We Can Demand Better

WE CAN DEMAND BETTER

CLIENT TALKING POINTS

TROUBLE IN RUSSIA

Russia is an interesting country and not just for the vodka and YouTube videos that come out of there. It is effectively a high beta market that is closely tied to gold, oil and mining. Commodities matter in Russia – why do you think there’s all these rich oligarchs running around? So should the US dollar rise, Russia is in for a hell of a freefall in regards to their market. Russian stocks are down -21% from the March top.

WE CAN DEMAND BETTER

That’s right. Complacency is for suckers. If we want more stimulus and dollar debauchery, we can get it. Bernanke is willing to hand out round after round of quantitative easing, no matter the end cost. And at this point, with the S&P 500 struggling day after day to stay above 1400, that help will certainly be needed. Consider how bad volumes are in the US equity market. Little-to-no action will move a stock a dollar or more in some cases. Growth is slowing and inflation is rising. I doubt many of you are OK with higher fuel and food prices. The question is: when will you demand better?

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ASSET ALLOCATION

Cash:                  DOWN

U.S. Equities:   UP

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

“Stagflation: Finland Q2 GDP -0.1% Y/Y vs 2.2% in Q1” -@KeithMcCullough

QUOTE OF THE DAY

“The reason there are so few female politicians is that it is too much trouble to put makeup on two faces.” –Maureen Murphy

STAT OF THE DAY

Spain banks raise share of Spain debt to 32.3% from 30.9% in June.