On Notice

Client Talking Points

Hit The Brakes

Having transitioned from #GrowthSlowing to #GrowthStabilizing in mid-November back in 2012, we’ve since enjoyed a run up in the US equity market of epic proportions. The bears have been slaughtered, with their heads proudly displayed above the mantle in the House of Bulls. As much as the global recovery is exciting, it can be stopped in its tracks right now by two things: oil and Japan. Should Brent crude oil hit $130 a barrel and high gas prices come back into play, that will affect the consumer and when consumption slows, growth slows. As for Japan, their insistence on destroying the Yen while trying to save their own economy leaves much to be desired. After all, the Yen has been “Taro Aso’d” for some time now now. Just remember that the market only goes up until it doesn’t.

Valentine's Day

I wouldn't be able to pen today's RIA Daily Playbook without mentioning the single most important holiday of the year for couples. So with that being said, here's a random tidbit for you: it is estimated that $13.19 billion will be spent on Valentine's Day between the chocolates, the flowers, the dates, the jewelry, etc. That's nothing to sneeze at and is a positive for consumption which is a driver of global growth. If you are not participating in today's festivities for whatever reason, may we suggest enjoying a nice bottle of wine and the first season of the critically acclaimed HBO series The Wire ?

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

“Holy heck...$HNZ going away...didn't see that one coming...god speed to Warren Buffett” -@HedgeyeStaples

QUOTE OF THE DAY

“The squeaking wheel doesn't always get the grease. Sometimes it gets replaced.” -Vic Gold

STAT OF THE DAY

U.S. weekly jobless claims drop 27,000 to 341,000 in the week ended Feb. 9.