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Feeling Fresh

Client Talking Points

Flying High

Fresh new year-to-date highs in the S&P 500 and Russell 2000 from yesterday’s close? You betcha. Same goes for Japan and China, too. You have to keep in mind that #GrowthStabilizing is part of the global macroeconomic picture; it’s not just the United States that reaps the benefits of a bull market. What’s important is that you don’t get caught up in the frenzy and lose sight of your goals and the amount of risk you’re comfortable with. Our models tell us the following is happening:

 

  • US Stocks (SP500) immediate-term TRADE overbought in the 1510-1513 range
  • US Equity Volatility (VIX) immediate-term TRADE oversold in the 11.98-12.04 range
  • US Dollar Index immediate-term TRADE oversold at $79.41
  • US Treasury Yields (10yr) immediate-term TRADE overbought at 2.04%

 

Guess what? China and Japan are overbought, too. Same goes for the Euro and the DAX. Markets go up and until they don’t and with Brent Crude oil approaching $115 a barrel very quickly, that kind of problem can cause growth to slow, causing consumption to slow. See where we’re going here? Still, any market bears are in for a rude awakening if they stick to their plan to short everything and not take advantage of the rallies. 

Asset Allocation

CASH 46% US EQUITIES 18%
INTL EQUITIES 18% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 18%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

FDX

With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

“So I guess New Jersey is responsible for 2% plus in GDP. That's a lot of tomatoes.” -@ThemisSal

QUOTE OF THE DAY

“The world is full of willing people, some willing to work, the rest willing to let them.” -Robert Frost

STAT OF THE DAY

Jan. ADP Employment Report: Prior 215k, Market Expects 175k , Actual 192k