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Client Talking Points


Obviously we didn’t have air strikes into Tikrit in our model, but that’s what moves the oil market in very short order here. We are seeing a 4.8 standard deviation move on our immediate term trade duration which puts oil up at the top of the risk range. The risk range for WTI Oil is now $10 wide, this will just perpetuate more volatility. The immediate term risk range for WTI Oil is $42.39-52.29. This is a great selling opportunity for oil.


Probing the lows here the bottom end of the risk range for the USD is just north of $96, the trend line of support is closer to $93. We are not changing our bullish view on the USD or our bullish view on holding a lot of cash. The USD risk range is almost being as asymmetric to the upside as oil is to the downside, we see no resistance for the USD until $99.65 and the upside down to that is that we have no support for the EUR/USD to $1.04.

S&P 500

2,046 is support and 2,084 is resistance for the S&P 500, what was support has now become immediate term resistance. What is even more interesting, is that the trend line that is very much in play, is pretty much right where the S&P 500 started the year. The futures have you below the trend line and below the trade line and again that’s obviously a very bad thing if it were to hold. Now what would be the catalyst...EARNINGS SEASON. The music will stop once the economic gravity hits the tape so again watch out for this, these phase transitions can happen quickly. If the S&P 500 can’t get back above 2,058 this will likely turn into a bearish trend for the S&P 500.

Asset Allocation


Top Long Ideas

Company Ticker Sector Duration

Manitowoc  (MTW) is splitting the business into two companies. Given the valuation differential between the sum-of-the-parts and the current enterprise value of the company, the break-up should be a substantial positive. Recent nonresidential and nonbuilding construction data remains firm for 2015, which suggests that MTW’s crane sales should see a pickup in the first half of the year. The Architecture Billings Index (a survey of architects) typically leads nonresidential and residential construction spending by approximately 9-12 months. More importantly, the ABI Index leads MTW Crane Orders by 2 quarters.


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. Builder Confidence retreated for a 3rd consecutive month in March and New Home Starts in February saw their biggest month-over-month decline since January 2007.  We think the underlying reality is more sanguine with the preponderance of the weakness in the reported February data largely attributable to weather.


While labor supply constraints may serve as a drag to builder confidence, presumably it is rising demand trends that are driving tighter conditions in the resi employment market.  All else equal, we’d view improving demand as a net positive.  On the New Construction side, while the sharp drop in Housing Starts captured most of the headlines, we believe the real story was in the 3% gain in permits. We'd expect to see a big rebound in the next two months in housing starts as the data plays catch-up to the thaw.


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. Most of the #Deflation trades bounced to something less-than-terrible (both absolute and relative) for 2015, whereas the real alpha trending in macro markets continues to play to the lower-rates-for-longer camp’s advantage.

Three for the Road


Nice beat by $LULU. But guidance looks like death.



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