CLIENT TALKING POINTS
Big In Japan
Japan's Nikkei 225 hit a fresh 5-year high today as Japanese stocks rip the the upside (while the Yen flirts with the downside). The Nikkei is up +3.6% in overnight trading and is up +37.4 year-to-date. Bravo! As long as your central bank is in this market to rip 'em higher and win big, investors can't lose.
Goodbye To Gold?
Say goodbye to gold, folks. Gold is down nearly -0.8% this morning as people realize that consumption is good for stocks, bad for gold. Combine that with a stronger US dollar and you'll realize that gold isn't bottoming - it's crashing. Gold failed again at our TRADE line of resistance of $1490/oz. Things get tougher for gold here, not easier.
TOP LONG IDEAS
IGT
Decent earnings visibility, stabilized market share, and aggressive share repurchases should keep a floor on the stock. Near-term earnings, potentially big orders from Oregon and South Dakota, and news of proliferating gaming domestically could provide near term catalysts for a stock that trades at only 11x EPS. We believe that multiple is unsustainably low – and management likely agrees given the buyback – for a company with the balance sheet and strong cash flow as IGT. Given private equity’s interest in WMS (they lost out to SGMS) – a company similar to IGT that unlike IGT generates little free cash – we wouldn’t rule out a privatizing transaction to realize the inherent value in this company.
WWW
WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow.
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.
Asset Allocation
| CASH | 27% | US EQUITIES | 20% | |
| INTL EQUITIES | 20% | COMMODITIES | 0% | |
| FIXED INCOME | 6% | INTL CURRENCIES | 27% |
THREE FOR THE ROAD
TWEET OF THE DAY
"#FastFact Breakfast accounts for 25% of McDonald's sales $MCD" -@BloombergTV
QUOTE OF THE DAY
"I'm worried that the universe will soon need replacing. It's not holding a charge." -Edward Chilton
STAT OF THE DAY
MBIA (MBI) stock soared +45% yesterday on news that it has reached a settlement with Bank of America related to various mortgage lawsuits stemming from the housing crisis.
