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Client Talking Points

CHINA

Sneaky central planning dudes stole the Greek headlines overnight, throwing some rumor action (National Pension Fund buying!) out there, delivering the biggest intraday move in the Shanghai Composite since 1992! (closing up +5.5%); ex-Thailand (down -0.9%) Asian Equities were pretty much green across the board. 

EUROPE

Yes/No, risk On/Off – this is a certified political gong show at this point, but in the midst of it the Europeans still have to report slowing economic data. German Retail Sales went negative -0.4% year-over-year (Greek Retail Sales -1.9% year-over-year), Italian unemployment still sucks at 12.4%, and most PPIs were still year-over-year deflationary.

S&P 500

That wasn’t a typo – that was the 1st > 2% down day of 2015 (SPX has only had 5 of those in the last 2 years!), but there were 20 greater than 2% down days in the 6 months (JUN-DEC) of the last “European Crisis” (which incidentally was the last big 2H U.S. economic data slowdown “surprise”; VIX in the high-teens very different than VIX 11-12).

 

**The Macro Show - CLICK HERE to watch today's edition at 8:30AM ET with housing commentary from Housing & Macro Analyst Christian Drake.

Asset Allocation

CASH 49% US EQUITIES 5%
INTL EQUITIES 10% COMMODITIES 8%
FIXED INCOME 28% INTL CURRENCIES 0%

Top Long Ideas

Company Ticker Sector Duration
ZOES

We came out of the most recent earnings report being very positive about management doing all the little things right. They continue to prove that they are some of the best operators in the industry. In a quarter where ZOES opened 12 new company-owned restaurants they managed to decrease both COGS and labor. We view ZOES as one of the best small cap growth names.  The company is set-up for long-term success for the following reasons:

  1. Superior brand positioning
  2. Management philosophy and execution
  3. Unit opening geographic profile
  4. Early-stage average unit volumes and returns
PENN

PENN’s new property, Plainridge Park in Massachusetts, had a strong opening. We expect slot win per day of $400, above Street expectations. In addition, June state gaming revenues will begin to roll out in 1-2 weeks. We expect June to be as strong as May, setting up Q2 to be estimate-beating quarter for PENN.

TLT

After a Fed-fueled week of strength in slow-growth, yield-chasing asset classes and long duration fixed income, both the Dollar and interest rates re-couped their losses from Fed Week. The dollar declined, rates increased, and as a result, those long of gold took some pain. Will this continue? Will a long, sustained rate liftoff ensue? We don’t think so. We continue to repeat that the chance of further downward revisions to forward looking growth estimates from the Federal Reserve and consensus macro is much more likely than not. The attempted suspension of economic gravity from policy makers weakens the currency and puts pressure on bond yields. We remain long of this set-up with gold and long-duration fixed income.

Three for the Road

TWEET OF THE DAY

PODCAST (5mins) Lacalle: This Time Is Different In Greece https://app.hedgeye.com/insights/44956-lacalle-this-time-is-different-in-greece … via @hedgeye @dlacalle

@KeithMcCullough

QUOTE OF THE DAY

The horse is here today, but the automobile is only a novelty - a fad.

President of Michigan Savings Bank advising against investing in the Ford Motor Company

STAT OF THE DAY

53% of New York City’s 27,469 Airbnb listings are rented out for more than 60 nights per year, and 30% of them are managed by hosts who have more than one Airbnb listing to their name.