WHAT IS THIS GUY DOING?

Client Talking Points

USD

Dollar Down is Ben Bernanke’s go-to move. Oil, Gold and Silver (virtually everything that’s regressive and unproductive to real consumption growth basically) is ripping. We definitely didn’t get the super-secret memo coming on that. This changes our US #GrowthAccelerating call to potentially SLOWING sequentially in Q3, and in a hurry. It's sad.

OIL

What’s more dangerous for rising oil prices? A Syrian overlord or a Monetary overlord like Bernanke? Someone evidently knew he was going to trump the Fed Minutes (half the Fed actually disagrees with him now) with his comments. Oil was front-running that, big time. Now Brent is above our long-term TAIL risk ling of $108.11/barrel. That's just great (if you’re long #GrowthSlowing this morning, that is).

TREASURIES

The "Long Treasuries" lobby is large and Ben Bernanke buckled to it. The 10-year (2.58% last) sees the immediate-term risk range open wide to 2.41-2.77% now. Make no mistake, this central planning “communication tooling” vs economic gravity is only going to drive FICC (Fixed Income Currency Commodity) volatility higher, not lower. Atta boy Ben.

Asset Allocation

CASH 62% US EQUITIES 18%
INTL EQUITIES 0% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 20%

Top Long Ideas

Company Ticker Sector Duration
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. 

Three for the Road

TWEET OF THE DAY

Top 3 Bloomberg headlines this morn are all about the almighty central planner in Chief; just as Jefferson designed it

@KeithMcCullough

QUOTE OF THE DAY

"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
- Henry Ford

STAT OF THE DAY

Global equities have lost about $3 trillion in value and 10-year Treasury yields have surged more than 50 basis points since May 22, when Bernanke indicated the central bank may reduce its bond-buying program as economic risks subside. (Bloomberg)