Oil Crashing

Client Talking Points

OIL

Never mind oils epic crash of 2014, now it’s crashing (again) in 2015 – with today’s #deflation of -2.9%, WTI Oil is now -21% for 2015 year-to-date and they’re going after Saudi stocks (-4.3% this morning); Greek stocks back in crash mode, -21% since FEB.

VIX

The VIX remains in what we’ve called a bullish phase transition since July of 2014 (see our #VolatilityAsymmetry Macro Themes deck); no matter what the Fed does today, we expect cross asset volatility to remain bullish.

RUSSELL 2000

We’ve liked the IWM (iShares Russell 2000 ETF) but we don’t like chasing things at their all-time closing highs (the Russell 2000 hit that again yesterday at 1242) – ahead of this Fed circus of mismanaged expectations, we say book some profits, raise cash.

Asset Allocation

CASH 46% US EQUITIES 12%
INTL EQUITIES 11% COMMODITIES 0%
FIXED INCOME 18% INTL CURRENCIES 13%

Top Long Ideas

Company Ticker Sector Duration
ITB

We’ve liked the IWM (iShares Russell 2000 ETF) but we don’t like chasing things at their all-time closing highs (the Russell 2000 hit that again yesterday at 1242) – ahead of this Fed circus of mismanaged expectations, we say book some profits, raise cash.

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

Big Day for @HedgeyeTV - tune into The Macro Show 830AM and Fed Show 150PM EST

@KeithMcCullough

QUOTE OF THE DAY

They sleep, we grind.

-Erykah Badu

STAT OF THE DAY

Foot Locker estimates that 90% of their online traffic will come from phone/tablet in 2018. 


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