CLIENT TALKING POINTS
YEN
So you know your country has a serious credibility problem when the Yen looks stronger than your own currency. Unreal. USD/YEN continues to break down through our 97.35 TREND support. 98.23 is the new resistance now. The Nikkei was down hard on that this week.
OIL
There was basically nothing going on in the Middle East this week. No big headlines. Nothing. But #DownDollar on reckless "Sky Is Falling!" fear-mongering from Treasury Secretary Jack Lew about US Debt Default burned the buck. It also pushed Brent Oil back above TAIL risk line of 108.61 to 109.23 here. That's not good. It's called a #tax on consumers. Bad for growth.
ITALY
Take a look at Italy. It is up +1.1% this morning for the MIB Index. That gives the Italians the nod as one of the best stock markets of the week. Government saving people from government? That there is an epic market catalyst, I guess. We play the cards we're dealt here at Hedgeye. The Global Government Gong Show.
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.
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.
Asset Allocation
| CASH | 53% | US EQUITIES | 14% | |
| INTL EQUITIES | 18% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 15% |
THREE FOR THE ROAD
TWEET OF THE DAY
Fascinating to watch a US President who doesn't get markets try to scare "folks" with market rhetoric @KeithMcCullough
QUOTE OF THE DAY
I am not a product of my circumstances. I am a product of my decisions. - Stephen Covey
STAT OF THE DAY
Twitter's just released IPO documents suggest a valuation of $12.8 billion for the microblogging service, underscoring the seven-year rise of a still unprofitable company that has helped revolutionize how people share information. Twitter is seeking to raise $1 billion and has pegged the fair value of its common stock at $20.62 a share. There are 620 million shares outstanding. (Bloomberg)
