SEE YOU AT JACKSON HOLE
CLIENT TALKING POINTS
TURNING JAPANESE
Japan is getting hit in the gut and no one is lending a helping hand to help them stand back up. On top of the $26.3 billion loss suffered by their Public Pension Fund, the Nikkei is down -1.6% into month end for August and is down -3.7% since August 23. Oh, and it’s also down -13.8% since the all important month of March. For 20 years this country has been in the gutter. But as long as they follow the path of Keynesian economics and keep printing that yen, everything will be OK (until it’s not).
TOUGH NUMBERS
The truth can be hard to swallow but sometimes you need to buck up and face it head on. Let’s look at some recent economic data and number play that reflects the global environment we live in where growth slows and printing presses never get shut off, shall we? We’ll make it easy on you and will focus on US numbers only. If we gave you the full breakdown, we’d have to call you a doctor:
1. US Jobless Claims rose wk-over-wk to 374,000 vs 366,000 two weeks ago
2. US Consumer Confidence fell -8% month-over-month in AUG to 60.6 vs 65.9 in JUL3
3. US GDP Growth for Q212 slowed to 1.73% vs +1.97% in Q112
SEE YOU AT JACKSON HOLE
Today’s the big day. Will we get another round of quantitative easing from the Federal Reserve or not? That is THE question. And furthermore, is QE already priced into the market? Will it even matter if we get another round? Unfortunately, we have to stay on the sidelines while we wait for Bernanke to speak. That’s the problem with these central planning catalysts; you basically can’t do anything until you have them come out, clear the pomp and circumstance and tell the investing public what they plan on doing. At least after today we can return to trading knowing what the state of monetary policy is.
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ASSET ALLOCATION
Cash: Flat
U.S. Equities: Flat
Int'l Equities: Flat
Commodities: Flat
Fixed Income: Flat
Int'l Currencies: Flat
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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
“figured trading volume will fall off a cliff at 12 noon today... holiday weekend” -@tjtakes
QUOTE OF THE DAY
“Eccentricity is not, as dull people would have us believe, a form of madness. It is often a kind of innocent pride, and the man of genius and the aristocrat are frequently regarded as eccentrics because genius and aristocrat are entirely unafraid of and uninfluenced by the opinions and vagaries of the crowd.” -Edith Sitwell
STAT OF THE DAY
$26.3 billion. The amount of the loss suffered at the Japan Public Pension Fund.
