BBQ In Tokyo!

Client Talking Points

JAPAN

In case you were wondering what that smell is this morning, the Nikkei got barbequed last night. Japan down -3% as the Yen failed to breakdown this week post LDP elections. This is an interesting spot to buy the Nikkei now (we haven’t - yet). The Yen is now signaling immediate-term TRADE oversold (vs USD) in my model at 98.41 (a good spot to re-short the Yen too).

SPAIN

Well, what a big week it was for the Spaniards. Their alleged sky-high unemployment rate stopped going up for once (downtick from 27.2% to 26.3)%. Do we believe it? The IBEX did and is up +0.8% leading the gainers in what’s been a strong European Equity market for the last month. It will close above its 8099 TREND line too. 

COPPER

Try as it may, even Down Dollar won't help the metals out this morning. "Dr. Copper" is leading the decline down -1% after failing at immediate-term TRADE resistance of $3.22 earlier in the week. On a related note, China is down for three straight days (Shanghai -10% year-to-date). That certainly doesn’t help the demand argument does it? Neither did the news from Caterpillar.

Asset Allocation

CASH 39% US EQUITIES 23%
INTL EQUITIES 13% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 25%

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

Try and stop him. @KeithMcCullough is buying the damn dip. Actually don't try. Mucker's love for a market consensus hates cannot be stopped.

@Hedgeye

QUOTE OF THE DAY

"It's true that the Federal Reserve faces a lot of political pressure and is unpopular in many circles." 

- Ben Bernanke 
 

STAT OF THE DAY

$885,000,000: The amount UBS has agreed to pay Fannie Mae and Freddie Mac to settle claims that it improperly sold them mortgage-backed securities during the housing bubble. 


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