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LAST NIGHT’S DEBATE

CLIENT TALKING POINTS

LAST NIGHT’S DEBATE

Last night’s debate was a fierce battle between Joe Biden and Paul Ryan over myriad issues. We may not be ready to declare a “winner” just yet, but one thing is certain: Biden laughed. He laughed, laughed and laughed some more. Keith sums it up best: Ryan looks like a rookie and Biden looks like a snake. There has been no material change on InTrade with Obama vs Romney, so the kid held his own.

EARNINGS GAME

#EarningsSlowing continues as companies like Norfolk Southern (NSC) and FedEx (FDX) get rocked when they offer lower guidance. JP Morgan (JPM) and Wells Fargo (WFC) were able to beat this morning, but keep in mind that earnings are peakish for a lot of names out there. Not everyone can pull a JPM and beat the Street. 

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ASSET ALLOCATION

Cash:                UP

U.S. Equities:   DOWN

Int'l Equities:   Flat   

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

HCA HOLDINGS (HCA)

While political and reimbursement risk will remain near-term concerns, on the fundamental side we continue to expect accelerating outpatient growth alongside further strength in pricing as acuity improves thru 1Q13. Flu trends may provide an incremental benefit on the quarter and our expectation for a birth recovery should support patient surgery growth over the intermediate term. Supply costs should remain a source of topline & earnings upside going forward.

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

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THREE FOR THE ROAD

TWEET OF THE DAY

“If u just read the top/bottom line beats for these bailed out banks, you're being regressive - may as well use a walkman” -@KeithMcCullough

QUOTE OF THE DAY

“A lot of fellows nowadays have a B.A., M.D., or Ph.D. Unfortunately, they don't have a J.O.B.” -Fats Domino

STAT OF THE DAY

JPM Earnings: Top & Bottom line beats. $1.40 includes 18 cents reserve release vs. expectations for 14 cents