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Russia: The Worst Looking Major Country Chart In Macro

While European stock markets rallied broadly into today's close, Russia flashed another major negative divergence, closing down another -2.4%.

The Russian Trading System Index (RTSI, see chart) has been crushed in the last week, trading all the way back down to 603. The capitulation low of October 24th was 549, and there is no technical support for this index until we revisit that line. The geo-macro concerns in this region of the world are real. Pay attention to them.

We've drawn the important resistance lines in the chart below. There is massive resistance up at 1,116. That line will need to be overcome before the negative intermediate "Trend" reverses to the positive. A cold Russian winter cometh...
KM

Sports Apparel Sales Weak: Market Share Matters

Not a good week for sports apparel per SportscanINFO. Both dollars and average price point were down near 10% -- a continuation of the trend we’ve been seeing in recent weeks. Market share matters… While no brands are exactly knocking the cover off the ball, I like Under Armour’s trends the best. Check out Exhibit 3 below.

The S&P 324

If SP500 held to it's $4B market cap hurdle, it would lose 166 components.

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JBX – Franchisee Files For Bankruptcy

Nation’s Restaurant News reported yesterday that a JBX franchisee, Kobra Properties, filed for Chapter 11 bankruptcy in Sacramento last week. Kobra operates 71 Jack in the Box units, four Qdoba restaurants and five T.G.I. Friday’s units. The company also owns the fine-dining eatery Crush 29 in Roseville, California and has other concepts in development.
“Like families, governments and businesses everywhere in the Sacramento area, America and around the world, our company is facing difficult financial challenges,” company founder Abe Alizadeh said in a statement. “In the face of these challenges, we’re taking action so we can fairly honor our financial commitments, protect the thousands of jobs we provide and restructure Kobra Properties so we not only weather the storm, but emerge even stronger.”

Clearly, these challenges are not specific to JBX. As I have said before, franchisees in general are more greatly feeling the impact of today’s difficult operating environment, and I would expect to see more franchise operators file for Chapter 11 bankruptcy and/or require increased financial support from their franchisors whether it be in the form of loans or deferred payments (please see my post titled “Franchisees are Really Feeling the Pinch” from November 20 for more details).


China: The Best Looking Major Country Chart In Macro

The Shanghai Stock Exchange Index (see chart) had another solid day of trading, closing up another +4% at 1,965. Considering the major policy moves the Chinese Government has made in the last few months, this chart looks as fantastic as it should.

Since the beginning of November, Chinese stocks are up over +15% (the USA is down -15%). They are cutting both taxes and interest rates. They are plugging in one of the largest domestic stimulus plans in world history. Who can afford to miss getting this wrong? This is not that complicated.

If we weren’t bearish on China (and Asian growth broadly) at this time last year, I may not understand the bear case as well as I feel my investment team does. We also have a research office there, which gives us both critical contacts and context to make this call. After crashing for a 70% peak to trough move, the nominal slowdown in Chinese growth is baked into the cake.
KM

Commodity Exposure Exposed – Fast Casual and QSR

The tables below highlight fast casual and QSR companies’ commodity exposure and their most recent cost outlook for fiscal 2008 and fiscal 2009. Please see my post from yesterday titled “Commodity Exposure Exposed – Casual Dining” for more details.

Early Look

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