Global Equity Melt-Up

Client Talking Points

ASIA

Big stimuli (or rumors of moarrr) and Japanese/Chinese stocks love it! The Nikkei and Shanghai Composite up another +1% and +1.6% overnight to +11.4% and +8.3%, respectively. The KOSPI is trying to breakout now too, +2.1% after being bearish for most of 2014.

 

USD

Down Day for USD yesterday had everything from Biotech (IBB) to Yield Chasers (Utilities and REITS) roaring to the upside – this is what Wall St. is begging for from Janet Yellen, lower USD and lower rates, for longer – we’ll see if she delivers #patience.

OIL

Oil doesn’t buy into the idea that USD will have more than 1 down-day, falling another -1.2% this morning to $43.34 with our refreshed risk range signaling lower-highs and lower-lows at $43.05-47.36; some of our best E&P MLP short ideas crushed yesterday.

Asset Allocation

CASH 42% US EQUITIES 14%
INTL EQUITIES 12% COMMODITIES 0%
FIXED INCOME 19% INTL CURRENCIES 13%

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

TODAY AT 8;30AM ET Watch The #MacroShow, Live w/ @KeithMcCullough SPECIAL GUEST: @HedgeyeENERGY (Kevin Kaiser) https://app.hedgeye.com/insights/42973-watch-the-macro-show-live-with-keith-mccullough-at-8-30am-et

@Hedgeye

QUOTE OF THE DAY

The power of imagination makes us infinite.

-John Muir

STAT OF THE DAY

1 in 4 people in Japan are above the age of 65.


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