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Timberland (TBL): Tick-ah-teee Booo!

Boot to the head if you're short McGough's bullish call here. I've never been accused of not celebrating big wins, and this was our biggest one today; TBL closed +11% on the day on takeout rumors. See Brian McGough's research for more. At 7x trailing cash float, with net cash on the balance sheet, and 9% short interest, this stock's run isn't over.
  • Breaking out of a big base, TBL's next stop is $19.18, before the shorts get some relief.
    KM
chart courtesy of stockcharts.com

SKX: Misery Loves Company

At least Skechers has good company in announcing announces capital investment in China AFTER a 20% run in the Yuan. The narrative here is scary…

I think Skechers’ announcement that it is expanding its Asian JV with the Onwel Group is another nail in the coffin for this story. Let’s add this to the narrative of its growth slowdown… A) Shift in fashion towards low profile propels margins from 0% to 9%. B) Low profile growth slows after four years. C) Takes next leg of growth overseas. D) SKX becomes more litigious, suing a smaller brand after years of fighting against economic harm from knocking off styles. E) Opens up more company-owned retail stores to get product to consumers despite less interest from retail. F) Broadening wholesale distribution to more marginal channels (Goody’s, Mervyn’s). G) Bids for Heely’s. H) Now it grows more aggressively into Hong Kong and Macao with a goal to triple sales there in 3-years. Maybe they should have thought of this 3-years ago before a 20% run in FX? FX moves are always hindsight 20/20, but this is another example of a poorly managed company in this space deploying capital reactively. Proactive always wins in my book.

The biggest plus is that its partnership could secure it better capacity in an environment where plant space is becoming extremely more difficult to find. But this is not a positive – it simply helps mitigate a potentially massive negative.

Also, it was announced within a day of Coke offering a 195% premium for Huiyuan Juice Group.

Maybe Skechers and Coke borrow each other’s Macro analysis….
Investing in China at the top!

Unemployment Trends In Japan: Where's the next big move going to be?

The glass half full crowd got thrown a bone by a slight downtick in unemployment numbers in Japan this week. To better understand the employment environment in Japan you must factor in the “Haken” – a chronically underemployed class of young people created as the government introduced regulatory changes over the past decade that made it easier for employers to hire through temp agencies and short term contracts.

In 2007, the Ministry of Internal Affairs estimated that there were 3.3 million people aged 25 to 34 working as temps or contract employees – put in context that is over 4% of total working age population (15-64).

As major domestic employers like Toyota start to reduce capacity these workers will be the first to go, and even those lucky enough to stay employed will feel rising inflation faster and harder than the fully employed.

Andrew Barber
Director

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An Ugly Chart Gets Uglier: Japanese Stagflation...

The scariest thing about this chart is that the US one can start to look a lot like it, soon.
Below we have overlaid Japanese inflation with their easy money interest rate policy.

KM
(chart by Andrew Barber, Director - Research Edge LLC)

Finally, A Fed Member Who Agrees With Me On Something!

From our friends at Street Account who do a great job intraday!

9/03/2008 12:21:27 PM "Boston Fed President Rosengren says US unemployment rate may rise above 6%"

I'm continue to be in print with an estimate for the US Unemployment rate to hit 6-7% by the end of 2008.

Stagflation remains, despite the selloff in commodities.
KM

US Dollar Is Finally Overbought

Here's a chart of the +9% move that the US Dollar had since July 14th.
  • In our "Hedgeye Portfolio", I shorted the US$ via the UUP (etf) yesterday at $24.17
    KM
chart courtesy of stockcharts.com

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