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Client Talking Points

US DOLLAR

Well, Ben Bernanke just eviscerated almost my entire bull case for US growth accelerating from here. So it’s a good thing he cut his GDP forecast. The best way to slow real economic growth is by burning your currency. Bottom line here is that yesterday was a great day for 2013 US stock market bulls, but a very sad day for America.

COMMODITIES

Anything linked to Burning The Buck went absolutely ape on Bernanke fighting economic gravity. If Ben bans the economic cycle, Gold should love that. Of course, Bernanke rescued Gold from crashing yesterday. The two are Best Friends Forever. And he’ll keep that nice fat consumption tax on at the gas pump going on US consumers. Instead of snapping its TAIL risk line, Bernanke has Brent Oil hold $109.04 TAIL support.

EMERGING MARKETS

They absolutely love Ben Bernanke and Down Dollar. So you can take that slide deck we have on Emerging Markets and burn it alongside the buck too. Turkey rocketed +7.6% overnight, Indonesia shot up  +4.8%. No, those are not typos.

Asset Allocation

CASH 35% US EQUITIES 25%
INTL EQUITIES 25% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 15%

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

As for Ben Bernanke and the Fed, shame on you - you are a national embarrassment @federalreserve

@KeithMcCullough

QUOTE OF THE DAY

"I may reverse my entire macro position based on Bernanke's disaster day - and I won't apologize for it" - Keith McCullough

STAT OF THE DAY

Assets the Fed holds have jumped by over $800 billion, or about 30%, to more than $3.6 trillion since it first announced its latest bond-buying program last September. The balance sheet is up from less than $1 trillion prior to the recession.