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Client Talking Points

Managing Risk

As the transition from #GrowthSlowing to #GrowthStabilizing continues, commodities will keep deflating in price as the number of total CFTC net long contracts declines along with the price of gold, silver and other assets. This whole #GrowthStabilizing thing is good for America, but isn’t very welcome by those who are long gold and/or Treasuries. Corn is getting clobbered, along with wheat, soybeans and other commodities now that investors are realizing you can’t just pump out more rounds of quantitative easing to artificially inflate prices. Keep an eye on gold, as it snapped our long-term TAIL risk line of $1671 last week and has fallen considerably in price since then. Same goes for the CRB Commodities Index, which remains in a bearish formation.

Dollar Holler

The US dollar has been up for 9 of the past 13 weeks, which certainly doesn’t help commodity bulls. A strong dollar helps strengthen America, so those of you who are trading the commodity deflation cycle, hats off. Our range for the EUR/USD at the moment remains at $1.31-1.33. 

Asset Allocation

CASH 55% US EQUITIES 21%
INTL EQUITIES 12% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 12%

Top Long Ideas

Company Ticker Sector Duration
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.

Three for the Road

TWEET OF THE DAY

“The 12 Days Of Trading" On the 1st day of trading the markets gave to me, a spike from high frequency' bit.ly/Y6WqQO” -@bclund

QUOTE OF THE DAY

“Whenever you find that you are on the side of the majority, it is time to reform.” -Mark Twain

STAT OF THE DAY

London Stock Exchange to pay $482 million for a 60% stake in LCH.Clearnet.