CLIENT TALKING POINTS
USD
We had an immediate term overbought signal yesterday is the U.S. Dollar – backing off at 99.99 (Wayne Gretzky would have been proud). Equity markets bounced and then accelerated into the close. Big up day for the markets - lots of counter-trend moves, plus the things that have been working were trending higher - but don’t confuse that with the broader trend here: the U.S. Dollar remains your friend. Immediate term upside to over 100 for USD (finally!), with an immediate term risk range is 97.46-100.31.
OIL
Oil is getting sacked in the backfield for another loss, down almost a full percent to 46.63. This is actually a big move in standard deviation terms - we have it at 3.6 standard deviations oversold which establishes a lower-high of resistance inside of 50 (49.64 to be exact). The two important points today are that the USD has a 100 handle in its risk range and oil at the top end of its risk range is inside of 50….that’s very deflationary.
VOLATILITY
You don’t need someone at the Fed to give you inside information, you just need the risk ranges U.S. equity market volatility signaled an immediate-term overbought SELL signal on Wednesday. The current immediate term risk range for the VIX is 13.03-17.36. We would suggest you risk manage this by taking off some of your U.S. equity exposure that you put on on the down moves. Buy low. Sell high. Rinse. Repeat.
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 | 43% | US EQUITIES | 14% | |
| INTL EQUITIES | 11% | COMMODITIES | 0% | |
| FIXED INCOME | 21% | INTL CURRENCIES | 11% |
THREE FOR THE ROAD
TWEET OF THE DAY
GREECE: don't tell mainstreamers, but since they claimed Greece was fixed on FEB 24, Greek stocks have crashed 15%
@KeithMcCullough
QUOTE OF THE DAY
A thankful heart is not only the greatest virtue, but the parent of all other virtues.
-Cicero
STAT OF THE DAY
A strike at a Chinese factory that makes shoes for Nike, Timberland, Kenneth Cole and other well-known brands grew on Tuesday to about 5,000 workers.
