Client Talking Points
It is the first day of QE in Europe, the Euro is down ahead of this about 3.1% last week and down 10.5% year-to-date. With QE and the insinuation that there could be a rate hike in the U.S., the reality is that the Euro will probably get a lot weaker here.
We all know the story of oil over the last year, the bigger story here is some of the other commodities; wheat is down 5.9% last week, orange juice is down 14.3% last week, respectively each of these are down 18.8% and 17.7% year-to-date. Commodity #Deflation is clearly continuing in 2015.
The Canadian Loonie (Canadian Dollar) is not far behind the Euro, down about 7.5%. This obviously goes along with the weakness in oil. Housing Starts in Canada missed meaningfully came in 156.3K for the month vs. consensus of 175K.
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Top Long Ideas
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 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.
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
Japanese GDP missed again, but who cares - that only gets them to print moarrr Burning Yens
QUOTE OF THE DAY
Wisdom begins in wonder.
STAT OF THE DAY
Only 2% of the world's population has green colored eyes.