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Client Talking Points

UK

Oh have the Brexit Bears (on the economy) been wrong – UK Services PMI for DEC accelerates (again) to 56.2 DEC vs. 55.2 NOV and the FTSE hits yet another post Brexit high; I still like the Pound on pullbacks to the low-end of my range 

Volume

My price/volume/volatility signal continues to signal buying opportunities on slowing volume DOWN days; the last 2 UP days for the SP500 have seen Total US Equity Market Volume +11% and +30%, respectively, vs. the 1-month avg.

10YR

One of the few remaining economic data series that has NOT accelerated is NFP – if that were to change tomorrow, I see Gold getting smoked and the 10yr getting to at least 2.61%; the y/y NFP “compare” for JAN is a lot easier than the comp for DEC, so we might have to wait another month; but the probability isn’t low that the jobs market stops slowing Q1/Q2.

 

TOP 4 LONGS: USD (or UUP in ETF terms), GBP/EUR, XOP, and QQQ

 

TOP 3 SHORTS: Gold (GLD), EUR/USD (FXE), Long-term Treasuries (TLT)

Asset Allocation

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
1/4/17 31% 21% 10% 11% 0% 27%
1/5/17 33% 18% 10% 11% 0% 28%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
1/4/17 31% 64% 30% 33% 0% 82%
1/5/17 33% 55% 30% 33% 0% 85%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

Three for the Road

TWEET OF THE DAY

Kohl's ($KSS) putting up $4 in EPS is kind of like bigfoot. People talk about it all the time, but nobody ever sees it.

@HedgeyeRetail

QUOTE OF THE DAY

"I want to stay as close to the edge as I can without going over. Out on the edge you see all kinds of things you can't see from the center. Big, undreamed-of things – the people on the edge see them first."

–Kurt Vonnegut

STAT OF THE DAY

Active equity funds closed out 2016 with cumulative annual fund flows at new all-time lows. Domestic equity lost -$237.5 billion in 2016, outstripping 2015's -$174.3 billion outflow to become the worst year on record.