Baucus Bomb

Attached below is the morning note from our Healthcare team, Tom Tobin and Christian Drake.  In it are some data points that we thought would be interesting:


I look through a lot of news items every morning and because of some of the work I was doing yesterday, it stuck out.  It was an item about how Liz Fowler, former insurance insider and current Baucus aid, had written the Baucus proposal circulated earlier this week.  I was on the phone with a health insurance actuary trying to figure out what some of the language meant in the Baucus release for underwriting a health policy and what additional proposals could mean for Managed Care under Health Reform (that is assuming it gets done).  The conclusion is that Liz Fowler’s background shows;  the Baucus proposal looks favorable to Managed Care.  The key point is the flexibility in how the price of a premium is built out of the cost of services and the risk factors listed, such as age and smoker, the inclusion of a mandate, and some other provisions. 


There were other points we touched on regarding the current state of the market both positive (premiums are accelerating) and negative (adverse selection) which we will be discussing in a note later today.  If the Research Edge Macro call on Inflation is right, we’ll see pressure on consumption, including healthcare consumption, and higher investment income returns.  If Mr. Geithner is right, we’ll see job growth next year and enrollment growth.  If Health Reform passes, the least likely outcome, a whole new leg of enrollment growth becomes available.


The beta side of healthcare dominated as healthcare outperformed the market for a 3rd consecutive day on continued higher volume.  Inflation backed off & Cost of Capital led negative correlation factors as 10 yr. Treasury yields got smoked. Mirroring the markets ongoing inflation-deflation debate, Balance sheet & inflation related factors have been inconsistent as price drivers.  This inconsistency, when married to our macro call for inflation & cost of capital to accelerate as we move through the back half of the year, represents opportunity as analyst/economist prognostications have yet to be backed by the conviction of capital commitments.  We’re hosting a Healthcare-Macro Call on Monday where we’ll expound on the healthcare investment implications of our 4Q & 2010 Macro Theses. (contact if you’d like to join the call).


Baucus Bomb - DR B


Daryl G. Jones
Managing Director



Galaxy has bought its Cotai land bank from the government for MOP3 billion.  The Mystical Oasis property is currently being built on the site and is due to open towards the end of 2010.  DM sees this purchase as being more beneficial for Galaxy than it may appear, stating, “For less than it cost to build StarWorld on the peninsula, the group now has a secure land bank in what is likely to become one of the world’s hottest pieces of real estate for decades to come”.


Galaxy is developing The Mystical Oasis property, which will consist of two hotel towers of 1,500 rooms each, a massive gaming floor, and a few retail outlets.   The rest of the land will be given over to possible development of hotels, leisure facilities, and apartments.






Wealthy mainlanders are boosting Macau’s property sales.  Although there was a suspension of the city’s investment migration scheme two years ago, many of the people who were on the waiting list were still processed and approved since the suspension.  In 2007, 2008, and 1H09, there were 1,429, 1,852, and 1,185 approvals respectively.  Some commentators believe that the suspension has helped cool off the property market.


The SCMP story spurs DM to caution of the risks of investing in the gaming hub’s property market.  There are a lot of positive catalysts in the future; One Central is opening and there is excitement about LVS possibly selling its serviced apartment tower at the Four Seasons.


The cautionary point is that the long term in Macau is decidedly murky.  One anecdote that illustrates this point is the rumor that Concordia Industrial Park, on the edge of Cotai, will soon be rezoned to make way for a massive multi-tower residential development. Considering the possible restart of construction on the gigantic Windsor Arch development opposite the racecourse in Taipa, the overhang from One Grandtai on the ridge overlooking the Cotai Strip, you have to start wondering how many mainland property speculators there are out there who can sustainably support this takeoff yet again.





DM noted that the mass floors at LVS’ properties were packed during the month of August and that LVS gained MOP 100 million in mass revenues on a month-over-month basis.  SJM still made the most on mass – MOP 1.25 billion – but pays out much of that in commissions to third party non-Lisboa casino operators.  SJM’s hold was a mere 2.6%, after an even worse 2% in July.  MPEL gaming significantly in rolling-chip volume: up 20% compared to July.  Hold for MPEL was 3.1%. WYNN and Galaxy both saw improvements in VIP revenue while MGM was the only concessionaire to see VIP win drop month-over-month, albeit against a very strong July number.


DM sees little long term lessons to be taken from the August numbers but recognizes the paramount importance of luck (hold percentages) in the Macau operators’ results.





LVS closed its pre-IPO financing within days of saying that it was going to.  DM estimates that Venetian Macau Limited gained well over US$100 million in EBITDA for August and predicts that LVS will announce its earnings for the quarter ended 9/30 much earlier than is customary (six weeks). 





Wynn Resorts is said to be planning to raise up to US$ 1 billion by listing its Macau assets on the Hong Kong stock exchange.  A source revealed that the tentative listing date for the IPO is set for October 9 and that Wynn Macau will sell 20% of its enlarged share capital.


Some commentators see Wynn’s Hong Kong offering as being a more attractive option in Macau than LVS’ forthcoming IPO due to Wynn’s lower debt levels and strong brand name.





Henry Mong, the gambler who is as much as HK$30 million in debt to Wynn Resorts, is trying to block Wynn’s lawsuit by saying that Macau’s gaming laws require a credit contract to be ratified by the DCIJ.  Wynn is saying that the company can’t possibly do this on every credit agreement with every player and that the law was intended to cover credit agreements with junkets. 


DM hopes Wynn wins the case but wonders what that would do to the direct-VIP business.





Infrastructure projects are coming on line in Macau.  The new light rail system and the Pac On ferry terminal are both due to open towards the end of 2011.



SEPTEMBER 11, 2009




I was typing an overnight callout based on an analysis my team did on retail employment, when Zach forwarded me the most bizarre brand-building experiment I have ever seen by an apparel company.  I can try to describe Puma’s marketing campaign, but could not even begin to do it justice. It’s clean enough to show on YouTube, so I’ll point you in that direction. But it definitely pushes the envelope…


As for retail employment, check out the chart below, which shows that year on year job openings are down a full 35% vs last year. The trend year-to-date is even more notable in that it is not getting better.  Compares will be easier within a few months, but man, are these numbers ugly, or what?








Some Notable Call Outs

  • Despite generally consistent and solid results overall, Walmart continues to paint a picture of a challenging backdrop for its customers. The payroll cycle remains particularly pronounced, including data that suggests sales increases are taking place after midnight on the first of the month (suggesting consumers are waiting for payroll checks to clear and then immediately restocking). Additionally, Walmart research showed that their customers spent approximately 25% less on vacation this summer. Despite these challenges, Walmart continues to gain market share as evidenced by traffic increases which have continued through August.


  • Lululemon is one of a few retailers that actually may be missing sales due to tight inventory controls. The company highlighted on its 2Q conference call that the pulling forward of Fall goods drove quicker sell throughs and as a result, same store sales rose and fell commensurate with new product flows. Management went on to suggest that they may have reported positive same store sales if they have made a bigger inventory commitment.


  • Admittedly behind the times, Carter’s CFO highlighted ecommerce as an untapped opportunity for the company. They are one of the few brands with a retail presence that does not transact directly with its consumers. The company is now building a team to build out its ecommerce effort, and with the help of third parties will launch a platform some time next year. We applaud the effort but still wonder why it has taken more than a decade since ecommerce began for iconic brands such as Carters and Oshkosh to realize they can sell onesies and overalls online.




-Led by Vietnam, textile and apparel imports to the U.S. from South Asia increased in July as shipments from most other countries fell - The Commerce Department’s Office of Textiles & Apparel said Thursday that shipments of textiles and apparel to the U.S. fell 8.7% in July. Apparel and textile imports from Vietnam increased 16.7%, Bangladesh was  up 3.1%, India increased its imports 1.7%. Shipments from South Korea fell 30%, Indonesia declined 7.9%, China declined 1%. Apparel shipments from China to the U.S. increased 10.9% in 12-month comparisons.  <>


-New Balance sues Louis Vuitton - New Balance Athletic Shoe Inc. accused Louis Vuitton of crossing the line between homage and infringement in a trademark lawsuit filed Wednesday. The company filed a complaint in U.S. District Court in Boston alleging that LVMH Moët Hennessy Louis Vuitton’s Minstrel sneaker, released as part of the luxury firm’s winter 2009 collection, borrows too heavily from its own 574 model. The suit accuses LVMH of intentionally mimicking the 574’s shape and coloring with the Minstrel. <>


-Wal-Mart Stores Inc. reached outside the company to hire a leader for its Asia business - The retailer on Thursday named Scott Price, a former top DHL executive, as president and chief executive officer of Wal-Mart Asia. The world’s largest retailer traditionally chose leaders from its own talent pool, but that has changed in recent years. Wal-Mart recruited from outside the company Leslie Dach, executive vice president of corporate affairs and government relations, who was vice chairman of Edelman, a global public relations firm, and Brian Cornell, president and ceo of Sam’s Club, who was ceo of Michael’s Stores. <>


-Procter & Gamble Co. Thursday lifted its full-year earnings guidance and said that it expects sales to rebound this fall as it cuts prices, invests in new products and continues restructuring. Earnings are still expected to be 95 cents to $1 a share. Analysts are looking for 97 cents. “We clearly see that we are approaching an inflection point in P&G’s organic sales trends,” said chief financial officer Jon Moeller. “The innovations we are launching and the investments we are making are having an impact in the market. In addition, prior-year results will get easier as we move into the second quarter.” The maker of household and beauty products reaffirmed fiscal 2010 sales guidance of flat to up 3%, as well as the outlook for organic sales growth of 1 to 3%. Full-year earnings guidance was raised to $3.99 to $4.12 a share, up from $3.65 to $3.80 a share, due largely to the $3.1 billion sale of its pharmaceutical business to Ireland’s Warner Chilcott plc announced last month. <>


-Mexico adds transition duties on top of antidumping duties towards Chinese imports - Mexico’s Ministry of Economy recently issued a notice advising importers that apparel imports from mainland China, which were subject to antidumping duties as recently as May 2009, are now subject to transition duties. Mexico and China signed an agreement last year under which Mexico eliminated the AD duties it maintained on a broad range of products from the mainland, effective from 15 October 2008. As part of the agreement, many of these products will be subject to so-called transition duties through 11 December 2011. <>


-Pakistan hopes to achieve textile exports of US$25 billion in the coming five years - Federal Textile Minister Rana Farooq Saeed Khansaid that as the textile industry was an important sector of the economy, if the sector was given a proper boost, it could provide sufficient jobs for the whole country. The textile sector was now getting electricity to function smoothly, but any problems related to load shedding would be sorted out by December this year and the sector would also get un-interrupted supply of gas in winter season, he said. He added that President Zardari during his recent visits to the US and Europe, had discussed market access for Pakistani textile products in these markets and those visits would help improve the economy of the country and trade. <>


-More trade without the US dollar: Turkey-Russia bilateral trade - The head of Turkish Leather Garment Manufacturers' Association (TDKD) said that the leather sales to Russia would increase by 50% if Turkish lira and Russian ruble were used in trade with this country. In an initiative to boost leather exports to its neighbor the chairman of the TDKD, Ramazan Hazar said that Turkish leather sector would be promoted in various fashion capitals of the world including Russia's capital city, Moscow. Commenting on the project aiming at the using of Turkish and Russian currencies in the bilateral trade between the two countries, Hazar said that Turkish leather sector's sales to Russia would increase remarkably if such project was implemented. "Both parties are interested in this project. Accountants and finance experts from both countries are currently working on it. If it is implemented, there will be a 50 percent increase in our sales," Hazar said. This project comes on the heels of Brazil’s plan to trade with China using local currency instead of the US dollar as a medium of exchange. The growing lack of confidence in the US currency has also resulted in China calling for a new reserve currency based on a basket of currencies similar to the SDR’s used by the IMF. <>


-Australian department store IPO - Australia’s largest department store group Myer said Friday it will return to the Australian stock market before Christmas with an initial public offering that analysts anticipate will be worth 2 to 3 billion Australian dollars, or $1.7 to $2.6 billion, pending market conditions. The ipo comes three years after the Coles Group sold Melbourne-based Myer to a consortium led by US private equity group Texas Pacific for 1.4 billion Australian dollars, or $1.2 billion. The company did not provide any further information on pricing or the size of the offer. An ipo prospectus is due to be lodged with the Australian Securities and Investments Commission (ASIC) on approximately Sept. 28. There are signs that the ipo market for retail companies might be starting to pick up- albeit slightly. Earlier this week, Italy's online discount retailer Yoox  said it is pushing ahead with its plans to list on the stock market in the first half of next year. Originally the Bologna-based company had planned to go public this year. <>


-J.C. Penney rolls out its first contemporary label created by its own design team - The line is called "she said" and will be in 600 stores and have a significant presence on “It’s really a younger customer under 35 that we are going after here. It just so happens that we are resonating with those under 35,” said Liz Sweney, J.C. Penney Co. Inc.’s executive vice president of women’s. Most big box and department stores fail to project a sharp fashion image, given their wide range of merchandise, prices, customers and propensity to promote markdowns to the extent of overshadowing the actual styles. But Penney’s has been ramping up its contemporary offerings for the past 18 months and says that, despite generally depressed sales, the strategy is resonating with customers and that younger, trendier styles are outselling basics and conservative looks geared to older customers. With the recent additions of contemporary lines done in collaboration with designers and brands like Bisou Bisou, I [Heart] Ronson, Allen B., Oxford & Regent and Twelfth of Eleven, the percentage of younger women shopping the store is growing, executives said. About 45 percent of women’s apparel sold at Penney’s is to women under 35; four or five years ago it was 40 percent. <>


-The luxury category may be tapped out, according to a new study conducted by The Luxury Institute - In the New York-based firm’s latest WealthSurvey, conducted in cooperation with Evins Communications, more than half of all wealthy consumers and millionaires said there are too many brands in most high-end categories, while 77% believe luxury is less important in today’s economy. <>


-JJB Sports investigated for fraud - JJB Sports Plc and Sports Direct International Plc's activities are being investigated by the U.K. Serious Fraud Office in conjunction with the Office of Fair Trade.  <>


-Dubai Investment Fund That Acquired Barneys Is Said to Be Up for Sale - Istithmar World, the Dubai sovereign wealth fund, is halting investments as part of a restructuring effort after spending more than $25 billion this decade on stakes ranging from a yacht marina to luxury retailer Barneys New York, according to people familiar with the plan. <>


-UK recovery evident as consumer spending patterns mirror recovery stages of 2001 downturn - The UK economy is beginning to show signs of recovery, according to improved online consumer spending patterns evidenced in research from Maximiles. The 2009 Consumer Confidence Report analyses the online spending habits of approximately two million British consumers across Maximiles UK's shopping portal, While consistent consumer spending and a booming housing market were key factors in Britain's narrow escape from official recession in 2001, the latest 2008-9 spending patterns reveal that now may be a time for cautious optimism. However, consumers are looking for more value online as the average spend per person on these products each month has dropped from £9.61 to £6.04. This mirrors the shifting consumer trends during the recovery periods of the last downturn when the proportion of our cash that we were spending on consumer electronics products per month peaked at 26 per cent at the height of the downturn and then decreased as the recovery began, slowing to 25 per cent. <>


-Dick’s Sporting Goods and American Eagle ride the m-commerce wave - Earlier this month, the number of retailers that have introduced mobile commerce sites and/or smartphone apps surged past 100, and last month leading m-commerce technology vendors reported nearly 20 more clients preparing to launch mobile sites or apps before the holidays. Today e-retailing heavy hitters American Eagle Outfitters Inc., No. 54 in the Internet Retailer Top 500 Guide, and Dick’s Sporting Goods Inc., No. 121, both have launched m-commerce sites. Multichannel retailer Dick’s Sporting Goods’ site,, is organized by category and enables shoppers to search for products, locate stores, download coupons and more. The m-commerce site, built by online marketing firm Branding Brand, enables consumers to shop on their mobile phones Dick’s Sporting Goods’ complete selection of merchandise. The home page features buttons for a list of product categories where mobile shoppers can begin the quick process of drilling down to a desired sub-category or product. <>


-Juicy Couture’s new online Club Couture boosts conversion rate by 162% - Social shopping features at Club Couture let shoppers create, share and view looks created by others. The retailer has also driven up page views per visit by 141% and average time spent on the site by 150%. <>


-New York City, for one night, seemed to forget that there was a recession -  Streets were packed, stores were crowded and gobs of people were carrying shopping bags on Madison Avenue. More than 800 stores held parties and kept their doors open until 11 p.m. Mr. Kors, the fashion designer, said they were “beating the tom-toms” for starving retailers. The scene was utterly chaotic, and it was not entirely clear that many people had bought much more than a Fashion’s Night Out charity T-shirt to benefit the National September 11 Memorial and Museum and the New York City AIDS Fund, so they could have it autographed by Ms. Wintour. Terry J. Lundgren, chief executive of Macy’s, said the chain had sold more than half its 6,000 T-shirts, for $30 apiece, by 5 p.m. Similar events intended to encourage shopping were being held in Paris, Milan and other cities around the world on Thursday. It was impossible to gauge the immediate impact of the shopping parties, or whether they will have a long-term effect on consumer attitudes.  <>


-The new iPhone app from Puma has all the ingredients of scoring plenty of viral buzz - The free app is called the Puma Index and here’s how it works. When the Dow goes up, the models on your iPhone put on their Puma clothes. When the Dow goes down, they start taking their Puma clothes off. If the market goes down enough, the models strip down all the way to their Puma bodywear, a line extension the company has just launched. “We’ve seen a lot of branded applications and a lot of them play it too straight down the middle,” said Antonio Bertone, Puma’s chief marketing officer. “We thought that if we could do this right and have models take off clothes when the market was going down, this could really work.” The app, which will get you a 20 percent discount if you show it at a Puma store, is already available on the iPhone. A web application of the “Puma Index” will launch in a couple of weeks. Puma is hoping this will appeal internationally. The models will soon strip to the German (DAX) and Australian (ASX) markets, Bertone said. As for what would happen if the market started crashing again? Bertone: "They'll be in their bra and underwear having a pillow fight." <>





GES: Carlos Alberini, President & COO, sold 162,000shs ($5.7mm) roughly 40% of total common holdings.


JOSB: Robert Wildrick, Director, sold 262,500shs ($12.1mm) nearly 90% of total common holdings pursuant to 10b5-1 plan.


KSWS: David Nichols, Executive VP, sold 10,000shs ($44k) up exercising the right to buy 10,000 shares.


PSS: Michael Massey, Senior VP, sold 3,000shs ($52k) nearly 20% of total common holdings.



Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.43%
  • SHORT SIGNALS 78.34%

Want Vs. Need

“The better part of valor is discretion”
– William Shakespeare
Thanks Bill, and the better or necessary part of consumer spending is the staples.  Necessity is why staples are also called non-discretionary.  With their discretion, will consumers be so valorous as to empty their wallets for things they want, rather than need?  The almost vertical trajectory of discretionary consumer stocks suggests yes.  On the contrary, sound analysis indicates that consumers face an almost impenetrable ceiling, triple fortified by the Three S’s:  Savings rate, Stagflation, and Share of wallet.  I’d add consumer credit (bad) to the mix but it doesn’t begin with an S, we like 3s, and our macro team will be addressing this topic shortly.
So while Geithner may say that “things are better than 3 months ago, 6 months ago, before this recession began”, I would ask two questions:  By what metric and for whom?  Geithner’s preferred metric lately, it appears, is the rate of change or the “less bad” thesis that Research Edge was espousing when everyone else thought the world was falling apart (March 9th ring a bell?).  The stock market has already discounted “less bad”, then “stability”, and now is viewing the consumer as in “recovery” mode.  This is what scares me.
“Recovery mode” implies, well…recovery.  I’m certainly not seeing it in the consumer discretionary sectors of gaming, lodging, and leisure that comprise my analytical vertical.  Is business less bad?  Maybe, but I think the comparisons are just getting easier.  The consumer is not necessarily getting stronger.
“Recovery mode” also implies some lasting duration.  We are very worried about Q4 from a macro and consumer perspective.  The threat of stagflation is real, maybe coming as soon as Q4.  Stagflation is a consumer killer.  In a stagflation environment, fewer consumers have jobs and the ones that do can’t buy as much as before.  Will you take credit for that too, Mr. Geithner, when it happens?  Your policies and your predecessor’s policies (as well as the Bernanke constant) have created a fertile environment for potentially massive inflation, yet unemployment continues to grow.  Sure unemployment is growing at a slower rate (10% but it could’ve been 10.5%!). Congratulations - pop the champagne – at least the French consumer discretionary industry will benefit.
So if I’m out of work (thankfully I’m not) and my purchasing power begins to decline at an accelerating rate (rate of change cuts both ways Tim), am I really going to buy that 2nd boat, 8th Coach bag, or book that 3rd cruise this year, or will I feed my family.  Want versus need.
This also gets us to the share of the wallet question. In an inflationary economy, a larger part of consumer spending will go to non-discretionary items.  With stagflation, the size of the wallet shrinks.  One of my industries has a third problem:  even within the consumer discretionary segment, casino spending is shrinking as a % of Personal Consumption Expenditures (PCE) for the first time in 25 years.  Now that’s a triple whammy!
So what do we do?  Be careful and manage risk.  We can’t ignore the warning signs just because the stock market and consumer stocks are going up.  Timing, as always, is critical.  This is where I defer to our timing tutor, Keith McCullough.
On a separate note, I will be taking many moments of silence today to contemplate what happened exactly 8 years ago on a beautiful, sunny Tuesday morning.  The events of 9/11 had an impact on virtually every American.  The impact was personal for many of us living/working in NYC that day.  We move forward in part by looking back.
Todd Jordan
Managing Director


VXX – iPath VIX We bought volatility horribly the first time on 9/3. With the VIX testing our 23 level of support on 9/10, we added to the position.  

XLV – SPDR Healthcare We’re finally getting the correction we’ve been calling for in Healthcare. It’s a good one to buy into. Our Healthcare sector head Tom Tobin remains bullish on fading the “public plan” at a price.

EWH – iShares Hong Kong
The current lower volatility in the Hang Seng (versus the Shanghai composite) creates a more tolerable trading range in the intermediate term and a greater degree of tactical confidence.  

CYB – WisdomTree Dreyfus Chinese Yuan The Yuan is a managed floating currency that trades inside a 0.5% band around the official PBOC mark versus a FX basket. Not quite pegged, not truly floating; the speculative interest in the Yuan/USD forward market has increased dramatically in recent years. We trade the ETN CYB to take exposure to this managed currency in a managed economy hoping to manage our risk as the stimulus led recovery in China dominates global trade.

TIP – iShares TIPS The iShares etf, TIP, which is 90% invested in the inflation protected sector of the US Treasury Market currently offers a compelling yield. We believe that future inflation expectations are currently mispriced and that TIPS are a efficient way to own yield on an inflation protected basis, especially in the context of our re-flation thesis.

LQD – iShares Corporate Bonds
Corporate bonds have had a huge move off their 2008 lows and we expect with the eventual rising of interest rates that bonds will give some of that move back. Shorting ahead of Q4 cost of capital heightening as access to capital tightens.

EWU – iShares UK We’re bearish on the UK’s leadership and monetary policy to weather its economic downturn. Although we’re seeing improved fundamentals within the country and across Europe we continue to see the country’s financial leverage as a headwind and increasingly the data suggests that inflation is getting ahead of growth. With the FTSE reaching a YTD high on 9/9, we shorted EWU.

DIA  – Diamonds Trust We shorted the Dow on 9/3.  In the US, we want to be long the Nasdaq (liquidity) and short the Dow (financial leverage).

EWJ – iShares Japan While a sweeping victory for the Democratic Party of Japan has ended over 50 years of rule by the LDP bringing some hope to voters; the new leadership  appears, if anything, to have a less developed recovery plan than their predecessors. We view Japan as something of a Ponzi Economy -with a population maintaining very high savings rate whose nest eggs allow the government to borrow at ultra low interest levels in order to execute stimulus programs designed to encourage people to save less. This cycle of internal public debt accumulation (now hovering at close to 200% of GDP) is anchored to a vicious demographic curve that leaves the Japanese economy in the long-term position of a man treading water with a bowling ball in his hands.

SHY – iShares 1-3 Year Treasury Bonds  If you pull up a three year chart of 2-Year Treasuries you'll see the massive macro Trend of interest rates starting to move in the opposite direction. We call this chart the "Queen Mary" and its new-found positive slope means that America's cost of capital will start to go up, implying that access to capital will tighten. Yields are going to continue to make higher-highs and higher lows until consensus gets realistic.

Range Rover Attack: SP500 Levels, Refreshed...

They are coming right after my Range Rover line of 1041 here intraday (Range Rover is one of our Q3 Macro Themes that states simply that, while everyone runs around trying to call crashes – the only one we’ll see is the one to the upside versus consensus expectations).


Almost 6 weeks ago, after having the topside of my Range Rover target penetrated, I moved to 1041. That line of resistance has held up, until now.


Now, with the Buck Burning again to fresh YTD lows, the SP500 is making YTD highs. Can the REFLATION traders hold this line and close it here? We’ll have to see. As the data changes, I will – the data that matters most is embedded in closing prices, not intraday ones.


For now, the next line of resistance above my 1041 is 1049. Beyond 1049 will make this market finally overbought. Beyond that line will make this generational short squeeze, on a percentage basis, as large a move as we saw (peak-to-trough) in the 2007-2008 crash on the downside.


Immediate term TRADE support bumps up to 1018.



Keith R. McCullough
Chief Executive Officer

Range Rover Attack: SP500 Levels, Refreshed... - a1

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