CLIENT TALKING POINTS
The High Road
First off, let us review what's currently going on. The Dow Jones Industrial Average touched another new high yesterday and stocks are in bullish formation. This is in line with our global growth thesis that revolves around economic recovery in the housing and labor markets and increased consumption. We have a strong US dollar driving down commodity prices and in particular, crude oil, which is now at $90 a barrel (WTI). That's bullish for consumption which is ultimately bullish for stocks. Things are all good for the bulls in stockland.
The Low Road
Conversely, we are bearish on commodities and mining is a sector highly correlated to commodity prices. On March 27th, Industrials Sector Head Jay Van Sciver will hold a Black Book call to discuss his view on the sector and some names that are sure to attract your attention (CAT - anyone?). Why focus on mining? Because they've spent a ton of capital over the last decade and mining is not a growth industry contrary to what others might think.
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 | 24% | US EQUITIES | 24% | |
| INTL EQUITIES | 24% | COMMODITIES | 4% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 24% |
THREE FOR THE ROAD
TWEET OF THE DAY
"@KeithMcCullough @HedgeyeEntertaining and informative. Great stuff." -@JoshWellerWorld
QUOTE OF THE DAY
"We don't see things as they are, we see things as we are." -Anais Nin
STAT OF THE DAY
U.S. Jobless Claims fall to 340,000. One month average hits five-year low.