CLIENT TALKING POINTS
Who Could Have Known?
Sometimes the market just likes to throw in a mid-day switch for good measure. In the case of yesterday, it looked like the S&P 500 was going to test YTD highs (1530) and instead, volatility cranked up and boom: the marker "tanked." We did some smart planning, like selling our short Yen (FXY) position and sold Utilities (XLU) on the high. No one could have predicted that the Italian election would have caused as much global chaos as it did yesterday. The Euro took a nosedive south and now our risk management signals are flashing bearish for the first time since a long time.
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 | 40% | US EQUITIES | 20% | |
| INTL EQUITIES | 20% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 20% |
THREE FOR THE ROAD
TWEET OF THE DAY
"Yesterday's 1-day move (up) in the VIX was the biggest since AUG2011" -@KeithMcCullough
QUOTE OF THE DAY
"A cynic is a man who, when he smells flowers, looks around for a coffin." -H.L. Mencken
STAT OF THE DAY
U.S. home prices rose in December, and saw the largest year-over-year gain since 2006. The S&P/Case-Shiller 20-city composite posted a nonseasonally adjusted 0.2% increase in December, following a 0.1% decline in November.