Opinions expressed herein are those of Brett Ewing and S. Lance Mitchell and do not represent those of Centaurus Financial, Inc.
Jobs Report Helps Weak Dollar Thesis
- Over the recent few months the rally in risk assets has begun to pull forward the likelihood of a raise in the FED funds rate
- The US Dollar started rallying at the end of April & sure enough markets started falling
- Many participants probably feel duped into believing the weak dollar rally & namely the extreme rallies that were seen in industrial, cyclical, emerging market companies
- We believe that the rallies in these sectors were in fact not a dead cat bounce but a true trough in a multi-year decline the areas had been experiencing
- We believe the real sea change case was only made stronger with the weak NFP number released today
- Only creating 160k jobs gives the FED more fuel to continue a “gradual” policy which really means no hikes until we know for sure things have changed
- This should continue the downtrend in the dollar and the snapback in valuations for cyclical & industrial companies
- Market participants have severely discounted the tailwind of a weaker dollar in earnings & revenue results for these sectors & in the back half of 2016 we believe it will begin to show
- Three individual names we like as case examples are Darling Ingredients (Ticker: DAR), Consol Energy (Ticker: CNX), & Colfax Corporation (Ticker: CFX)
- Rearview mirror earnings are useless for these companies as we believe the numbers have troughed & on a go forward basis they should experience solid growth aided by a falling dollar
Securities and advisory services offered through Centaurus Financial, Inc., member FINRA and SIPC, a registered investment advisor. Centaurus Financial, Inc. and First Franklin Financial Services are not affiliated companies. This presentation is for educational purposes only and is not intended for investment advice or a solicitation of services.
Brett Ewing and S. Lance Mitchell may own shares of DAR, CFX and CNX personally and also may manage discretionary accounts which include DAR, CFX and CNX shares in the portfolio. The views and opinions expressed herein are those of Brett Ewing and S. Lance Mitchell alone and do not reflect the views of Centaurus Financial, Inc., its affiliates, agents or employees. The information set forth herein has been obtained from sources believed to be reliable; however no guarantee is made or implied with respect to its accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any investment decision. This information has been provided solely for informational and educational purposes only and should not be construed as an offer to sell or the solicitation of an offer to buy or sell any securities.
Any equity ideas noted herein are not and should not be construed as a recommendation or rating to buy, hold or sell any security. The information and content herein are subject to change without notice and Centaurus Financial, Inc., its affiliates, subsidiaries, employees, officers, agents or representatives may from time to time have positions or may acquire a direct or indirect beneficial interest in securities mentioned in this communication. As with any investment, the past performance of DAR, CFX and CNX is not an indication of future performance.