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Client Talking Points

Still Bearish on Commodities

Despite the fact that the end of the world crowd stayed vocal the past 24 hours, we, amazingly enough, pulled through and the end of the world isn’t here. What we do see is the same bearish trend in commodities that we have seen when the dollar remains strong. Gold, copper and oil all are weakening as the dollar strengthens for the seventh week in the last eight.

Korea’s KOSPI As a Leading Indicator?

We have looked to Korea’s KOSPI as a leading indicator of global economic growth. However, thanks to the global currency war, and specifically the ongoing depreciation of the Japanese yen, the KOSPI hasn’t performed as well as we might have expected. We think that’s a function of the competition faced by Korean manufacturers because of that weaker yen, and is not suggestive of a weakening global economy.

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
DRI

Darden stands to be a beneficiary from a housing recovery and an improved employment picture, which boosts casual dining trends. Darden reported earnings today that beat Wall Street expectations, though net income declined 18%.

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

“Shorting European markets, selectively, on bounces is making money; shorting US stocks on that hasn’t” -- @KeithMcCullough

QUOTE OF THE DAY

“Wall Street people learn nothing and forget everything.” – Benjamin Graham

STAT OF THE DAY

$30 million, the price Yahoo! Reportedly paid to buy Summly, a mobile news app, from a 17 year-old British entrepreneur