CLIENT TALKING POINTS
Burning Yen
As Japan systematically and aggressively burns its currency, the Nikkei is crashing to the upside, up another 1.5% Friday. The Nikkei is up 45 percent since mid-November, and it’s one of the best performing market in the world so far this year. Meanwhile, Japanese bond yields are hovering near their lows at around 0.63%. This will not end well, though, as history had told us that when a country devalues its currency, it’s anything but a good idea.
US Bond Signals
The US ten-year bond failed to break-out to a higher-high Thursday, so that should keep the t-bond bulls hoping. But as we say at Hedgeye, hope is not a risk management process. Keith signal says higher-lows and higher-highs in yields from here. That follows our growth stabilizing macro theme.
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 | 32% | US EQUITIES | 24% | |
| INTL EQUITIES | 20% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 24% |
THREE FOR THE ROAD
TWEET OF THE DAY
"If you ever worked on a desk, you’d know that the Whale story happens every day; not unique.” -- @Keith McCullough regarding the trading loss at JP Morgan
QUOTE OF THE DAY
"Study history, study history. In history lies all the secrets of the statecraft.” – Winston Churchill
STAT OF THE DAY
5 inches, the screen size of the Samsung Galaxy S4, which was unveiled globally Thursday