Dynamic Debauchery

Client Talking Points

The Clan In Japan

Japan’s dynamic duo of Finance Minister Taro Aso and Prime Minister Shinzo Abe are really on a roll with this whole “plan” of theirs. They want to “stabilize” the  Yen and target “2% inflation.” And yet since the Bernanke Top in September 2012, the Yen has fallen -17%. In turn, the Nikkei is up +32.4% since mid-November when #GrowthSlowing stopped. You can’t have your cake and eat it too, so the question remains: when is enough, enough? You can only devalue that Yen so far and you can only artificially pump stocks so much higher. Keep in mind that when consumption slows, growth slows, and that’s not something Aso & Co. want to see. 

Asset Allocation

CASH 40% US EQUITIES 20%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 20%

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

“When did RBS think their LIBOR investigation was going poorly? Maybe it was when they saw a trader talk about LIBOR fixing in an email.” -@PeteSchroeder

QUOTE OF THE DAY

“If you haven't found something strange during the day, it hasn't been much of a day.” -John A. Wheeler

STAT OF THE DAY

MBA MORTGAGE APPLICATIONS W/E FEB 1ST: +3.4% V -8.1% PRIOR