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Client Talking Points

Can We Fix It?

While the US stock market is looking good, America's political class is looking ugly, today. Automatic spending cuts aka The Great Sequester are set to kick in at midnight. Can Congress come to an agreement? Fat chance of that happening. So the question is, will it really hurt the stock market? In a sense: no. We may see a down day or two, but we are bullish on consumption. Consumption helps drive growth and with oil prices hitting 2013 lows this morning, we're liking the consumption game. Remember: strong dollar = strong America. 

Asset Allocation

CASH 48% US EQUITIES 20%
INTL EQUITIES 12% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 20%

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

"The one eyed man is king in the land of the blind." -@HedgeyeDJ

QUOTE OF THE DAY

"Cynicism is an unpleasant way of saying the truth." -Lillian Hellman

STAT OF THE DAY

US consumer spending edged up 0.2% in January while income fell sharply.