CLIENT TALKING POINTS
USD
A generational ramp for #StrongDollar finally signals immediate-term TRADE overbought (within a very bullish TREND) at $99.99 on the U.S. Dollar Index (Gretzky should be proud he got paid in Dollars, not Loonies!) and the EUR/USD bounces at what was our intermediate-term target of $1.05.
JAPAN
The Weimar Nikkei screamed higher overnight +1.4% to +8.9% year-to-date (vs S&P 500 -0.9% year-to-date) on Burning Yens, but that YEN vs USD cross is signaling oversold too – so we should see a short-term bounce in USD traded (Oil, Gold, etc.) and the Nikkei correct some tonight.
RUSSELL 2000
The Russell 2000 is up on the day with the SPY down -0.2% and we like it on the long side here into the Retail Sales print (which should beat) – being long domestic consumption in the U.S. remains our best relative long idea on the other side of our Global #Deflation call – Russell revs are 80% U.S. domestic.
TOP LONG IDEAS
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.
Asset Allocation
| CASH | 33% | US EQUITIES | 17% | |
| INTL EQUITIES | 15% | COMMODITIES | 0% | |
| FIXED INCOME | 24% | INTL CURRENCIES | 11% |
THREE FOR THE ROAD
TWEET OF THE DAY
GERMANY: whopping -0.2% correction day for the DAX, which is +20.2% YTD vs $SPX -0.9%
@KeithMcCullough
QUOTE OF THE DAY
In the middle of every difficulty lies opportunity.
-Albert Einstein
STAT OF THE DAY
After 6 weeks of inflows, domestic stock funds returned to redemptions losing almost $2 billion in the most recent survey.
