CLIENT TALKING POINTS
EUROPEAN CPI
The CPI number for March across the Eurozone came in at +0.1% and in Germany it came in at +0.3%. This gives ECB President Mario Draghi a lot of data cover to continue this policy of Quantitative Easing and burning the Euro. Our immediate-term risk range for the Euro is 1.04-1.08.
GREECE
The Greek Finance Minister Varoufakis is traveling to Washington to meet with Obama, he is traveling with the lawyer who helped Greece restructure its debt in 2012. They will meet with Obama tomorrow followed by a meeting on Friday with ECB President Mario Draghi, U.S. Treasury Secretary Lew, Italian Finance Minister Padoan and IMF officials. The next catalyst is the upcoming Eurogroup meeting on April 24th. European Commission Vice President Dombrovskis told the Handelsblatt that next Friday's Eurogroup meeting will not approve aid and will only look at the progress of talks.
CHINA
China reported a GDP number of +7%, this is the slowest quarterly year-over-year growth in 5 years. A National Bureau of Statistics official commented that it will be important to keep the property market steady; the economy is likely to remain under pressure in Q2 as destocking, clearing over capacity could take time; and they will be prioritizing stable growth, jobs and profitability.
TOP LONG IDEAS
MTW
Manitowoc (MTW) is splitting the business into two companies. While the crane business receives the most attention in part due to its cyclicality and because they are well, more noticeable, Manitowoc’s other business, Foodservice equipment, is the larger of the two in terms of operating income (60% vs. 40% for Cranes). Several indicators are pointing towards upward momentum for MTW’s Foodservice business. Restaurant same store sales have benefitted since the drop in oil prices. Furthermore, an indicator by the National Restaurant Association, RPI Capital Expenditures Index, has surged recently in part due to lower fuel prices driving restaurant traffic and restaurant owners’ outlook.
ITB
iShares U.S. Home Construction ETF (ITB) is a great way to play our long housing call. The housing data was again strong in the latest week with Pending Home Sales, HPI and Purchase Demand all accelerating to close out March. Pending Home Sales rose +3.1% sequentially in February with signed contract activity up a remarkable +12% YoY, taking the index to a new 19-month high. Mortgage Purchase Applications – the most real-time, high frequency housing demand indicator - rose +5.7% WoW on the back of last week’s +4.9% advance and accelerated to +7.6% on a year-over-year basis. HPI: The Case-Shiller 20-city series showed home prices grew +4.6% year-over-year in January. A stabilization/inflection in home price growth is important as housing related equity performance tracks the slope of home price growth strongly.
TLT
It was another week of declining long-term yields getting you paid on the long-side of Low-volatility Long Bonds (TLT). To reiterate our view over the longer-term, we pin a good chance the U.S. Dollar will reach new highs ($120 anyone?) with the probably of long-term Treasury yields reaching all-time lows very much in play.
Asset Allocation
| CASH | 32% | US EQUITIES | 13% | |
| INTL EQUITIES | 15% | COMMODITIES | 2% | |
| FIXED INCOME | 30% | INTL CURRENCIES | 8% |
THREE FOR THE ROAD
TWEET OF THE DAY
Despite the ramp into fixed income ETFs they only have 7% market share against bond mutual funds (more gains to come) http://www.bloomberg.com/news/articles/2015-04-14/bond-liquidity-desperation-sends-record-cash-into-etfs-worldwide
@hedgeyeJC
QUOTE OF THE DAY
Logic will take you from A to B. Imagination will take you anywhere.
Albert Einstein
STAT OF THE DAY
In general, the White House estimates that women get paid 77 cents on the dollar compared to men.