Client Talking Points
A big 6-day move gave chart-chasers another round of whiplash, and now the bounce (in Euros +0.4%) vs USD. We think another round of Down Dollar can continue into this bomb of a GDP report on Friday (which the government is working on re-calibrating the calculation!).
WTI oil was up +1.4% on the USD arresting its ascent – get the Dollar right and you’ll get most things Commodities right. The CRB Index tested the low-end of our 221-227 risk range yesterday and bounced too. WTI oil has immediate-term upside to $61.34.
We’re not sure how many more times perma Bond Bears can ring the ‘end of the world’ sirens, but that was a stiff 20 basis points drop from yet another lower-high for the 10YR Yield in early May – post yesterday’s -2.3% year-over-year Durable Good print, we’re staying with the #LateCycle slowing call.
|FIXED INCOME||24%||INTL CURRENCIES||2%|
Top Long Ideas
One way to invest in Lower-For-Longer, from an equity perspective, is being long U.S. REITS (VNQ). Unless the Fed wants to show the world it has the power to go both ways on rates, we don’t think the Fed will ever be able to justify hiking interest rates. We expect an unarguable slowing of the current economic cycle by Q4 of this year. If you think domestic economic growth is slow now, just wait until the U.S. economy faces very difficult growth and inflation comps in the second half of 2015.
Housing got its mojo back in May, rebounding strongly over the last couple of weeks alongside the moderation in rates and ongoing strength in reported price/volume data. Below is a round-up of the data thus far in 2Q:
The strength of the labor market continues to be a good indicator of our positioning in the current cycle:
Three for the Road
TWEET OF THE DAY
Finland's unemployment rate rises to 9.6% from 9.4%
QUOTE OF THE DAY
Today is only one day in all the days that will ever be. But what will happen in all the other days that ever come can depend on what you do today.
STAT OF THE DAY
According to according to WPP and Millward Brown's annual "Brand Z" rankings Marlboro is the world’s 10th most valuable brand, commanding 43.8% of the U.S. cigarette market.