Got Summers?

Client Talking Points

GOLD

Per the Japanese press, Larry Summers is in. The US Dollar and #RatesRising both like it. Gold? It hates it. The Great 2013 Gold Crash continues. It's down -22% year-to-date as it moves toward our immediate-term TRADE oversold line of $1307 (within a bearish intermediate-term TREND). Meanwhile, Silver’s losses? They are 2.5x Gold’s this morning, but that’s been the story all year. Gold’s best buddy was Ben Bernanke. Bottom line? #ItsAllOver

OIL

Despite the Russians moving some of their eye-candy into the Mediterranean, Brent is down -0.5% this morning. Our immediate-term TRADE momentum line of resistance on my radar is $114.67. The TAIL risk support is still very much in play down at $108.59. So clearly Barack Obama has some communication tooling to do.

UST 10YR

Witness the well-deserved higher-lows and higher-highs as yesterday’s US Jobless Claims print trumpeted the best in 7 years on a seasonally adjusted basis. Incidentally, it was the best in 13 years on a non-seasonally adjusted basis. But alas, partisan people will keep whining about this, and that, and the next thing. Guess what? That is a very bullish thing (but bearish for Gold and Bonds).

Asset Allocation

CASH 32% US EQUITIES 22%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 26%

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

TREASURIES: 10yr steady on Larry Summers (he's hawkish for intererest rates) = 2.92% #RatesRIsing

@KeithMcCullough

QUOTE OF THE DAY

In my mind, I'm always the best. If I walk out on the court and I think the next person is better, I've already lost. -Venus Williams

STAT OF THE DAY

According to a recent study, the US is home to about one in every three ultra-high net worth individuals — those with $30 million or more in total assets. At last count, 65,000 U.S. residents possess more than $9 trillion.



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