Buy Japan? Not Yet...

I get a lot of questions about Japan, and whether or not I think it's cheap, and/or if the activists are going to continue to prevail against Japanese corporates.

Yes, Japan is cheap, but cheap assets can get cheaper; particularly if you don't have an asset specific catalyst in mind.

The Nikkei closed up +0.92% overnight at 13,360, and I'd have to see a close above the 13,537 line in order to get more constructive on the region.

Fundamentally, the Bank of Japan assured us overnight that things are worsening in 8 out of their 9 economic regions. My old friend inflation was cited as the primary reasoning for dampening growth.

The March 2008 lows on the Nikkei remain a lot lower. Be careful out there if you're trying to be the Buffett of Asia.

It is global this time, indeed.

(Chart courtesy of stock

Mexican Shorts Are Working...

On 6/18 I wrote a note titled "Shorting Mexico", and the Mexican Bolsa has dropped -4.3% since. This is the beginning of the decline in Mexican Equities. Do not mistake it for the end.

The Mexican Bolsa Index has outperformed plenty of country indices globally since the "its global this time" Wall Street peak. Since October 18th, 2007, Mexico has only lost -14% of its value. Given their GDP's extremely high historical correlation to US GDP, and my GDP outlook for the US altogether, this remains one of the more precarious looking country's on my dashboard.


(chart courtesy of

Brazilian Equities: Definitely Broken Now...

Despite the fact that Brazil is trading up over +2% this morning, the Bovespa Index remains broken from a quantitative perspective. I'll need to see a closing price over the 61,644 line before I start to give this country the benefit of the doubt again.

As of Friday's close, the Bovespa has fallen -19.2% since May 20th when the entire "Fast Money" community was buying everything Latin American, from fertilizer to food stocks. There is big time risk in running with this "me-too" crowd. Respect it; manage it.


(chart courtesy of

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Buy Taiwan? Not Yet...

While this morning's macro data out of Taiwan was encouraging, my greatest fear here is that too many people got levered long this trade too early. I am waiting to buy the Taiwan ETF (EWT) on a down day, closer to $13.11.

Taiwan's June export growth # this morning came in better than expected at +21.3% year over year versus +20.5% reported for May.

New capitalism and trade friendly President Ma is one of the main reasons consider that Taiwan will be able to grow off of China's back. Timing this investment, as with all those we make, remains critical.


(chart courtesy of

Hang Seng Chart: Bounced But Still Broken...

Hong Kong stocks finally had an up day, closing +2.3%, taking the Hang Seng Index to 21,913. Unless this chart can climb and close above the 23,166 level however, it remains broken from both a "Trend" and "Trade" perspective...

It is global this time, indeed.

(chart courtesy of

China's Concerns Morphing Into Consensus...

There is a lead article in the South China Morning Post today titled "Wrong policy may lead to hardship". While the recap by Jane Cai, Denise Tsang and Adam Chen does not reveal anything that I have not proactively pointed out in notes past, it does give the reader a sense of where consensus has finally morphed to.

The big pre-Olympic catalyst on the Chinese macro calendar is the mid year July 17th economic assessment/outlook. Rhetorically, there is no reason to believe that there will not be linearity between that and the note I just posted on the Industrial Commercial Bank of China's outlook.


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