CLIENT TALKING POINTS
ASIA
Just a nasty session for Asian Equities ex-Japan. Indonesia down -3% continues to see #EmergingOutflows. Meanwhile, the Hang Seng dropped another -2.5% (down -15.4% since January 30). It is becoming crystal clear at this point that most things Chinese equals #GrowthSlowing. Every TREND line in our model other than the Nikkei is now bearish across Asia.
PORTUGAL
So Greece was already crashing (down -30% since May). Now we've got Portugal gapping down -5.7% this morning, leading Spain to a -3% loss (down -12.5% since the January top) too. Incidentally, both the DAX and FTSE broke their TREND support a few weeks ago, so weakness there isn’t new. Meanwhile, UK Services PMI beat big at 56.9 JUN. Guess what? It didn’t matter – German Services PMI of 50.4 was another miss.
OIL
Oil is up on Egypt and whatever else is going to happen next in the Middle East. Watch this TREND line of $104.95 for Brent closely. It is key. Bottom line here is breaking out above that line would be an incremental, potential tax on consumption in July and August.
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 | 14% | |
| INTL EQUITIES | 0% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 26% |
THREE FOR THE ROAD
TWEET OF THE DAY
And so it begins again -- guy emailed me calling my note on $BBEP "a short hatchet job." Sooo it's probably a great idea
QUOTE OF THE DAY
“I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson
STAT OF THE DAY
West Texas Intermediate surpassed $100 a barrel for the first time in nine months on shrinking U.S. stockpiles and concern that political turmoil in Egypt may disrupt Middle Eastern supply. (Bloomberg)