Follow the QE. Top 5 Wall Street ideas last week

Published Sat, Apr 11 20156:00 AM EDTUpdated Mon, Apr 13 20156:44 AM EDT

CNBC Pro highlights below the five best strategy or economic notes that came across our desk this week. The excerpts are from the strategists whose work we find to be particularly insightful. Robert Buckland, Citigroup (April 7): "Still overweight QE" "The ECB and BoJ are expected to pursue further QE which should weaken their currencies and support profits. The Fed is expected to tighten policy later in the year which should strengthen the US$ and hold back profits...In hedged currency terms, we favour Europe ex UK and Japan where QE should provide further impetus. We underweight commodity-tilted UK and Australia. We are Neutral US and EM. In EM we prefer Asia to LatAm and CEEMEA. Our sector strategy has a cyclical bias." Chris Verrone, Strategas (April 6): "Average stock continues to oupterform" "Despite the volatile backdrop, the average stock continues to outperform the (S & P 500) Index – this underscores the importance of stock selection right now. Near-term S & P support is near 2040, followed by roughly 2015 (the upward sloping 200-day moving average)...At the sector level, we continue to like homebuilding stocks. By our work, this still looks out of consensus – just 34% of analyst recommendations to the group is rated buy." The Guggenheim S & P 500 Equal Weight ETF tracks the average stock's performance. Jeffrey Hirsch, Hirsch Holdings and the Stock Trader's Almanac (April 7): What to hold during historically the worst six months for stocks (May-November): "Due to the Fed's zero interest rate policy (ZIRP), most money market accounts (and similar places to park cash during the 'Worst Six Months') pay literally nothing. This leaves few alternatives aside from the relative safety of Treasury bonds. The problem here is longer-dated maturities offer the best yield, but also tend to be the most volatile. So any benefit of a higher yield can be quickly erased by a drop in bond price. To lessen volatility shorter duration bonds are best, but here again due to ZIRP they also offer next to no yield. The best approach would be to own Treasury bonds across the entire duration spectrum. By doing so, yield is likely to be more attractive and volatility could be trimmed. iShares Core Total US Bond Market (AGG) nicely does just this. It holds Treasuries of multiple durations, yields right around 2% and exhibits more price stability than other longer-dated Treasury bond ETFs. AGG has more than $24 billion in assets, trades more than 1 million shares a day on average and, best of all, its expense ratio is just 0.08%. AGG can be bought on dips below $110.12." Savita Subramanian, Bank of America Merrill Lynch (April 10): "Expect first EPS decline since '09, but not a reason to sell" "This quarter marks the first since 2009 in which analysts expect earnings to fall YoY: consensus EPS growth is -4%, or -6% excluding the impact from buybacks. ... Historically, we have found that sectors with strong earnings revisions, sales revisions and management guidance have been more likely to have a greater proportion of EPS overshoots than misses in the subsequent earnings season. Also, given positive surprises tend to persist, sectors with a higher ratio of positive to negative surprises in the prior quarter may be more likely to enjoy similar results in the current quarter. Each quarter we have ranked sectors by these measures, and for 1Q15 earnings season we found Healthcare screens as most attractive, while Energy screens as least attractive, the same as in 4Q." Donald Luskin, Trend Macrolytics (April 7): "From March Badness to a Monday Miracle" "Considering futures markets on the Friday holiday, yesterday (Monday) the S & P 500 rallied 32.72 points, not the 13.66 that showed on the tape, despite Friday's big miss on jobs. Dudley made reassuring noises, but we think the explanator is the sharp rally in global crude prices despite the risk of new supplies from Iran. Saudi announced a price hike on improved global demand, reaffirming our view that we've seen the lows for the year in crude--and by extension, the highs for the dollar. This reduces the risk of recession, and a potential 'reflexive' vicious cycle, arising from the shock of fracking as a 'disruptive technology.' Stocks have corrected only 3.28%, so it's hard to believe we've seen the worst in this move. But the fundamentals are all falling into place for a move back to the highs." Read More Goldman: Buy these 5 stocks before earnings

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CNBC Pro highlights below the five best strategy or economic notes that came across our desk this week. The excerpts are from the strategists whose work we find to be particularly insightful.