Oil's Well

Client Talking Points

Tax Break for the Consumer

With Brent oil now down nine percent from a long-term lower high that it made in February, global consumption is getting a boost. That's because lower oil prices mean consumers pay less money at the gasoline pump. Also, as the dollar goes one direction,  Brent oil goes the other, according to our models. As such, as the dollar strengthens, Brent oil should continue to fall.

S&P 500 Direction

While Brent oil has a negative correlation to the US dollar, the S&P 500 has a positive one, according to our models. That means the S&P 500 currently moves higher as the US dollar moves higher. Hence, our big move in the S&P over the past few months. But, those correlations can change quickly, and they won't last forever. We'll continue to model that correlation, and let you know if and when it changes. That's why we're risk managers.

Asset Allocation

CASH 32% US EQUITIES 24%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 24%

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

"Happy Pi Day. Today mathematical celebration is wholly irrational." -- @GeneralElectric

QUOTE OF THE DAY

"Bummed Out" -- New England Patriots' quarterback Tom Brady after he learned that receiver Wes Welker had agreed to sign with the Denver Broncos

STAT OF THE DAY

332,000, the number of weekly jobless claims, which put the four-week moving average to a five-year low


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