CLIENT TALKING POINTS
CHINA
So, China’s Finance Minister says they “won’t use large scale stimulus.” Take his word for it. Shanghai Composite led losers down -1% in Asia overnight. Meawhile, Singapore put up a nasty (ex-Oil) Export print of -8.8% year-over-year in June. What that says is ex-Japan Asia #GrowthSlowing.
USD
Everyone and their brother are trying to front-run Ben Bernanke breathing appointments at this point. It's sad, but that’s the reality. CRB Index up +0.6% yesterday with Gold, Oil, etc chasing higher on a -0.7% US Dollar day. Will Bernanke be dovish enough? We shall see. But this is a certified central planning expectations circus; EUR/USD TAIL risk line is 1.31. That could go either way.
COMMODITIES
Copper down -1.1% on the China reality-check (short CAT again on that too). But Brent is still pinning her hopes on Benny. $109.40 last is above our long-term TAIL line of $107.86. That's important. The net long position in futures/options for everything crude oil has gone hog wild; over 325,000 net longs! (biggest long lean of the year).
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 | 16% | |
| INTL EQUITIES | 6% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 20% |
THREE FOR THE ROAD
TWEET OF THE DAY
Goldman upgrades $LINE $LNCO to Buy. We reiterate Sell.
QUOTE OF THE DAY
"We keep kicking the can down the road. But maybe now we're at the point where the can is kicking back"
- Jim Chanos
STAT OF THE DAY
$487.9 Million: The total amount in fines and penalties Barclays and four former traders must pay in an order tied to an investigation of alleged manipulation of energy markets. (Bloomberg)
