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Client Talking Points

Question The Markets

The market has been quite unpredictable over the past week. The S&P 500 is down -1.7% November-to-date and there’s no distinct catalyst that moves the market each day. On top of it all, the lack of volume makes for big swings that are unjustified in a sense that don’t correlate with the underlying fundamentals of what’s truly happening right now. Growth is slowing, commodities are weakening and the Fiscal Cliff is still unresolved. If the latter can be addressed in a quick and decisive matter, then you can expect the market to cheerlead and head to the upside. 

Asset Allocation

CASH 49% US EQUITIES 6%
INTL EQUITIES 0% COMMODITIES 6%
FIXED INCOME 24% 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.

IGT

There is improving visibility on 20%+ EPS growth with P/E of only 11x with better content leading to market share gains. New orders from Canada and IL should be a catalyst. Additionally, many people in the investment community are out in Las Vegas at the annual slot show (G2E) and should hear upbeat presentations by management.

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

“Hilsenrath lives!!” -@Commodity_Bull

QUOTE OF THE DAY

“Time is that quality of nature which keeps events from happening all at once. Lately it doesn't seem to be working.” -Anonymous

STAT OF THE DAY

Jobless Claims fell by 41,000 last week to 410,000.