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PREMIUM INSIGHT

Rising Rates? No Worries… This Housing Stock Is A Buy

Rising Rates? No Worries… This Housing Stock Is A Buy - thumbnail TMS JS CD Housing 3.28.2017 NO TEXT

Shares of Realogy (RLGY) jumped +2.6% today on news U.S. home prices are near three-year highs.


Sector Spotlight Replay | Q&A with Tech Analyst Ami Joseph

Missed it? watch the replay below

Veteran Technology sector head Ami Joseph was LIVE on HedgeyeTV this afternoon for interactive Q&A. He discussed major investing themes developing in his sector and highlighted his favorite LONG and SHORT ideas. 

 

CLICK HERE to access the associated slides. 


DiMartino Booth: 6 Ways to Fix the Fed

 

When a highly regarded investor like Stanley Druckenmiller describes the Federal Reserve as “stumbling” and “reckless,” you know the Fed has a serious credibility problem.

 

Cue Danielle DiMartino Booth. She spent the better part of a decade at the Dallas Fed working alongside Dick Fisher. Her brand new book “Fed Up” devotes a significant number of pages to practical Fed fixes.

“We’re no longer the same nation that we were in 1913 when the Federal Reserve act was initially conceived,” DiMartino Booth says. In other words, let’s bring the Fed into the realities of the 21st Century. Here are six of her policy proposals from the video above with Hedgeye CEO Keith McCullough:

 

  1. Reduce the Fed’s mandate to just minimizing inflation
  2. Take the labor mandate out of the equation; put it back in the hands of the private sector
  3. Reduce regional Fed offices to ten districts (from twelve currently) by adding a regional Federal Reserve office (or two) on the West Coast and absorbing Minneapolis, St. Louis and Cleveland into Chicago
  4. Give every district a permanent vote to minimize the power of votes in New York and Washington D.C.
  5. The Fed should hire more staff with greater financial market familiarity and experience
  6. The Fed needs a better appreciation of monetary policy rules, like the Taylor Rule, which would help serve as a system of checks and balances

 

Watch the entire Real Conversations interview between DiMartino Booth and McCullough, “‘Fed Up’ Fed Veteran: Our Central Bank Is Failing, Here’s How to Fix It."

 


Comcast & AT&T: Is Congress Setting Up a $60 Billion Opportunity?

 

As soon as tomorrow, Congress may vote to open up a brand new market for cable and telecom providers that’s currently worth $60 billion in revenue. The vote is on rolling back rules imposed by the Obama administration’s FCC.

 

“The Senate passed something on it last week. The House is scheduled to vote on these rules tomorrow. We believe that President Trump will sign this, if it comes to him, by the end of the week,” says Hedgeye Telecom & Media Policy analyst Paul Glenchur.

 

Once these rules are off the books, companies like Comcast (CMCSA), Charter Communications (CHTR), Verizon (VZ) and AT&T (T) will be able to earn digital advertising dollars. This realm has been dominated by the likes of Facebook (FB) and Google (GOOG), which have upwards of 60% of the market, Glenchur said on The Macro Show this morning.

 

That may change. And fast. According to Glenchur:

 

“It’s a $60 billion plus market, so there’s a lot of revenue growth still to come for broadband providers,” Glenchur says. “There’s a good growth trajectory if they can just be freed of the regulatory problems that they’ve been dealing with over the last year.”

 

We’re watching this one closely.


McCullough: Did You Buy the Dip? (You Should Have)

 

In the highlight reel above from The Macro Show this morning, Hedgeye CEO Keith McCullough explains why we told investors to raise cash last week and buy the dip in U.S. stocks today.

 

  • Stocks Overbought, Raise Cash… Stocks Oversold, Buy Stocks – In our asset allocation model, we took cash up to the year-to-date max on Friday because the market was overbought. “It’s really simple. Raise cash at the top end of our ranges,” McCullough says. “On the pullback, when nobody wants to buy’em, you buy’em.” By the way, it’s almost time for the month-end, quarter-end mark-up. In other words, “Yesterday could be the lows of the quarter,” McCullough says.
  • Hedge Fund Performance Chasers – Our proprietary risk ranges, which investors use to buy low and sell high, are calculated via the price, volume and volatility of an underlying asset. Staring at one of these in isolation is no way to trade. “If all you did was look at the surface, at price, you’d sell low and buy high. That’s what a lot of people, in the hedge fund community in particular, are being pressured to do. What they’re constantly doing is chasing their own momentum tail and that really doesn’t help you.”
  • A Brief Note on Oil – Oil prices are breaking down, McCullough says. Stay away.

 


Got BEN? Franklin Resources Is a “Very Undervalued” Stock

 

If you’re looking for exposure to a “very undervalued” stock, one which is among the world’s largest asset managers, we’ve got an idea for you.

 

Buy Franklin Resources (BEN).

 

Sure, the fund manager, with $738 billion in assets under management, has had a great run over the last six months. It’s up +14.6%. But skeptics on the stock are backward looking and overly fearful of negative fund flows, according to our Financials analyst Jonathan Casteleyn.

 

The flows are slowly, but surely, turning around.

 

“The top 100 Franklin funds are still in redemption, with an annualized negative growth rate of -8.3% but that has improved from the high teens,” Casteleyn says.

 

Meanwhile, the company has a “solid” net-asset value (NAV), with $12 per share in unrestricted cash and investments, and annual free cashflow of $2 billion for an 8% free cash-flow yield.

 

“Franklin stock is very undervalued in the intermediate-term, meaning over the next 12 to 24 months,” he says.


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