• It's Coming...

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Client Talking Points

COMMODITIES

A weaker dollar is positive for commodities, as the Fed downwardly revised growth and inflation targets on March 18th the USD has been down about 1.6% against the CRB Index which has been lead by Energy. Our immediate-term risk range for the USD is 98.01-100.24 (the USD remains in a bullish formation).

 

AUSTRALIA

The Australian Dollar is up about 1.3% this morning after a strong employment report. They added more than expected full time jobs in March about 37.3K, Australia's unemployment rate has now fallen to 6.1%. The labour force participation rate jumped to 64.8% in March from a revised 64.7% in February.

GREECE

The major index in Greece is down about 5.5% on the week, the big challenge here is that there has been little to no progress with Greece’s international creditors. Germany’s Finance Minister effectively came out yesterday and said no one expects a deal to be made next week (the Eurogroup is meeting on April 24th).

Asset Allocation

CASH 33% US EQUITIES 13%
INTL EQUITIES 15% COMMODITIES 2%
FIXED INCOME 29% INTL CURRENCIES 8%

Top Long Ideas

Company Ticker Sector Duration
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.

Three for the Road

TWEET OF THE DAY

Former Fed Chairman Ben Bernanke to be senior adviser to Citadel Investment - NY Times

@HedgeyeEurope

QUOTE OF THE DAY

Never say never, because limits, like fears, are often just an illusion.

Michael Jordan

STAT OF THE DAY

By one estimate U.S. online political advertising could quadruple to nearly $1 billion in the 2016 election (Reuters).