Slippery Slopes

Client Talking Points

Slowing Growth

Since we transitioned from #GrowthSlowing to #GrowthStabilizing back in November/December, things have been relatively uneventful as the Dow hit 14,000 and the S&P 500 climbed to 1500. Now, with Brent crude oil approaching $118 a barrel, we have to worry about consumption slowing which in turn slows growth. People paying $5 to $6 a gallon for gas start pinching pennies instead of going out to Applebee’s every night for dinner. Oil is a big headwind for global growth and we’ll have to see what it does over the next week in order to asses what happens next.

Heads Or Tales

This morning we had the pleasure of waking up to the EuroStoxx 50 breaking down on both a TRADE and TREND basis. It’s clear that much like America, the European political class is intent on screwing things up. Draghi wants to “jawbone the Euro back down” as Keith put it this morning and do the opposite of what helped Germany’s economy recover. Currency does have a positive correlation to growth expectations believe it or not; just look at Japan.

Asset Allocation

CASH 55% US EQUITIES 10%
INTL EQUITIES 15% COMMODITIES 0%
FIXED INCOME 5% INTL CURRENCIES 15%

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

“Final paper on the table. "It's the Final Countdown", as Europe would sing. #EUCO #MFF” -@alexstubb

QUOTE OF THE DAY

“I quit therapy because my analyst was trying to help me behind my back.” -Richard Lewis

STAT OF THE DAY

Canadian International Merchandise Trade (CAD) (Dec) -0.90bln vs. Exp. -1.45bln (Prev. -1.96bln, Rev. -1.67bln)