CLIENT TALKING POINTS
GOLD
Is that all Bernanke’s got? The US Dollar Index holds immediate-term TRADE support of $82.52; Gold fails at my $1312 TRADE line in kind. The Fed Chief's Dollar Devaluation attempts are being met with less and less stamina. I can’t imagine why? The Fed’s Balance Sheet is only at $3.504 TRILLION right now (I guess the +11.4 BILLION it's up week-over-week just doesn’t cut it) Rate of change impotence.
ASIA
Over in Asia, Chinese stocks, the KOSPI, etc didn’t care much for Bernanke’s monetary escapades. Shanghai and Hong Kong closed down -1.6% and -0.8%, respectively; that's despite the all-time highs in the SP500 and Russell. Don’t forget that every single major Asian Equity market remains bearish on our intermediate-term TREND duration (other than Japan). #GrowthSlowing
ITALY
The weakest link stops going up first. With the exception of the FTSE and DAX right now (both are only up +1% above their TREND lines), all of Europe is bearish TREND as well. Italy is down small this morning, but notably down post the USA Viagra thing. And it's still down -1.5% year-to-date for the MIB index is the point.
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 | 68% | US EQUITIES | 12% | |
| INTL EQUITIES | 0% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 20% |
THREE FOR THE ROAD
TWEET OF THE DAY
TREASURIES: 2.53% 10yr - Bernanke, is that all you got? you need to snap 2.4% to get me to stop shorting bonds
QUOTE OF THE DAY
"If the economy is so fragile that the government cannot allow failure, then we are indeed close to collapse."
-- Seth Klarman, Baupost
STAT OF THE DAY
The Fed's balance sheet is now 25% of US GDP and the Fed is currently in possession of 30% of all 10-Year equivalents. (Zero Hedge)
