EQUAL AND OPPOSITE REACTIONS
CLIENT TALKING POINTS
HOLLER AT THE DOLLAR
We really like the US dollar, it’s true. We’re of the belief that the commodity bubble that currently exists (have you checked our grains or precious metals lately?) will pop and prices will come down as the dollar rallies. Currently, we’re long the USD Index but that could soon change as we manage the risk and the range. Bernanke can only keep the illusion up for so long before someone pulls back the curtain and reveals the reality of this dog and pony show.
LET’S ALL MAKE STUFF UP
The absurdity associated with today’s media is at an all time high. Yesterday, the news that the ECB wasn’t going to do anything hit at 7:45am. But the media said “Well, let’s wait until Draghi says something at 8:30!” And we did and guess what? He didn’t do anything new. Report the news and don’t worry about the outcomes. That should be the media’s job. We didn’t see a lot of people discussing the intraday reversal of Spanish equities, which were up 2%, then closed down -5.2%. Sheesh.
FALL OF THE ROUNDTABLE
We did an analysis of what’s going on at Knight Capital Group (KCG) with our Managing Director of Financials Josh Steiner and CEO Keith McCullough. We highly recommend taking the time to listen to the call, which examines Knight’s fate and counterparty risk on Wall Street.
URL: http://app.hedgeye.com/media/513
_______________________________________________________
ASSET ALLOCATION
Cash: DOWN U.S. Equities: UP
Int'l Equities: Flat Commodities: UP
Fixed Income: UP 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
FIFTH & PACIFIC COMPANIES (FNP)
The former Liz Claiborne (LIZ) is on the path to prosperity. There’s a fantastic growth story with FNP. The Kate Spade brand is growing at an almost unprecedented clip. Save for Juicy Couture, the company has brands performing strongly throughout its entire portfolio. We’re bullish on FNP for all three durations: TRADE, TREND and TAIL.
- TRADE: LONG
- TREND: LONG
- TAIL: LONG
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
“RAJOY: `I TAKE NOTE' OF ECB WORDS, OTHER EU STATES SHOULD TOO. The Spanish 10 Year especially” -@zerohedge
QUOTE OF THE DAY
“Honesty is a good thing, but it is not profitable to its possessor unless it is kept under control.” – Don Marquis
STAT OF THE DAY
$3.09 billion. The amount of the loss recorded by the Royal Bank of Scotland (RBS) in the first half of the year.
