RIA DAILY PLAYBOOK
FOR RELEASE ON THURSDAY, JULY 26, 2012
CLIENT TALKING POINTS
FEEDING CHINA
In the game of inflation, you’ve got to control it enough so that there’s some kind of outright riot among the people and their government, You reach a point where food prices and oil prices become way to high for anyone, Think China is going to cut rates anytime soon? Not a chance. As a result, Chinese equities are going to have to endure a beating until we reach a point of stability that everyone is comfortable with.
WE LIVE IN A BOX
A box of short-termism. All we care about is the now and not the consequences that might affect us down the road. Yes, it’s corporate earnings season and yes, company XYZ got lucky on a beat. But really, a companies are missing out there. They are not meeting consensus and whoosh – down they go. Corporate revenues are looking a lot like they were in Q3 2008. But nevermind. All we need is a little hope that Fed Chairman Ben Bernanke (who is basically out of bullets), will ease further. Then the market is A-OK and good for another 20 handle rally in the morning, followed by an afternoon selloff.
SUPER MARIO DRAGHI
Big news out of Europe this morning. European Central Bank Chief Mario Draghi came out and said that he’s ready to do whatever it takes to save the Euro. Talk about a catalyst. Markets immediately responded positively to the news. The ECB may go and pull a Fed by going into the markets to buy bonds to quell fears over the situations in Spain, Italy, etc.
ASSET ALLOCATION
Cash: Flat U.S. Equities: Up
Int'l Equities: Flat Commodities: Flat
Fixed Income: Down Int'l Currencies: Flat
TOP LONG IDEAS
JACK IN THE BOX (JACK)
This company is transitioning from cash burn to $75mm annual free cash flow generation thanks to completion of a reimaging program and refranchising of JIB units. Qdoba is the leverage; a maturing and growing store base will bring higher margins. We see 8.5% upside over the next 6-9 months.
TRADE: LONG
TREND: LONG
TAIL: LONG
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
LIFEPOINT HOSPITALS (LPNT)
We continue to expect outpatient utilization to pick up in 2H12 alongside stabilization in acuity with ortho and cardiac/ICD volumes supporting both pricing and inpatient admissions growth. Births should serve as a tailwind into year-end, recent and prospective acquisitions offer some upside to 2012/13 numbers and the in place repo offers some earnings flexibility. With European and Asian growth slowing, we like targeted domestic revenue exposure as well.
TRADE: NEUTRAL
TREND: LONG
TAIL: LONG
THREE FOR THE ROAD
Tweet of the Day: “Wait. Las Vegas Sands did more Casino Revenue in Bethlehem PA than Las Vegas??!! tinyurl.com/cwx8hq2” -@ThemisSal
Quote of the Day: “Be yourself. The world worships the original.” – Ingrid Bergman
Stat of the Day: Initial jobless claims fell 35,000 last week to 353,000.
