A Crisis of Confidence

RIA DAILY PLAYBOOK     

FOR RELEASE ON TUESDAY, JULY 17, 2012

CLIENT TALKING POINTS

BETTING ON BERNANKE

Another day of what Jesse Jackson would call “keep hope alive.” The market is rallying pre-open this morning as the masses use hope as a risk management process. The hope is that Fed Chairman Ben Bernanke will continue on his path of quantitative easing, kicking the goalpost down the line past the current 2014 date. And in turn, oil is ripping higher with Brent crude at $104 a barrel. It appears everyone really enjoys those prices at the pump.

GET THE DOLLAR RIGHT...

...and you get a lot of other things right, especially in lieu of Bernanke today. Get the USD right and you’ll solve the correlation puzzle connected to commodities, oil, currencies and equities. Just so you know: we view the USD in a bullish formation and gold in a bearish formation.

CONSUMING US ALL

71% of the US Economy is based on consumption. That’s a lot of big macs, Ford trucks and Chinese buffets. The inflation in food and oil we’ve experienced since the dawn of the age of QE has pissed the public off and with good reason. Why people continue to subject themselves to $10 boxes of cereal and $5 a gallon gas is beyond us. You get the US economy right and it helps guide you on the slope of growth.

ASSET ALLOCATION

Cash: Up                U.S. Equities: Down

Int'l Equities: Down    Commodities: Down

Fixed Income: Up        Int'l Currencies: Down

TOP LONG IDEAS

PSS WORLD MEDICAL (PSSI)

The bulk of the bad news is on the table following disappointing F2012. Rebased F2013 estimates far more reasonable, and revenues should be supported by our expectations for rising physician utilization, and in the near-term, a flu season that is shaping up as a considerable tailwind.

TRADE: LONG

TREND: LONG

TAIL: NEUTRAL

HCA (HCA)

SS volume accelerated in 1Q12 and employment remains a tailwind to both admissions & mix. We expect acuity to stabilize and births and outpatient utilization to accelerate out of 1Q12, while supply cost management continues as a margin driver and acquisition opportunities remain a source for upside.

TRADE: NEUTRAL

TREND: LONG

TAIL: NEUTRAL

UNDER ARMOUR (UA)

The company continues to control its own destiny through investments in all the right areas. We think 30%+ top line and EPS growth for 5+ years. One of its failures, however, has been in penetrating markets outside the US. That will happen. But for now, its failure is a competitive advantage in the face of a strengthening dollar. We like it in sympathy with a LULU sell-off.

TRADE: LONG

TREND: LONG

TAIL: LONG

THREE FOR THE ROAD

Tweet of the Day: “BoE's KING: First we knew of LIBOR fraud was two weeks ago; BoE not responsible for regulation of markets.”-@DailyFXTeam

Quote of the Day: “Character is much easier kept than recovered.” –Thomas Paine

Stat of the Day: CHINA: +0.6% for the Shanghai Comp on the bounce after yesterday's -1.7% smackdown