THE VALUE OF A DOLLAR
CLIENT TALKING POINTS
THE VALUE OF A DOLLAR
If you get the US dollar right, you get a lot of other things right. This is very important to remember when you’re trading and investing on a daily basis. The moves the dollar makes correlate to things like crude oil, commodities and the euro, so you need to keep an eye on it even if you’re not a currency trader. Bernanke has continued to devalue our currency year after year for nearly half a decade at this point. Some claim that it’s the way out of the great recession we’ve been in. We don’t buy that nonsense.
THE SLOWDOWN
Everything is slowing down, like Neo in The Matrix when he’s dodging bullets. Seriously, though. Growth continues to slow as the recession drags on, cycles continue to peak and roll over and commodities inflate. We also have earnings slowing with the likes of FedEx (FDX) and Caterpillar (CAT) showing us what it’s like when they have to lower guidance for 2013. This sort of thing will continue to happen as more companies report; just watch and see.
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ASSET ALLOCATION
Cash: UP
U.S. Equities: DOWN
Int'l Equities: DOWN
Commodities: Flat
Fixed Income: Flat
Int'l Currencies: Flat
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TOP LONG IDEAS
BRINKER INTL (EAT)
Remains our top long in casual dining as new sales layers (pizza) and strong-performing remodels (~5% comps) should maintain sales momentum. The company is continuing to enhance returns for shareholders through share buybacks . The stock trades at a discount to DIN (7.7x vs 9.3x EV/EBITDA) and in line with the group at 7.3x.
- 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
UNDER ARMOUR (UA)
This company’s on track to post $3Bn in revenues by ’14 – impressive given a $1.5Bn print in 2011. Perhaps more impressive is the breadth of growth drivers that will get it there – women’s, accessories, new underwear platform etc. in addition to footwear. UA is gaining share in both apparel and footwear quarter-to-date. While some may be concerned over the loss of UA’s SVP/Sourcing we’re 8% ahead of the Street in the upcoming quarter and buyers on weakness.
- TRADE: LONG
- TREND: LONG
- TAIL: LONG
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THREE FOR THE ROAD
TWEET OF THE DAY
“#Dow starts the week 3.91% away (554 pts) from an all-time high. $$” -@carlquintanilla
QUOTE OF THE DAY
“History teaches us that men and nations behave wisely once they have exhausted all other alternatives.” -Abba Eban
STAT OF THE DAY
Chile SEP inflation (CPI) rises to +2.8% YoY from 2.6%
