CLIENT TALKING POINTS
Crude Mood
Yesterday, we re-shorted Brent crude oil (OIL) in our Real-Time Alerts as it tested our immediate-term TRADE line of resistance of $110.02. With commodities deflating as growth stabilizes, oil is poised to take a beating over the next few months and can go a long way down from here. If the US dollar is able to stabilize and strengthen, it will add to oil’s woes.
Stop The Presses
It wouldn’t hurt for central planners to shut the printing presses off for a bit and hit Cancun for a week. Japan is the latest country to join the party of those who think printing more money over and over again is the solution to any problem. Look at how well its worked out for the Eurozone and the United States! Our third round of quantitative easing is clearly not working the way Ben Bernanke thought it would. Gone are the long-term artificial bull markets created from Fed announcements. Clearly, more of the same isn’t working. We’ll continue to be long consumption and short commodities, including oil.
TOP LONG IDEAS
NKE
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.
SBUX
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.
FDX
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.
Asset Allocation
| CASH | 52% | US EQUITIES | 24% | |
| INTL EQUITIES | 12% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 12% |
THREE FOR THE ROAD
TWEET OF THE DAY
“On an operating basis $DRI burned about $250MM in cash... before spending the $578MM to buy Yard House!” -@HedgeyeHWP
QUOTE OF THE DAY
“There is no greater importance in all the world like knowing you are right and that the wave of the world is wrong, yet the wave crashes upon you.” -Norman Mailer
STAT OF THE DAY
IntercontinentalExchange (ICE) to buy NYSE Euronext (NYX) for about $8.2 billion.
