When The Going Gets Tough

Client Talking Points

Which Way Did It Go?

Yesterday, the market started off by testing a new all-time high on the S&P 500 (1570), which failed. By the close, the market had fallen and was lucky to hold our TRADE line of support at 1556. If you bought the open or sold the close, you made the wrong move. It's easy to get pulled into the market when everyone around you is suddenly an expert on stocks ("Buy 'em" my father said yesterday). Sometimes you have to be able to step away from the computer and just say no. Yesterday was a good day to do just that. 

Making Moves

While chasing the S&P 500 was not a viable game plan yesterday, taking gains on existing positions, cutting losses and initiating new positions was. Since the S&P 500 and Russell 2000 held their line of support, we bought the Russell via IWM yesterday afternoon. We also cut a macro position that wasn't working and bought a stock that worked in our favor. It's all about timing and watching the signals.

Asset Allocation

CASH 22% US EQUITIES 26%
INTL EQUITIES 22% 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

"Cyprus finance minister Michalis Sarris quits. Who thinks the rest of their govt quits this month?" -@tbuhl

QUOTE OF THE DAY

"The point of quotations is that one can use another's words to be insulting." -Amanda Cross

STAT OF THE DAY

The US Dollar rises while the Euro softens after March PMI data for the euro area showed that activity contracted at an accelerating pace in March, dropping to a three-month low of 46.8.


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