• [WEBCAST] Raoul Pal & Neil Howe: A Sobering U.S. Economic Reality Check

    Prepare your portfolio for “big picture” paradigm shifts with Real Vision co-founder Raoul Pal and Demography analyst Neil Howe. Watch the replay from this webcast.

Client Talking Points

Industrials

Up in a down tape yesterday (XLI +0.7% vs. SPX -0.36%) and this is a sector that you want to stay long when we’re in Quad2 (growth and inflation accelerating, at the same time); one of our favorite longs remains Textron (TXT) – Jay Van Sciver and Emo Gardner are our Industrial and Defense analysts.

UST 10 YR

Great week to be long of growth and inflation accelerating as the 10yr Yield is +11bps on the week (+3bps this morning to 2.51%) and short long-term Treasuries; stay with the risk range process and short LT bonds (TLT) closer to the low-end of my current 10yr risk range = 2.33-2.53%, not down here.

EPS

Earnings Season is 10% done (50 of 500 S&P Companies have reported) an aggregates SALES acceleration of +4.1% year-over-year growth and an EPS acceleration (non-GAAP!) of +8.8% y/y growth; this stands in stark contrast to when we were bearish on US Equity Beta at this time last year, when y/y EPS growth was negative.

Asset Allocation

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
1/19/17 29% 19% 16% 10% 0% 26%
1/20/17 27% 21% 16% 10% 0% 26%

Asset Allocation as a % of Max Preferred Exposure

CASH US EQUITIES INTL EQUITIES COMMODITIES FIXED INCOME INTL CURRENCIES
1/19/17 29% 58% 48% 30% 0% 79%
1/20/17 27% 64% 48% 30% 0% 79%
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

China made up it's economic growth numbers today (6.8% in Q4 vs 6.7% in Q3). But concerns of collapse are overdone. app.hedgeye.com/feed_items/567

@Hedgeye

QUOTE OF THE DAY

“To win, you have to risk loss.”

-Jean-Claude Killy

STAT OF THE DAY

The Green Bay Packers are +5 at the Atlanta Falcons.