CLIENT TALKING POINTS
INDIA
With the exception of Japan, every single major Asian Equity market remains bearish TREND in our model. We called this #AsianContagion on our Macro Themes Call yesterday (let us know if you want the replay). India has inflation rising now that the Rupee is down -8% year-to-date vs US Dollar. The government there is rhetorically trying to defend the Rupee this morning. Action speaks louder than words. BSE Sensex down -1% on that tighter #confusion.
SPAIN
Spain? It's bearish TREND and breaking down faster this morning after failing to rally alongside everything else that ticks yesterday. It's down -1.5% for the IBEX right now as the Troika sniffs around Portugal (it doesn’t smell very good, evidently). Meanwhile, the Euro is failing at our TAIL risk line of $1.31 vs USD. That is still a big risk.
OIL
Brent is not letting up this morning. It's still a $109 handle. The immediate-term upside is to $110.29/barrel. This represents a sequential consumption tax for the world in Q3 versus Q2. No, this is most definitely not what 99% of the world's population needs – not now. Oil prices matter. We are watching this one closely.
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 | 58% | US EQUITIES | 14% | |
| INTL EQUITIES | 6% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 22% |
THREE FOR THE ROAD
TWEET OF THE DAY
My wife's pre game advice (as I was walking out the door): "play nice with the other tv people today"
QUOTE OF THE DAY
History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.
- James Madison
STAT OF THE DAY
The price of gold is off sharply from the record highs of 2011, when it touched $1,900 an ounce. Despite its gains this past week, gold is still down 24% since the beginning of the year.
