Ice-ing On The Cake

ICE-ING ON THE CAKE 

 

CLIENT TALKING POINTS

 

ICE-ING ON THE CAKE

IntercontinentalExchange (ICE), rival to CME Group, is going to close its open outcry trading pits in lower Manhattan today. It is the end of an era for those who are used to yelling and shouting orders for everything from cotton to cocoa. The proliferation of electronic trading across multiple asset classes has helped improved price discovery, costs and availability to traders both retail and institutional. There are hardly any independent futures exchanges left in the United States aside from the two giants: CME Group and ICE. CME’s floor pits in Chicago are hanging on borrowed time and will likely close sometime in the near future. It’s the end of an era and the beginning of a new one - for better or for worse.

 

 

A SLOWDOWN IN EARNINGS

Call us crazy, but our #EarningsSlowing theme continues to gain traction as more companies report this month. It seems that everyone from Microsoft (MSFT) to Morgan Stanley (MS) to AMD (AMD) are feeling the hurt from the global macroeconomic environment. If you think stocks look “cheap” here and are poised for another “big time rally,” you are mistaken. Cheap gets cheaper and the November election will play a big role in where we’re headed as a country and economy into 2013.

 

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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

 

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

“BREAKING: Obama credits Tiger win to GM bailout #fairshare” -@KeithMcCullough

 

 

QUOTE OF THE DAY

“The Bible tells us to love our neighbors, and also to love our enemies; probably because they are generally the same people.” -G.K. Chesterton

                       

 

STAT OF THE DAY

Microsoft profit down 22% on falling sales of Windows. 

 

 


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