Client Talking Points
Last week, we saw a slew of bad data hit the tape. Everything from the ADP employment report to initial jobless claims came in under expectations and really stunk. The market seems to want to keep the hope alive and has yet to perform a major correction of any sort. That being said, if we continue to get bad spurts of economic data week-after-week, the end result will not be pretty.
The Korea Situation
All eyes are on North Korea right now and whether their war games are in fact just that: games and nothing more. Kim Jong Un and Co. sure do love the sabre rattling but we believe it's nothing more than that. North Korea is desperate to win back international aid and this is their way of asking for it back. Suffice to say, if any military action is taken by either side, we'll have to reassess the situation at hand.
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Top Long Ideas
Darden stands to be a beneficiary from a housing recovery and an improved employment picture, which boosts casual dining trends. The company's net income declined on its recent earnings report but beat the Street's expectations.
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 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
"3-day 5.6% decline in JPY i largest since October 2008..Only 4 other periods since 1971 where JPY declined more than 5% in 3-day period" -@BergenCapital
QUOTE OF THE DAY
"Because things are the way they are, things will not stay the way they are." -Bertolt Brecht
STAT OF THE DAY
Shares of LUFK surge 37% after GE announces acquisition deal.