All-Time Is a Long Time

Client Talking Points

US Stocks Hit New Highs

As we often say at Hedgeye, all-time is a long time, and that’s just what happened to US stocks, which hit their all-time closing highs last week. Those highs were driven by our fulcrum point for the bull case – a strong US dollar. That drives US and Chinese consumption, which drives economic growth.

 

 

Strong Dollar, Lower Food Prices

As the US dollar strengthens – up for the seventh week in the last eight – food prices are heading lower. On a week-over-week basis, wheat fell 5.8%, corn fell 4.3% and soy prices dropped 2.5%. Cheaper food prices make things easier on a consumer’s wallet, which in turn could help drive consumption elsewhere.

Asset Allocation

CASH 30% US EQUITIES 20%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 6% 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

“Happy Opening Day” – John Sterling, New York Yankees’ play-by-play radio announcer

QUOTE OF THE DAY

“Live as if you were to die tomorrow. Learn as if you were to live forever.” – Mahatma Gandhi

STAT OF THE DAY

22 points, the margin of victory for Louisville in its NCAA basketball tournament game against Duke Sunday night