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    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Client Talking Points

Tech Mate

Remember back in 2011 where you could be a great stockpicker by purchasing shares of Apple (AAPL) and letting them ride higher and higher like a balloon jammed to the gills with helium? Not the case these days, especially with management shakeups and disappointing price points on new products. Technology is performed awful in October as one of the worst sectors out there. The XLK fell a whopping -6.3% and Apple makes up a big portion of that ETF. So just think to yourself, with companies like Intel (INTL) and others missing on earnings, do you really think tech is still hot?

Asset Allocation

CASH 58% US EQUITIES 6%
INTL EQUITIES 0% COMMODITIES 0%
FIXED INCOME 21% INTL CURRENCIES 15%

Top Long Ideas

Company Ticker Sector Duration
TCB

After a long downward slide, TCB has finally turned the corner. The margin has stabilized after the balance sheet restructuring. Loans are growing thanks to the equipment finance business. Non-interest income is more likely to go up than down going forward, a reversal from the past 18 months. Credit quality has a tailwind from a distressed housing recovery in TCB’s core markets: Minneapolis, Detroit and Chicago. On top of this, the CEO, Bill Cooper, is one of the oldest regional bank CEOs, which raises the probability that the bank will be sold. Expectations are bombed out at this point, so we think it’s time to move from bearish to bullish on TCB.

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.

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.

Three for the Road

TWEET OF THE DAY

"The irony is exquisite: Obama does his job for a couple days and everyone yells: Game changer!!!" -@JonahNRO

QUOTE OF THE DAY

"So much of what we call management consists in making it difficult for people to work." -Peter Drucker

STAT OF THE DAY

Pfizer's profits fall -14% thanks to generic Lipitor.