Back To The Well: Bought My Gold Back...

As I alluded to in this morning's note, I have gold support at $911. Now that I bought it back, I'll tell you my short term upside target is $964.

Selling my gold in June was an unacceptable mistake. I am not in the business of making the same one twice. I am thankful to have been able to buy it back on a down move today.

*Full Disclosure: I own gold again (via GLD) in my personal fund.

(chart courtesy of

Lehman (LEH): Down -9% Today... Did I Buy Some?

Thankfully, No. Keeping a "Trade" a trade works, and so does doing nothing. The way the math works is that for a stock to hit lower lows, you need a few up days in the time series.

Next stop on the elevator down for Dick Fuld's stock looks like $19.46 to me.

(chart courtesy of

Blue Horseshoe didn't buck up for the Weather Channel...

The announcement of a $3.5 Billion NBC Universal/Bain/Blackstone purchase of the Weather Channel today represents several elements of the monumental shift that has occurred in the capital markets this year.

First -Pricing: In January when Landmark Communications initially began shopping the deal, the asking price was $5B, by accepting 30% less than their original number, Landmark has made the same hard acknowledgement that hundreds of Manhattan apartment owners have had to in recent weeks - that no rich US market centric Wall Street buyers are likely to chase bids, anytime soon.

Second -Financing: Three of the four primary financing sources are related companies to the Buyers - Blackstone's GSO, Bain's Sankaty, and GE commercial finance, with deal advisor Deutsche Bank as the fourth. In this market the only people doing deals are those that can finance them themselves. They also set the price.

Third -Attrition: This acquisition is an acknowledgement that NBC Weather Plus has been a bust and that the network has failed in its attempt to organically grow a viable competitor to the Weather Channel. This is the start of an important cycle where large companies that tried to grow for growth's sake (at the top of an economic cycle) are being sent packing. Misallocating capital gets people fired.

If you subscribe to the thesis that the current market shares many similarities with the early 1970's then it might be interesting to recall that the only guys that were able to get deals done in the mid and late 70's were junk bond traders - not bankers or entrepreneurial visionaries. The next couple years may prove to be a less friendly environment than many younger Wall Street professionals fully anticipate.

Andrew Barber

real-time alerts

real edge in real-time

This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.


The "buy the demographics" bull thesis on cruiselines is not looking as good these days. Per Cruise Lines International, the average age of cruiser is 49 years old. An analysis of population trends in the core cruiser age group of 47-51 shows decelerating growth from 2007-2014, troughing at negative growth beginning in 2012. On a positive note, contribution from the older set should grow at a healthy clip as population trends are very favorable for ages north of 50.

Is Mao's "Bird's Nest" For A Canary?

BBC news is reporting that Chairman Mao's portrait has been replaced by an image of the Olympic stadium on the new ten Yuan bills.

Although the revolutionary icon becomes less relevant with each passing year, it's interesting to note that the bird's nest is the Symbol that was chosen to replace him.

There is obviously a huge amount of national pride and effort invested in preparing for the Olympics (from shutting down steel mills and factories, to cleaning the air, to reports of hundreds of babies named after the games). This underscores the potential fallout of any unexpected negative event. No one will know why China's stock market has been cut in half in the last 9 months, until we see the Olympic story unfold.

From a Global Macro Risk Management perspective, managing proactively toward possible tail risk is what we have a responsibility to do. We continue to have an eye on developing Chinese trends ahead of the critical August event.

Andrew Barber
Research Edge, LLC



An age group analysis of the core casino customer yields a generally favorable intermediate outlook for gaming companies. Demographics certainly appear more favorable than other consumer sectors that skew to a younger age group such as casual dining (see Penney) and apparel (see McGough). Per the Harrah's Annual Gaming Survey, overall casino participation peaks in the 51-56 year old age group. However, Las Vegas actually trends younger than the regional gaming markets. This works to the advantage of the regionals as the 56-60 year old group will grow faster than the 46-50 year old segment over the next few years.
  • In looking at the core regional age group of 51-60, population growth accelerates in 2009-2011 and stays positive until 2018. These demographics should be viewed positively at least over the next several years although population growth in this segment will trail the 1 period. The outlook for the core Las Vegas gaming group customer is not as rosy. Growth in population here began decelerating in 2007 and that trend will continue, culminating in negative growth beginning in 2013.
  • I've written about the attractive regional free cash yields, the statistical significance of rising Las Vegas airfares in boosting regional gaming revenues, and the looming margin pressure in Las Vegas from falling room rates. Demographics appear to be one more reason to favor the regional over Las Vegas.


Enter your email address to receive our newsletter of 5 trending market topics. VIEW SAMPLE

By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails.