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Comments from CEO Keith McCullough

Another debt laden central plan, another short covering rally – Joy to the Levered World.

  1. CHINA – apparently the Chinese didn’t get the Institutional AM short covering memo (short red; chase green) – China looked more like Oracle’s guidance last night, losing another -1.2%, still in freefall at -22% YTD (Shanghai Comp). Remember, adding more leverage to the system structurally impairs Global Growth.
  2. LTRO – genius. brilliant. Right, right – for another short-term TRADE squeeze but piling another 498B Euros (monster #) in LTRO leverage onto this sick puppy is like lathering up tricky Dick Fuld a month before the blowup. This has both the DAX and CAC getting squeezed right back above TRADE lines of support (5809 and 3062, respectively) and I would not be short European Equities or the Euro here. EUR/USD mini breakout line = 1.31; waiting on 1.33 to re-short.
  3. SENTIMENT – the best thing about not running money is I get much better feedback on how people are really positioned. While its fashionable to say “everyone is bearish”, as of DEC the data no longer supports that qualitative claim (VIX anywhere in the area code of 21-23 is a very complacent signal and the II Bullish/Bearish Survey Spread just popped right back up to a 3mth high (to the Bull side) of +1800bps wide (last registered Dec 7th, before we swooned, again)

I have no European or US Equity Index/Sector shorts. I’ll say that’s plain lucky – because I didn’t see people hoping for this LTRO being the elixir of a levered life. Big risk management range in the SP500 of 1 is now the game that’s in front of us, so play that. Bullish TREND; Bearish TAIL.



THE HBM: MCD, WEN - subsector fbr



MCD: McDonald’s Romania expects sales to top EUR 100 million this year, versus EUR 99 million in 2010.

WEN: Wendy’s is set to overtake Burger King as number two in the domestic QSR sales rankings.  Sales at Wendy’s restaurants in the U.S. are on track, according to the Wall Street Journal, to be $8.42 billion or $53 million higher than Burger King’s this year .

THE HBM: MCD, WEN - stocks

Howard Penney

Managing Director

Rory Green