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).
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 | 33% | US EQUITIES | 13% | |
| INTL EQUITIES | 15% | COMMODITIES | 2% | |
| FIXED INCOME | 29% | INTL CURRENCIES | 8% |
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).