CLIENT TALKING POINTS
U.S. Equities
Renewed Skepticism (U.S. Equities) – The term structure of volatility has shifted significantly over the last few weeks from unprecedented lows to new skepticism, and that shift applied to all indices. Even back contract months have been bid up again, especially in the Nasdaq. Note that this new spike in implied vol is behind fresh all-time lows in 30D and 60D realized vol in Nasdaq 100 as of the close yesterday. Investors are bucking the trend in volatility to protect against downside.
Housing
Pending Home Sales (PHS) declined -2.8% sequentially in January while increasing just +0.38% YoY on the easiest comp of 2017. This is not a new development as demand growth has averaged just +0.67% YoY over the last 6 months and has been negative in 2 of the last 3. The divergence between Pending and Existing Home Sales is now the largest we’ve seen in years and with tight supply constraining the upside in sales, affordability declining, steeper comps and an impending reversal of the rate related pull-forward in demand, underwhelming should continue to characterize demand growth in the existing market over the nearer-term. Expect sequential softness in EHS (Existing Home Sales) alongside a recoupling of PHS and EHS over the coming month(s).
Euro
To further underline the ongoing political risk pancake playing out in the Eurozone, a new Sentix research group survey showed that 25.2% of respondents expected the Eurozone to lose at least one member state in the next 12 months, up from 21.3% in January (candidates include Netherlands, France, Italy). We remain intermediate term bearish on the EUR/USD, with the strong USD #TrumpTrade continuing to play out.
Asset Allocation
CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
---|---|---|---|---|---|---|
2/27/17 | 32% | 21% | 14% | 13% | 0% | 20% |
2/28/17 | 32% | 21% | 14% | 13% | 0% | 20% |
Asset Allocation as a % of Max Preferred Exposure
CASH | US EQUITIES | INTL EQUITIES | COMMODITIES | FIXED INCOME | INTL CURRENCIES | |
---|---|---|---|---|---|---|
2/27/17 | 32% | 64% | 42% | 39% | 0% | 61% |
2/28/17 | 32% | 64% | 42% | 39% | 0% | 61% |
THREE FOR THE ROAD
TWEET OF THE DAY
"Consensus is not bearish enough on Target" warned @HedgeyeRetail yesterday ahead of $TGT earnings app.hedgeye.com/insights/57593
@Hedgeye
QUOTE OF THE DAY
“Just keep taking chances and having fun.”
–Garth Brooks
STAT OF THE DAY
Marcus Keene of the Central Michigan Chippewas leads the country in scoring, averaging 29.7 points per game.