CLIENT TALKING POINTS
JAPAN
The #WeimarNikkei showed some impressive follow through following Friday’s +3.8% ramp. It closed up another +1.3 overnight (and more importantly, above our TREND line of 13,369). The USD/YEN continued lower, testing 99.74 resistance now. Commodities usually try to reflate on any USD correction. The immediate-term correlation between Gold and USD is -0.92. In other words, it's very high correlation.
DAX
A rather ugly PMI print out of Germany for June at 48.6. Believe it or not, this was actually worse than Italy and Spain this month. Yes that is saying something! The DAX snapped key TREND support of 8079 in June and is seeing follow through selling this morning. Careful here: there's no support to 7613.
COMMODITIES
Dead cats bouncing. And no, that’s not what you want to see from a US #GrowthAccelerating perspective. Commodity Deflation is of course good for US Consumption. For all you home gamers out there, Consumer Discretionary was the best S&P Sector ETF in June at +0.5% vs SPY -1.5%. The CRB Index probed its year-to-date lows at -6.6%.
TOP LONG IDEAS
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. We think that the prevailing bearish view is very backward looking and leaves out a big piece of the WWW story, which is that integration of these brands into the WWW portfolio will allow the former PLG group to achieve what it could not under its former owner (most notably – international growth, and leverage a more diverse selling infrastructure in the US). Furthermore it will grow without needing to add the capital we’d otherwise expect as a stand-alone company – especially given WWW’s consolidation from four divisions into three -- which improves asset turns and financial returns.
MPEL
Gaming, Leisure & Lodging sector head Todd Jordan says Melco International Entertainment stands to benefit from a major new European casino rollout. An MPEL controlling entity, Melco International Development, is eyeing participation in a US$1 billion gaming project in Barcelona. The new project, to be called “BCN World,” will start with a single resort with 1,100 hotel beds, a casino, and a theater. Longer term, the objective is for BCN World to have six resorts. The first property is scheduled to open for business in 2016.
HCA
Health Care sector head Tom Tobin has identified a number of tailwinds in the near and longer term that act as tailwinds to the hospital industry, and HCA in particular. This includes: Utilization, Maternity Trends as well as Pent-Up Demand and Acuity. The demographic shift towards more health care – driven by a gradually improving economy, improving employment trends, and accelerating new household formation and births – is a meaningful Macro factor and likely to lead to improving revenue and volume trends moving forward. Near-term market mayhem should not hamper this trend, even if it means slightly higher borrowing costs for hospitals down the road.
Asset Allocation
| CASH | 60% | US EQUITIES | 12% | |
| INTL EQUITIES | 6% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 22% |
THREE FOR THE ROAD
TWEET OF THE DAY
RUSSIA: -0.43% continues lower, -16.5% YTD and remains one of our fav shorts
QUOTE OF THE DAY
Your time is limited, so don’t waste it living someone else’s life.
–Steve Jobs
STAT OF THE DAY
Record bond-fund redemptions in the month ended June 24 surpassed the previous high of $41.8 billion set in October 2008, according to TrimTabs. In the most-recent period, investors pulled $52.8 billion from bond mutual funds and $8.9 billion from ETFs.
