CLIENT TALKING POINTS
Fix the VIX
The CBOE Volatility Index, better known as the VIX, is currently at the 12.66 mark. Back in the fall of 2009, the VIX at one point was flirting with 80. These days, the VIX going above 15 is a big enough deal. The point is that our bullish thesis for US equities is solidified by the VIX remaining at these ultra-low levels. Should it break through our YTD low, you can rest assured that the market would shift gears into “risk on” mode. In turn, gold and Treasuries would get hammered even more than they have been as of late.
Growth Spurt
Oil is down this morning, which is a positive catalyst for the global growth game. High oil prices are one of the few things out there that can derail economic growth and recover; consumers do not like high gas prices. Our #GrowthStabilizing theme continues to march on along with the stock market, which has the S&P 500 dancing with 5-year highs. Another factor in the US growth game is that inflation is decelerating and the housing market is recovering. Even the labor market is improving as we saw with yesterday’s jobless claims numbers. America is on the right track and as long as we stay the course, the outlook is good.
TOP LONG IDEAS
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.
Asset Allocation
| CASH | 55% | US EQUITIES | 10% | |
| INTL EQUITIES | 15% | COMMODITIES | 0% | |
| FIXED INCOME | 5% | INTL CURRENCIES | 15% |
THREE FOR THE ROAD
TWEET OF THE DAY
“Moscow is not New York. Moscow G20 is no Plaza Accord G7. Let's move on #forex” -@alaidi
QUOTE OF THE DAY
“Fools rush in where fools have been before.” -Unknown
STAT OF THE DAY
Canadian Manufacturing Sales (Dec) M/M -3.1% vs. Exp. -0.8% (Prev. 1.7%, Rev. to 1.9%)
