A recent NY Times article expands on our “New Reality” theme as it relates to Investment Banking Inc. and broadens the theme to the auto industry, calling December’s declining sales trends the “New Normal.” The article says that the historic collapse of the new-car market raises questions about whether the auto industry will ever again see the pace of sales it did a few years ago. The easy answer is no, but Detroit will adjust and move. The “New Normal” theme goes beyond auto, however, and touches just about every industry. More importantly, the death of the consumer credit cycle will mean that there is a “New Normal” for nearly everyone.

The “New Normal” refers to the fact that the world has changed forever and those companies that are reluctant to change are doomed to fail. Those companies that do not adjust to the “New Normal” will be in purgatory for an extended period of time. Reducing capacity and capital spending are the order of the day and those that try to convince you that “we can grow” through the cycle are not in tune with the “New Normal.” Our “New Reality” is closely aligned to the debacle on Wall Street and the end of Investment Banking Inc. as we know it. The “New Normal” is closely aligned to the permanent shift in every aspect of consumer behavior. The most recent example of the “New Normal” comes from Lee Scott, the CEO of Wal-Mart, who believes that recent economic activity has caused a permanent and fundamental change in the behavior of the consumer in that the consumer will not have as aggressive a desire for consumption and debt. The question that remains unanswerable as it relates to consumer spending is what level of spending is the “New Normal?”

As far as the investment community is concerned, the “New Normal” is not levered long, and does not include concentrated, activist investing. Traditional Hedge funds and Fund of Funds are not part of the “New Normal.” Business models that provide leadership, accountability and trust will be part of the “New Normal” within the investment community. The game is changing every day and we are here to play. Welcome to the “New Normal.”

Ironically, in 2004, Roger McNamee authored a book called ‘The New Normal.’ At the time, he said The New Normal is a time of risk and uncertainty, but it also offers unprecedented rewards for the bold. He also says that back in the 40s, 50s, and 60s, it was fairly easy to plan for a secure future. People picked a career, a spouse, and a place to live, and those basic decisions put them on a predictable course for the rest of their lives, especially if they were lucky enough to land at a big corporation with great benefits and smart enough to buy stocks. In the 1990s and early 2000s, technology and global competition transformed the world, and the bull market lulled people into thinking they were in control of their lives.

Today, the new normal of the 40s, 50s and 60s is looking like a great place to be. The “New Normal” of 2009 is nothing like we have ever seen.

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

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People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

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UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

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Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

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Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

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An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

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Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

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REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

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Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

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Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

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We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

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Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

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