Client Talking Points
Level Playing Field
You can fight the market all you want, but sometimes, you have to go with the (fund) flow. Any permabears that have stayed short the S&P 500 since November 2012 are cringing as they wake up to margin calls and headaches that won’t go away. Our strategy in the global macro arena has been to stay long the US dollar while short the Japanese Yen, long US and Asian equities (staying away from Europe) and short gold and Treasuries. You’ve seen the run up in the US stock market and the beatdown Treasuries, gold and the Yen have received since then. It’s all part of deflating the inflation that was originally brought on by Ben Bernanke and his posse at the Federal Reserve. Commodity prices coming down help spur consumption which in turn, helps spur growth. Growth = good. Simple as that.
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Top Long Ideas
We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.
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 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
“Back from lunch to hear the rumour of S&P downgrade of UK tonight ... hmmm” -@NicTrades
QUOTE OF THE DAY
“Before God we are all equally wise - and equally foolish.” -Albert Einstein
STAT OF THE DAY
SPX risk range = 1516-1524 as volatility gets crushed