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TO DEBASE A CURRENCY

CLIENT TALKING POINTS

WHAT’S IN A MARKET?

We’re essentially in a no volume, no volatility market. Think about it for a second: the VIX remains below 16 and yesterday’s NYSE volume was -30% yesterday vs the average down day for August. Must be great to be an equity broker these days. And of course everyone is back on the permabull bandwagon as they desperately try to hit 1400 on the S&P 500. Close, but no cigar. Best of luck trying to ride the beta wave, permabulls.

POURING CRUDE

Brent crude oil is up +25% since June! Isn’t that awesome? $110 a barrel oil thanks to Jon Hilsenrath and Ben Bernanke. Consumers at the pump have to be loving this three week trend of the US Dollar falling; lord knows it certainly helps pad their wallets when they hit the pump and grocery store (kidding.) As long as the Wall Street Journal continues to cheerlead for the Fed, expect more of this dollar debauchery and central planning madness.

JUST DEVALUE IT

Devaluing your country’s currency is so chic these days. Seriously. Venezuela had their currency devalued 50% by Hugo Chavez and now their stock market is up +110% year-to-date. No, that was not a typo – you read that number correctly. People seem to enjoy these little market rallies and the inability to earn a return on capital. Remember the days when you could put some money in fixed income or even a savings account and get a little return? We won’t be seeing a return to those days anytime soon, that much is certain.

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ASSET ALLOCATION

 Cash:               Flat  U.S. Equities:    Flat

 Int'l Equities:   Flat                   Commodities:    Flat

 Fixed Income:  Flat Int'l Currencies: DOWN

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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

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THREE FOR THE ROAD

TWEET OF THE DAY

“$EURUSD Tests its 55 DMA for 1st time in 3 months as Stocks Hit New 3mth Highs bit.ly/MKvmmd #forex” -@alaidi

QUOTE OF THE DAY

“The reason why so few good books are written is that so few people who can write know anything.” – Walter Bagehot

STAT OF THE DAY

$250 billion. The amount of illegal Iranian transactions that Standard Chartered allegedly helped conceal.