Mo' Money, Mo' Problems

Client Talking Points

The Vix

Not to be confused with the ‘80s band The Fixx, the CBOE Volatility Index (VIX) is at 15 and fast approaching the key level of 14. When the VIX is at 14, it’s a clear level to sell stocks for us and the rest of the institutional crowd out there. As we head into the weekend, keep an eye in the index in today’s trading. Provided there are no blowout catalysts in today’s market, volatility should remain at current levels.

Turning Japanese

With politicians debating what to do about the Fiscal Cliff on a daily basis and less than a month left until we hit the debt ceiling, things aren’t looking cheery for the United states right now. We’re beginning to look like Japan in ways as population growth slows along with our GDP numbers. The Federal Reserve’s agenda of printing money to solve problems hasn’t fixed anything and has artificially inflated commodity prices and the stock market while devaluing our currency over the years. With the US dollar down two weeks in a row, dollar bulls can’t call the currency the Comeback Kid just yet.

Asset Allocation

CASH 49% US EQUITIES 6%
INTL EQUITIES 0% COMMODITIES 9%
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.

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

“I wish one politician would call it what it is..taxes, not revenues” -@upsidetrader

QUOTE OF THE DAY

“It is amazing what you can accomplish if you do not care who gets the credit.” -Harry Truman

STAT OF THE DAY

Unemployment in the Eurozone hit a new high of 11.7% in October.