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Client Talking Points

USD

The immediate term risk range for the USD is 96.99-98.99 (bullish). We keep getting asked…If this is the beginning of the end for the dollar?…Is the Fed going to devalue? It could happen but we would warn you what happened was much more of a perfect storm of a day trade in USD rather than a new trend signalling that the currency war is over. To break intermediate trend support you would have to break down below and sustain a level below 94 and that doesn’t look like its anywhere in the area code of working. 

NO #OPEC CUT

Recent rumors of emergency meetings and agreements with countries outside of OPEC on a production cut are just that.. Rumors. With the USD getting tagged for nearly 3% and a ten-year yield re-pricing #growthslowing at 1.87% this morning, central planning storytelling is the only game in town. Don’t mistake a short-covering rally for the new bull case. WTI is leading CRB divergences this morning, trading down -1.5%

S&P 500

We reitaertate there is a difference between a trade and a trend, we have been bearish on the S&P 500 since July of last year. Intra-day yesterday we got an oversold signal right around 1874, that doesn’t mean there’s  a new bull market for the S&P it just means it was a good signal. The immediate term risk range for the S&P 500 is 1855-1949 (bearish).

 

*Catch the replay The Macro Show with Hedgeye CEO Keith McCullough  - CLICK HERE

Asset Allocation

CASH 61% US EQUITIES 0%
INTL EQUITIES 0% COMMODITIES 0%
FIXED INCOME 25% INTL CURRENCIES 14%

Top Long Ideas

Company Ticker Sector Duration
XLU

After a busy week of domestic data, you probably don’t need us to tell you that growth continues to slow. Despite the short-covering squeeze in energy stocks, Utilities (XLU) closed out January as the only sector in positive territory (+5%), other than Consumer Staples which eeked out a +0.5% gain. It was an awful start to the year for the S&P 500 (-5%). Don’t expect +10% of relative outperformance every month, but if you stuck with us on this trade, you’re in much better shape than most.

GIS

GIS remains one of our top Long ideas in the consumer staples space. As we have continued to say it boasts style factors that are ideal in turbulent times; high market cap, low beta and liquidity.

 

Recently, General Mills has been attacked by Chobani commercials, claiming that Yoplait yogurt contains the same ingredients used in pesticide. GIS filed a false advertising lawsuit against Chobani demanding that they stop showing that commercial because it could be detrimental to sales. GIS just got word that a federal judge has barred Chobani from continuing the ad campaign. This is a win for GIS, but it is unclear right now if there was any damage done to the brand. At this time we do not believe it had any serious impact on the company. We will keep you informed of any material information regarding this lawsuit as it moves forward.  

TLT

Long-Term Treasuries (TLT) continues to preserve capital against the slow-moving trainwreck in Junk Bonds (JNK). Week-over-week, 10-year bond yields crashed 13 basis points to 1.92%. That helped lift the best play on U.S. growth slowing (TLT) by 0.85% on the week as credit spreads continued to widen (JNK gained +0.76% on the week, underperforming TLT marginally on a relative basis).

Three for the Road

TWEET OF THE DAY

The #NetNeutrality Ruling: Implication For $NFLX $VZ $CHTR https://app.hedgeye.com/insights/48924-the-net-neutrality-ruling-potential-implications-for-netflix-verizon?type=video… @KeithMcCullough @PotomacResearch

@Hedgeye

QUOTE OF THE DAY

The very substance of the ambitious is merely the shadow of a dream.

William Shakespeare

STAT OF THE DAY

A survey given to 477 undergraduate and graduate students at three Bay Area campuses, found that just 6% of them knew how long they would be repaying their student loan debt and only 8% knew the interest rate on their loan.