The opening of The Encore at Wynn Las Vegas may be pushed into 2009. I don't normally sweat delays but the week encompassing New Year's Eve is the most important week of the year. Management must balance a rush opening in December against a smoother opening of the entire facility sometime in 2009. My guess is that WYNN will avoid the never effective piecemeal opening most recently tried by Las Vegas Sands and the Palazzo. In any event, the impact of any delay on the construction budget is the bigger concern. The project budget currently stands at $2.2bn. Recent casino ROIs have shown escalating denominators with no change to the numerators. Analysts: no more backing into EBITDA with your magical 15% ROIs.

Management has yet to respond to our inquiry. Stay tuned.

Korean Correlations ...

Ironically enough, at -19%, the South Korean stock market is down as much as the Dow Jones is since its October 11, 2007 "its global this time" high. According to new sober estimates from the Korean Economic Research Institute, stagflation looks like a similar domestic reality.

According to the Korean Herald this morning, "The private think tank said in a report that annualized growth in gross domestic product would plummet to 3.3 percent in the second half, from 5.2 percent in the first half of the year."

Meanwhile US stock market centric economists, strategists, and portfolio managers alike are finally agreeing to agree that inflation is a reality. What no one seems to have any confidence in is the growth side of the "stagflation" equation.

This report out of the Korean Economic Research Institute should be commended for it's proactive assessment of likely risks.

Global Stagflation is here.

Asian Stagflation...

On 5/28 I wrote a note titled "If Emerging Asian currencies crash, does it matter?". It was a rhetorical question with an implied conclusion related to global markets.

Now that Q2 is winding down, and Asian currency weakness is pervasive in daily trading (ex the Chinese Yuan which continues to make new ytd highs), we can look back on what was a forward looking indicator of Asian economic weakness to come.

Across Asian currencies, the Philippine Peso was weakest in Q2, losing close to 7% of its value. The South Korean Won was next, losing -5.3% of its value. Negative "Trend" lines in Asian currency trading are beginning to correlate to the downside.

In considering the "its global this time" bullish narrative, the continued fallout in the Vietnamese Dong, the Thailand Baht, and the Indian Rupee must be concerning investors who are levered long the region.

Asian economic growth is clearly slowing, as inflation continues to accelerate.


the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

Euro Zone Inflation Up again In June...

European stock markets are generally weak today partly because ECB chief, Jean-Claude Trichet, is being vindicated by the facts. Euro zone inflation bumped higher again in June to +4% year over year, up from May's +3.7%.

Trichet's commentary was as hawkish as usual. He is focused on inflation, and with a Euro priced at 1.58, he is looking much more like the proverbial king of the currency hill than those "King Dollar" fans of yesteryear would like to admit.


Inflation? Huh? ... Sometimes Pictures Make People Accountable

Since I left Wall Street at the end of October, I have had a lot of people tell me I was out to lunch with my inflation call. Finally, inflation is a consensus concept. Now, I'm looking for signals that may time the process of a top.

For the sake of accountability, I have attached a chart of the CRB Commodities Index since that snapshot in time. From October of 2007 to last week's all time high of 464, this index of 19 commodities is up +45%.

Facts can be stubborn things, indeed.

(chart courtesy of

Spanish Bears...

Despite Torres locking down the Euro Cup yesterday, the poor Spanish centric investor had to wake up to more selling this morning. Spain's IBEX Index is down another -1% today, taking the stock market to -25% from its October 07' highs.

If there was such a thing as "CNBC Spain", the commentators wouldn't be debating whether or not their stock market is a "Bear". This is just plain ugly.

As a consolation prize for losing yesterday, German's DAX index is also down close to -1% on the day, taking the decline in German stocks to -21% since their 2007 highs.

It is global this time, indeed.

Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.