DOWN WITH GOLD!
CLIENT TALKING POINTS
DOWN WITH GOLD!
Gold sold off hard late yesterday and is continuing to fall this morning. When news hit the wire that Draghi wouldn’t be attending the Federal Reserve meeting at Jackson Hole, people got scared. Keith is bullish on the dollar and is of the belief that if you get the dollar right, you get a lot of other things right. That appears to be the case right now: dollar up, gold down. And if the Fed doesn’t save the world like Bruce Willis in the movie Armageddon, then gold is poised to fall a lot lower. That last point will be emphasized should Romney pick up some momentum at the Republican National Convention this week.
CENTRAL PLANNERS RUN AMOK
Sometimes, people get confused. It happens to the best and the worst of us and it can’t be helped at times. In the world of central planning, however, clarity is needed. It appears that some of them are of the belief that inflation is equal to growth. Nope. That’s simply not true. Take Venezuela’s intrepid leader Hugo Chavez for example. The stock market is up +153% year-to-date! That being said, their currency has been devalued to hell and back – that’s no fun for anyone, is it? Asset price inflation is not growth. Your head of lettuce going for $10.50 a pop and $50 a gallon gas is not growth.
MORE DOLLAR DEBAUCHERY
Courtesy of Keith, we’d like to point out the effects of beating up on the US dollar and how that’s affected stocks and commodities. See below:
“Here’s the update on what US Dollar Debauchery has done for this 30-day bull run in stocks and commodities (inverse correlations between USD Dollar Index and the big stuff people are speculating on)”
1. Gold = -0.85
2. Silver = -0.87
3. Oil (WTIC) = -0.81
4. CRB Index = -0.74
5. CRB Raw Industrials Index = -0.79
6. SP500 = -0.83
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ASSET ALLOCATION
Cash: Flat
U.S. Equities: DOWN
Int'l Equities: Flat
Commodities: Flat
Fixed Income: Flat
Int'l Currencies: UP
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TOP LONG IDEAS
NIKE INC (NKE)
Nike’s challenges are well-telegraphed. But the reality is that its top line is extremely strong, and the Olympics has just given Nike all the ammo it needs to marry product with marketing and grow in the 10% range for the next 2 years. With margin pressures easing, and Cole Haan and Umbro soon to be divested, the model is getting more focused and profitable.
- 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
LAS VEGAS SANDS (LVS)
LVS finally reached and has maintained its 20% Macau gaming share, thanks to Sands Cotai Central (SCC). With SCC continuing to ramp up, we expect that level to hold and maybe, even improve. Macau sentiment has reached a yearly low but we see improvement ahead.
- TRADE: LONG
- TREND: NEUTRAL
- TAIL: NEUTRAL
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THREE FOR THE ROAD
TWEET OF THE DAY
“Look at those long term charts today, what do you see? Read some interesting metrics about Cyclically Adjusted Price/Earnings ratios (CAPE)” -@jackstone104
QUOTE OF THE DAY
“If at first you don't succeed, failure may be your style.”–Quentin Crisp
STAT OF THE DAY
Credit Agricole’s quarterly profit dropped 67% year-over-year thanks to troubles in its (drum roll, please) Greek and Italian businesses. It posted second-quarter net profit of €111 million compared with €339 million a year earlier.
