A New Year

Client Talking Points

Over And Out

Now that the fiscal cliff has narrowly been avoided, we can get back to what really matters. It’s truly a shame that the political class held Americans hostage with their absurd demands instead of serving the people who elected them to office in the first place. But such is life. 2013 is a new year and a time for new beginnings. We can now put our focus back on trading the markets using our process: fundamental research combined with quantitative risk management. We stick to this process and in return, we move forward. 

The Growth Game

Growth has stopped slowing and is now stabilizing. That’s just a matter of fact. The great commodity bubble that the Federal Reserve helped create is now deflating. Things like gold, oil and corn can go a lot lower and that’s good for the American consumer when they visit the pump or go grocery shopping. We’re long consumption growth, short commodities. That’s the name of the game and how you play it right now.

Asset Allocation

CASH 58% US EQUITIES 18%
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

“mkts ignoring tee-up for what will be worse fight 2 mos from now on debt ceiling.” -@ianrosen

QUOTE OF THE DAY

“By the time we've made it, we've had it.” -Malcolm Forbes

STAT OF THE DAY

In the 257-167 vote to avoid the fiscal cliff, 172 Democrats and 85 Republicans favored the bill; 16 Democrats and 151 Republicans opposed it.