CLIENT TALKING POINTS
Grabbing The Bull By The Horns
Yesterday was one hell of a rally. The S&P 500 held its line of support at 1419 and then ripped to within 0.8% of its September 2012 intraday high (Bernanke Top, anyone?) All it took was a little deal on the fiscal cliff. No biggie. Oh yeah - The Russell 2000 closed up +2.9%, making an ALL-TIME high at 873. Keith’s multi-duration S&P sector model is blowing gaskets like a Looney Tunes clock spinning a hundred times a minute; all nine sectors are bullish on all three durations (TRADE, TREND, TAIL) for the first time since December of 2011. This is huge. Anyone who shorted yesterday’s rally got their face ripped off.
So what happens next? There is a very good opportunity for the big guys - the asset managers - to move capital out of bonds and into stocks. Earning 50 basis points a year isn’t generating alpha, but participating in a full on bull rally will, provided you manage your risk. With #GrowthStabilizing, stocks on the rise and a housing market in recovery, we’re just a catalyst away from taking this market even higher.
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 | 55% | US EQUITIES | 18% | |
| INTL EQUITIES | 15% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 12% |
THREE FOR THE ROAD
TWEET OF THE DAY
“Buy stocks, sell bonds” -@KeithMcCullough
QUOTE OF THE DAY
“Democracy is a device that ensures we shall be governed no better than we deserve.” -George Bernard Shaw
STAT OF THE DAY
Private Sector Employment rises more than expected, up 215,000 in December.
