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ONE BIG MESS

CLIENT TALKING POINTS

PLEASE IGNORE THE RUMORS

Fib after lie after fib, there is always someone out there talking about China and how it has no concern for inflation (it most certainly does) and will still go into another round of easing soon, etc. This is nothing but nonsense. Six weeks of rumors have gone by and the Chinese stock market is still in the gutter. Now what do you say? Is there still hope in the form of central planner bailouts? We think not.

ONE BIG MESS

If the market goes up, it’s a mess for the economy. How? 0% rates are a bane for retirees with fixed-income portfolios, small business owners and higher commodity prices. If the market goes down, it’s a mess for the market. When stocks fall, everyone feels like a loser. Right now, growth is slowing all around us and while the market is up year-to-date still, it’s nothing to cheer about.

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ASSET ALLOCATION

Cash:                Down

U.S. Equities:   Flat

Int'l Equities:   Flat   

Commodities: Flat

Fixed Income:  UP

Int'l Currencies: Flat  

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TOP LONG IDEAS

NIKE (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            

PACCAR (PCAR)

Emissions regulations in the US focusing on greenhouse gases should end the disruptive pre-buy cycle and allow PCAR to improve margins. Improved capacity utilization, truck fleet aging, and less volatile used truck prices all should support higher long-run profitability. In the near-term, Paccar may benefit from engine certification issues at Navistar, allowing it to gain market share. Longer-term, Paccar enjos a strong position in a structurally advantaged industry and an attractive valuation.

  • 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

“According to the Chinese papers today : Big stimulus will limit economic growth. They get #inflation.” -@HedgeyeDJ

QUOTE OF THE DAY

“After all is said and done, a lot more will be said than done.” –Unknown

STAT OF THE DAY

$7.3 billion. The amount of money offered by Thai billionaire Charoen Sirivadhanabhakdi for beverage conglomerate Fraser & Neave.