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Client Talking Points

EURO

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.

COMMODITIES

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.

CANADA

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. 

Asset Allocation

CASH 34% US EQUITIES 15%
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

Japanese GDP missed again, but who cares - that only gets them to print moarrr Burning Yens

@KeithMcCullough

QUOTE OF THE DAY

Wisdom begins in wonder.

 -Socrates

STAT OF THE DAY

Only 2% of the world's population has green colored eyes.