The Economic Data calendar for the week of the 27th of May through the 31st is full of critical releases and events. Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.



Trade of the Day: FXY

Takeaway: Keith re-shorted the Yen (FXY) at 9:39am this morning at $96.75.

Hello darkness, my old friend - it's good to talk to you again... We are re-shorting the Yen at an immediate-term TRADE Overbought high. “Team Krugman” in Japan meets its maker. #gravity


Trade of the Day: FXY - FXY

Keith's Top-5 Tweets Today

Takeaway: Here's a look at Keith's top tweets heading into Memorial Day weekend.

Our best week ever in terms of new clients - thanking all of you for helping us be the change we all want to see

@KeithMcCullough 4:01PM


Long weekend trading days usually some of my favorite - volume makes it easier to pick people off

@KeithMcCullough 2:22PM


When we say sell, clients sell - when the Old Wall says sell, I usually cover/buy

@KeithMcCullough 12:28PM


The combination of market morons and economic ideologues is something we love competing with

@KeithMcCullough 8:09AM


Krugman's Op-Ed "Japan the Model" could have been written in 1924, championing the Weimar Republic @NYTimeskrugman

@KeithMcCullough 7:50AM


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Heard on the AM Call: Sippin' Sapporo

Takeaway: Paul Krugman and Ben Bernanke need to go back to whatever dorm they were sippin’ the Sapporo in and rethink everything.

(Excerpt from this morning's Hedgeye conference call)


Every Sector ETF in our S&P Sector Model (with the exception of Utilities) is in what we call a Bullish Formation (bullish on all 3 of our core risk management durations – TRADE, TREND, and TAIL). The Utilities Sector ETF (XLU) is getting crushed, already -6.4% in May.


What is people giving up on Utilities (Yield Chasing) saying? It‘s saying shame on you Ben Bernanke. He’s forcing retired people to chase yield and rethink the whole historic notion of savings going back to Benjamin Franklin.


Another shame shout-out goes to New York Times “economist” Paul Krugman. If you can stomach it, take a moment to read his latest op-ed championing “Abenomics” and Japan’s insane efforts to turn its economy around. Holy smokes. Krugman may as well be writing about the Weimar Republic in 1924-25.


Bottom line: Krugman and Bernanke need to go back to whatever dorm they were sippin’ the Sapporo in and rethink everything.

Oversold: SP500 Levels, Refreshed



I was a busy little beaver this morning. I came into the 10AM swoon running net short (only the 3rd day I have had more shorts than longs since November 29th), so covering on my oversold signal was a relatively easy decision. Buying aggressively here is less easy (maybe that’s why I should).


Here’s how I think about that in terms of key levels:

  1. Inside of 1637, the SP500 is immediate-term oversold
  2. But immediate-term TRADE resistance (1657) is the 1st signal for lower-highs I’ve had all month
  3. The broader TREND of support is down at 1558

This week’s 50 point SPY selloff (in 48 hours from Wednesday morning’s highs to Friday morning’s lows) came on central planning risks in the US and Japan; not economic fundamentals. #BernankeRisk is real – the market has already reminded you of as much. The risk is his forecast is too bearish.


It’s perverse really. Bernanke vs The People. And the bond market (long-term Treasuries) is betting that real (inflation adjusted) growth wins.


This week’s jobless claims surprised again on the downside, New Home Sales of 454,000 were fantastic, and this morning’s Durable Good print showed #GrowthAccelerating too.


Now all we need is a bigger #StrongDollar Tax Cut at the pump. Oil down hard on the week will help.


Enjoy your long weekend,



Oversold: SP500 Levels, Refreshed  - SPX

PG – Don’t Get Fooled Again

Takeaway: We think AG Lafley is a clear improvement over Bob McDonald, but we aren’t entirely convinced that Lafley is all that good.

This note was originally published May 24, 2013 at 10:25 in Consumer Staples

“Meet the new boss, same as the old boss.” – The Who

Last night, Procter & Gamble CEO Bob McDonald announced his “retirement” and former Chairman and CEO AG Lafley was named as President and CEO.  McDonald was facing a fair bit of external and internal criticism, and his retirement shouldn’t come as a complete surprise to the market.  We have a couple of thoughts on the situation.

  • We think Lafley is a clear improvement over McDonald, but we aren’t entirely convinced that Lafley is all that good – for example, the Gillette acquisition took place on his watch and we think it’s a horse race between PG/Gillette and GIS/Pillsbury for worst staples acquisition of the last 20 years
  • This doesn’t strike us as a permanent solution – AG Lafley is 65 and note that any likely successor to Lafley almost certainly lives and works in Cincinnati as I type this, so don’t expect a sea change in terms of philosophy or style going forward (this is part of the reason we questioned Pershing Square’s thesis on the name).
  • While PG stock was a strong performer during Lafley’s tenure, he had several notable tailwinds, including a period of strong global growth and a company in Unilever that was a fairly consistent share donor (the current Unilever is much, much more capable global competitor) – this goes back to our prior thought that while Lafley is better, better doesn’t necessarily equal good
  • It’s unclear to us what Lafley’s strategy will be, but there are only so many levers to pull – advertise, innovate and invest in price – none of those seem to be all that positive for the broader HPC space and likely not positive for PG’s earnings base.  2014 as a reset/investment year is a real possibility
  • At $82, PG is a do nothing for us and represents more than a little bit of the triumph of hope over experience, which we see as particularly fitting given that this is Lafley’s second “marriage” to PG (Samuel Johnson - “A second marriage is the triumph of hope over experience”)
  • We are happy to sit on the sidelines until we hear a clearly defined strategy and then perhaps wait a bit more until we see some positive impact from the implementation of that strategy – PG is a big ship to get moving
  • PG’s upgrade this morning by a large sell side firm strikes us as a “true-up” after being on the wrong side of the name for a good bit of time


Call with questions,






Robert  Campagnino


Managing Director






P: 203.562.6500




Matt Hedrick


Senior Analyst

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