prev

Falling BRIC: Selloff in Brazil

The Bovespa slid over 5% this morning.

The fear of the turmoil spreading from US financial institutions would have been enough to spark selling in Brazil today, but with an economy so heavily tied to oil, gas and biofuels the post-Ike sell-off in crude only adds insult to injury.

Central Bankers raised the benchmark SELIC rate by 75 basis points last Wednesday in an attempt to control inflation –the 4th time the rate has been raised since April. That intervention may not be enough to help this BRIC find a soft landing.

Andrew Barber
Director

Liquidity Watch: LIBOR Still Won’t Budge

Revisiting TED spread again. Despite the Fed’s attempts to increase liquidity in the system, LIBOR still has not budged.

The TED spread has obviously widened dramatically since we last discussed it. As you can see the short term cost of liquidity is trading at a big premium. As of this morning, the spread was at the highest levels it has touched since the Bear Stearns collapse back in March.

At that time calm was restored rapidly as JP Morgan emerged as a white knight. With no one there to catch Lehman as it fell and the Jury still out on AIG’s condition, we could well see spreads widen further before they come back down.

Andrew Barber
Director


Ike Gives Refiners a Break

The run up in distillates in advance of Hurricane Ike coupled with a sell-off in crude as the system began to deleverage itself helped refiners with a brief respite in recent sessions as the crack spread (crude vs. Gasoline & heating oil 321) crossed above $17 for the first time since June. With all indications that damage from the storm was minor, gasoline has come back down although crude continues to outpace it.

Andrew Barber
Director


the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

Volatility across the pond

The VSTOXX rose above 34 in today’s session, reaching levels that it has not seen since March. The VSTOXX can tend to track at a slightly higher level than the VIX due to its narrower component focus (EURO STOXX 50) but the European “fear index” still illustrates that fear of financial contagion is just as strong or stronger on the other side of the Atlantic.

Andrew Barber
Director

AC: THE GOOD NEWS: SMOKING BAN, THE BAD NEWS: SMOKING BAN

Atlantic City will finally catch a break as Pennsylvania implemented a new smoking ban this past Thursday. The ban affects 75% of the floor of PA slot parlors which puts the state on even footing with Atlantic City. This equality will be short lived, however. New Jersey will enforce a full smoking ban effective October 15th, placing PA back in the driver’s seat. AC can’t catch a break. New competition from PA, the smoking ban, high gas prices, and a difficult consumer environment have contributed to a string of monthly revenue declines (see chart). The 10/15/08 full smoking ban pushes back the “easy comparison” thesis by another 12 months.

Full smoking ban goes into effect on 10/15/08

LONDON FALLING

As a follow up to my 9/8 post “LONDON CALLING, BUT WILL THEY KEEP COMING?”, London RevPAR is now in a negative trend. I had predicted October as the first negative growth month but it looks like I will be proven wrong. September is off to a rough start, continuing what can now be called a trend from late August. Weekly RevPAR declined for the third straight week as shown in the chart. Look for continental Europe to capitulate next.

A trend is emerging

get free cartoon of the day!

Start receiving Hedgeye's Cartoon of the Day, an exclusive and humourous take on the market and the economy, delivered every morning to your inbox

By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails.

next