Client Talking Points
The fiscal cliff is the one catalyst that can really mix things up, but take that out of the equation and you can see the markets are experiencing a change. We’re slowly moving from #GrowthSlowing to #GrowthStabilizing. The commodity super-cycle is beginning to deflate with total net long commodity contracts falling -11% week-over-week and sugar, wheat and oil all dropping double digit percentages over the same time period. One exception is gold as bets that it’ll go higher continue to increase. With gold at $1690/oz right now, watch out for our TAIL line of support of $1670. If that breaks, look out below.
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Top Long Ideas
Our competitors are neutral to bearish on the name ahead of earnings, but we think they’re missing the bigger picture. We think concerns over the shoe cycle rolling over are overdone. With R&D in the mid-teens, NKE has the ability to drive the ‘sneaker cycle’ in a case of “the tail wagging the dog”. We also think $NKE is a candidate for releasing a special dividend when they report EPS next week.
Uncertainty in US from a macro perspective (jobless claims uptick) gives us pause from TRADE perspective although coffee prices will serve as a tailwind going forward. Company is becoming more complex, taking on risk as it acquires new brands. Longer-term, we view Starbucks, along with YUM, as one of the most attractive global growth stories in our space.
Margins are in a cycle trough as the USPS is on the brink. FDX is taking more share in the U.S. and following the recent $TNT news flow we think $UPS is in a tough spot.
Three for the Road
TWEET OF THE DAY
“Tepper says markets are going up and everybody buys $AAPLpremarket” -@harmongreg
QUOTE OF THE DAY
“There are some that only employ words for the purpose of disguising their thoughts.” -Voltaire
STAT OF THE DAY
Federal Reserve’s Empire State Index declines for fifth straight month to -8.1 in December from -5.2 in November.