Positive data point for QSR Pizza Operators

We just got the July NPD numbers and the QSR pizza category traffic trends improved sequentially to down only 0.6% from June’s 2.5% decline and 2Q08’s 1.7% decline. DPZ is facing easier same-store sales comparisons in 2H08 of 0.8% and -1.1% from 3Q07 and 4Q07, respectively, relative to the 4.4% number the company just lapped in 2Q08. This sequentially better number does not even account for the Olympics, which should also drive incrementally stronger results for the QSR pizza category in 3Q08.

DPZ’s CEO, David Brandon, stated on its last earnings call, “As it relates to the Olympics, any time people are sitting in front of a television set, glued to things that are happening, that's good for our business. It's good for pizza delivery and it's good for Domino's. So as it relates to the Olympics, without going any further in terms of any of our plans and programs during that timeframe, I can tell you we're looking forward to it because usually that's a great opportunity for us.”

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

Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

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

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'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.

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