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Client Talking Points

OIL

Well, they finally snapped an immediate-term TRADE momentum line that the machines are going to have to chase ($115.19 Brent is my signal line there). With crude futures/options net long contracts at all-time highs, will Oil make another lower-high versus its 2008 Bernanke Bubble peak? Consumer Discretionary stocks could be discounting that. The XLY is up +24.7% year-to-date.

MIDDLE EAST

Boom. Up +7.4% this morning. Evidently the United Arab Emirates stock market likes the no-action in Syria call too. Dubai is ripping again. Red hot up over 45% year-to-date now. Can you begin to imagine what happens if the world doesn't come to an end this month? Lots to consider right? #EOW

ASIA

One of the best 2-day moves of the year in Asian Equities. And it was broad based. Even the ugly markets that were imploding like India and Indonesia are both up over 3% this morning. Meanwhile, the Yen down -0.5% versus US Dollar drove the Nikkei up another +1.5%. It's up +7.5% for September and +39.5% YTD); China ripped an overbought signal on stabilized econ data

Asset Allocation

CASH 26% US EQUITIES 26%
INTL EQUITIES 23% 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.

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.

TROW

Financials sector senior analyst Jonathan Casteleyn continues to carry T. Rowe Price as his highest-conviction long call, based on the long-range reallocation out of bonds with investors continuing to move into stocks.  T Rowe is one of the fastest growing equity asset managers and has consistently had the best performing stock funds over the past ten years.

Three for the Road

TWEET OF THE DAY

Does No-Action in Syria matter? United Arab Emirates stock market is +7.4% this morning

@KeithMcCullough

QUOTE OF THE DAY

"Greater than the tread of mighty armies is an idea whose time has come." - Victor Hugo

STAT OF THE DAY

Thanks to a sharp increase in home prices, 2.5 million more US mortgage borrowers are no longer underwater. By the end of June, 7.1 million, or 14.5%, of mortgage borrowers remained underwater on their loans compared with 9.6 million, or 19.7%, at the end of the first quarter. In late 2009, during the worst of the housing market's meltdown, 26% of all borrowers owed more on their mortgages than they were worth.  (CoreLogic)