Go With The Flow

Client Talking Points

Changing Tides

This morning’s jobs data was in-line with expectations. That might be enough to spark a rally, but who knows. All it takes these days is one catalyst to get the market fired up. As we stated earlier this week, our S&P sector model is flashing bullish signals across all nine sectors. It’s pretty incredible stuff. People seem to be catching on to this whole short bonds and gold, long equities idea that we’ve talked about. Maybe it’s because the fund managers are following our lead? Maybe its fate. Whatever the reason, you can try to fight the overall market but it won’t be pretty.

Asset Allocation

CASH 55% US EQUITIES 18%
INTL EQUITIES 15% 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

“#Unemployment data out shortly & the 10yr is nearing 2% ~ Gold on the floor saying 'I've fallen & I can't get up' as well” -@TheKillir

QUOTE OF THE DAY

“Doubt is not a pleasant condition, but certainty is absurd.” -Voltaire

STAT OF THE DAY

December jobs up 155k, near 10k expected. Unemployment at 7.8%