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Charting Fokuda: Stay Short Japan (EWJ)

Below we have charted the Nikkei vs. Fokuda's unsuccessful 11 months attempts as Japan's PM.

Andrew Barber

China's Tanking Purchasing Managers Index (2004-2008)

We've updated this chart for this week's data. China's PMI has moved to a contraction zone. This is ominous, but to some extent discounted by a stock market that's down -62% since it's October 2007 peak.

Keith McCullough & Andrew Barber
Research Edge, LLC

India's New Central Banking Headache

Here’s a chart illustrating what Subbarao inherits as incoming central bank governor of India. Yesterday the ministry of commerce came out with trade balance numbers –the trade deficit continues to be driven by rising global commodity prices. Subbarao now must raise rates aggressively and increase debt in order to curb inflation and also pay for the administrations populist voter kickbacks (Bloomberg reports that Singh approved a 21% pay raise for civil servants and a $17B farm loan forgiveness package recently).

BTW: Subbarao was a Humphrey Fellow at MIT. The Humphrey Fellowship is a US state dept. funded program for foreign students of economics. The fellowship is named for Hubert Humphrey, the Vice President during the Johnson administration who helped to craft the “great society” platform of heavy government spending on social programs intended to eliminate poverty that resulted in inflation and increased debt (which, combined with the unpopular Vietnam war, cost Humphrey the presidency when he ran against Nixon in 68).

Andrew Barber

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A Korean Won Dive!

For 2008 to date, the South Korean Won is the worst performing Asian currency in the index of 10 countries that I follow. Inclusive of today's -1.6% drop, the Won is down -18% vs. the USD this year.

Currencies are not always a leading indicator of economic health. However, in this case, you can see quite clearly that the Won has previewed weakness in the KOSPI Index most recently (see chart).

The abrupt slowdown in Asian growth remains misunderstood.

An Eye on NYC's Hedge Fund "Mafia"

"Sixty-one percent of the 2,795 funds managing more than $100 million that are in New York-based HedgeFund.net's database are losing money in 2008."

That was the data point to take away from Kathy Burton's insightful Bloomberg article today, titled "Citadel, SAC Capital Get Pick of Casualties as Carnage Worsens"...

Despite people getting upset about it when I started writing about this 9 months ago, the facts appear to be bearing out on my side of the thesis.

Facts are stubborn little things, arent they.


My guys in Macau will be touring the casinos, as they always do, and hopefully providing a unique perspective and some anecdotals regarding volume, trends, etc. This post includes some thoughts on the newly opened Four Seasons Hotel and Plaza casino. I’m going to leave the discussion of the aesthetics and amenities of the new property to the rest of the sell side.

Suffice it to say the hotel and retail mall are beautiful as expected. It is the Plaza Casino where we have some concerns. I’m still trying to reconcile the target market of high end mass market and direct VIP customers with the current casino configuration and product. More on that in another post. The casino appears to be in an unfortunate location at the very end of the current Cotai development. It’s not easy to get to since a) there is no direct turn-off for cars from the Strip to the Four Seasons (cars need to run all the way to the Lotus Bridge roundabout and then come back about 300+ yards) and b) as far from the main entrance of the Venetian as it can be. Easily a 10 minute walk for someone who doesn’t know their way around or is not heading straight toward the Plaza Casino at a fast pace.

In terms of volume, the Plaza Casino was pretty empty on Monday afternoon. My guys reported that only half the tables were even open and with only a total of 20 players in the room. Contrast this with The Venetian where the floor was quite busy at the same time. No complaints with The Venetian ramp as revenue trends and market share continue to move higher with the increase in ferry service. Back to the Plaza, we’ll keep you posted as more definitive conclusions can be reached.

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