Another Tale Of Slowing

ANOTHER TALE OF SLOWING

 

 

CLIENT TALKING POINTS

 

ANOTHER TALE OF SLOWING

By now, you’ll clearly understand our case on growth slowing here in the United States. But what about corporate earnings? Are they also slowing? As Sarah Palin would say: “you betcha!” Right now everyone is busy filling themselves on goblets of QE3 Kool-Aid. There’s no worry about getting things “right” in the market. And yet, big corporations seem to know that things aren’t exactly peachy. Remember when Fedex (FDX) came out a month ago and issued lower guidance and then reported earnings and everyone seemed to forget about their previous announcement? Or take Staples (SPLS) which did the same thing. The truth of the matter is that corporate earnings are slowing along with growth and the economy isn’t better because of more QE, it’s getting worse. Keep in mind that Apple (AAPL) is not the economy or the market.

 

 

NO MORE HOLLERING

It has been six consecutive weeks of the US dollar Index falling lower and lower – nearly 2 months since the investment community rallied around the currency for a “Dollar Holler” as I like to call it. We wonder what it’ll take for confidence to construct itself again in the dollar. It seems that no one wants to even bother with it post-Bernanke speeches and it makes sense. He’s busy devaluing our currency while driving up food and fuel prices. We wonder why any of the retail crowd or mass market American public would want this to happen. It’s not like QE is going to get them out of foreclosure or get them a new job.

 

 

_______________________________________________________

 

ASSET ALLOCATION

 

Cash:                  UP

 

U.S. Equities:   DOWN

 

Int'l Equities:   Flat   

 

Commodities: Flat

 

Fixed Income:  Flat

 

Int'l Currencies: Flat  

 

 

_______________________________________________________

 

TOP LONG IDEAS

 

WENDY’S COMPANY (WEN)

Our conversations with Wendy’s franchisees indicate that sales have been trending sequentially higher in 3Q versus 2Q. We believe the company is about to announce the end of the company’s Sisyphean breakfast initiative after a prolonged “testing” phase. Given the capital demands on the company over the next few years as it invests to upgrade its asset base, shifting capital from the distraction that has been breakfast is a positive. The tail is less certain as it will take years for the system to rejuvenate the asset base and push out the older franchisees that don’t want to make the necessary investments to bring the asset base in line with contemporary industry standards..

  • TRADE:  LONG
  • TREND:  NEUTRAL
  • TAIL:      NEUTRAL            

 

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

  

_______________________________________________________

 

THREE FOR THE ROAD

 

TWEET OF THE DAY

“Bank Of America To Fire 16,000 By Year End tinyurl.com/ckprfp9” -@zerohedge

 

 

QUOTE OF THE DAY

“I could prove God statistically.” –George Gallup

                       

 

STAT OF THE DAY

Jobless Claims drop less than expected, down 3000 to 382,000; Wall Street expected 373,000.

 

 

 

 


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