As the YEN tumbles look at the Nikkei go, up almost 9% year-to-date up 1.2% overnight. The Yen has burned through the 1.20 line, intermediate term targets are 1.05 and 1.35 for the Euro and the YEN respectively and those targets look firmly intact at this point.

UST 10YR

We have been saying this all along, on a good jobs report number the UST 10YR hits the top end of the risk range which is 2.18 on a bad number it will see 20-25 basis points of downside. The jobs report was good, which is really not congruent with every other piece of jobs data or economic data that we look at. Either way a good jobs number is bullish for bond yields in the very immediate term.

Asset Allocation

CASH 37% US EQUITIES 12%
INTL EQUITIES 11% COMMODITIES 0%
FIXED INCOME 30% INTL CURRENCIES 10%

Top Long Ideas

Company Ticker Sector Duration
ITB

iShares U.S. Home Construction ETF (ITB) is a great way to play our long housing call, U.S. #HousingAccelerating remains 1 of the Top 3 Global Macro Themes in the Hedgeye Institutional Themes deck right now. Not only did U.S. home prices accelerate (in rate of change terms) in the Core Logic data this week to +5.7%, but the supply/demand data has been improving throughout the last 3 months.

PENN

Penn National Gaming is the best way to play improving domestic regional gaming trends due to its superior operational management and unit growth opportunities. Catalysts include positive estimate revisions, the opening of the first Massachusetts casino in June, and industry leading earnings growth in 2015 and 2016.

TLT

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.

Three for the Road

TWEET OF THE DAY

VIDEO: Maria, Leo, and I on #Bubbles - Alibaba Arguably “Biggest IPO Bubble In World History" | $BABA https://app.hedgeye.com/insights/42773-mccullough-alibaba-arguably-biggest-ipo-bubble-in-world-history

@KeithMcCullough

QUOTE OF THE DAY

The most unprofitable item ever manufactured is an excuse.

-John Mason

                                                             

STAT OF THE DAY

A member of the Bush family has now been on the cover of Time magazine 51 times.