• run with the bulls

    get your first month

    of hedgeye free


Bubbly Gold: Selling Some, Again

Last Wednesday our immediate term TRADE target for Gold was $1190, so we sold some. Then Gold corrected, and we bought back what we sold on Dubai Friday (gold was down, a lot).


This morning we entered the game with a 7% Gold position in the Asset Allocation Model, and I cut that in half as Gold tested our refreshed immediate term TRADE target of $1224. Unlike most sell-side strategists, we like to be on the right-side. Managing risk dynamically; changing our price targets proactively. As prices change, we do.


Some call this trading. It is – but when “long term investors” hit buy/sell buttons, that’s called trading too. What I have learned (the hard way) in this business is that it pays to manage the risk associated with price appreciation in long term TAIL positions. My daily challenge remains to improve this process, using math, as opposed to emotion. I continue to learn a great deal from chaos theory on this score. I continue to learn a lot about myself.


For now, the math says gold is in an immediate term TRADE bubble (TRADE = 3 weeks or less).


I’m not fighting it. I’m not selling all of it. I’m just selling some of it.


My risk management lines are in the chart below. I’ll be a buyer again of what I just sold on a pullback to my immediate term TRADE line of $1170/oz.


It’s ok to be long bubbles. Just be aware when you are in one (yes, Peter Schiff, that means you).



Keith R. McCullough
Chief Executive Officer


Bubbly Gold: Selling Some, Again - gold6m


E-commerce Data and Khakis


December 2, 2009





The flow of e-commerce data continues with more traffic, search, and sales stats flowing out of Black Friday and CyberMonday.  If you can step away from all the media hype, take a minute to look at Dockers new branding campaign.  Khakis may be coming back…


  • With all the speculation, traffic metrics, and surveys surrounding the post-Thanksgiving shopping period, we got a glimpse into actual results from Guess and Staples. Guess noted that Black Friday sales increased by mid to high single digits in its retail stores, with a margin performance that was comparable to last year. Staples characterized its Black Friday as “good” and on track with its aggressive plans. Management also went on to note that the pace of business in the afternoon, after the early morning doorbusters, was strong. Finally, it was noted that Black Friday has never been a good predictor of the ultimate success of the entire holiday period. With that said, all eyes will be on this Thursday’s sales reports despite their limited significance to the next 6 weeks of holiday shopping!
  • GSI Commerce reported that the same store sales of its 500 e-commerce clients increased by 17% over the Friday to Sunday period. They also noted that CyberMonday sales were record breaking although the final figures were not fully available. Even more impressive was the growth in online searches related to “Black Friday” and “printable coupons”. Google reported that searches for “printable coupons” were up 50% year over year, suggesting there has been a surge in the use of the Internet to search for the best deals offline. Consumers are conducting extensive product and pricing research before heading to the mall and are also increasingly planning their trips according to key-item availability and pricing.
  • Dockers released a new branding campaign, aimed at re-launching the khaki brand and reinvigorating sales which have been on the decline for 5 years. According to research conducted in advance of the new marketing push, men are replacing khakis at about half the rate that they replace their denim. The overall khaki category declined by 12% this year, which is in line with prior year declines. Dockers VP of marketing also went on to note that there are some signs that the category may be in the early stages of a turnaround as evidenced by fashion denim brands entering the category, increased sightings of khaki’s worn in key influential markets in northern Europe, and the return to a more formal work-place uniform (i.e not denim) as males attempt to gain employment. If true, we suspect it won’t be long before we see a khaki overload as all men’s brands attempt to capitalize on the trend.




PPR raises 806 mln euros in CFAO IPO - French retail and luxury goods group PPR raised 806 million euros ($1.22 billion) after pricing the equity offering for its Africa-focused unit CFAO at 26 euros per share on Wednesday, said sources familiar with the matter. Some 31 million shares were sold in the CFAO initial public offering, which is Europe's fourth largest this year. It was priced towards the lower end of the indicative price range of 24.80 to 29.0 euros per share. The CFAO offering was oversubscribed a week after the deal was launched on Nov. 17. CFAO shares are due to start trading on Euronext Paris on Thursday.  <forbes.com/>


Yoox Sets IPO Price - The price per share of Internet fashion retailer Yoox Group has been set at 4.30 euros, or $6.46 at current exchange, which values the company at 216 million euros, or $324.5 million. This price positions Yoox shares in the high-end range of the fork indicated for the IPO of between 3.60 euros, or $5.37, and 4.50 euros, or $6.71. Shares will start trading Thursday on the Milan Stock Exchange STAR segment for small companies. The Bologna, Italy-based firm, which runs e-commerce sites for brands including Emporio Armani, Diesel, Dolce & Gabbana, Jil Sander, Valentino and Roberto Cavalli, launched its IPO on Nov. 16, expecting to raise as much as 126 million euros, or $187.9 million at current exchange, through the sale of 24.3 million shares. <wwd.com>


Penney's Sets Rollout of Mango Line - In a move that chief executive officer Myron E. “Mike” Ullman 3rd called a “game changer” along the lines of the addition of beauty store Sephora to its mix, the Plano, Tex.-based company said Tuesday it has made a deal with Spanish fast-fashion retailer Mango to sell the MNG by Mango brand exclusively in the U.S. department store market. Billed as the largest rollout of any fast-fashion concept, the line of casual and career sportswear and accessories will launch in up to 75 J.C. Penney stores and on its Web site for fall 2010 and expand to 600 stores by fall 2011. Mango has more than 1,300 stores in 94 countries, but only 12 freestanding units in the U.S. The deal will immediately allow the Barcelona-based retailer to blanket the U.S. with its core collection — vaulting over the likes of H&M, Zara and Topshop — while giving Penney’s the ability to quickly provide European runway-inspired product to its customers. <wwd.com>


Payless Shoes Opening First Stores in the Philippines - Collective Brands Inc., the Kansas owner of several footwear chains, will bring its first Payless ShoeSource stores to the Philippines next year. The retailer will open in as many as seven locations in the country within the next 12 months, Chief Executive Officer Matthew Rubel said today during a telephone interview. Collective Brands is working with a franchise partner, Stores Specialists Inc., based in the Philippines. The move marks the next stage of international growth for Collective Brands, which will also expand the number of stores it operates in the Middle East and open in Russia next year, Rubel said. Shoes are a category on which consumers in emerging markets tend to spend as their incomes increase, and Filipino consumers already have “high footwear consumption,” he said.  <bloomberg.com>


Liz Claiborne appoints new head of Lucky Brand - David DeMattei, Williams Sonoma exec, new head of Lucky. Tom Fitzgerald who served since June departing company. Apparel maker Liz Claiborne (LIZ.N) on Tuesday appointed David DeMattei as chief executive of Lucky Brand Jeans, starting Jan 4.The company gave no reason for the departure of Tom Fitzgerald, who has served as CEO since June. DeMattei, who will report to Liz Claiborne CEO William McComb, most recently served as a group president of brands at home furnishings retailer Williams Sonoma Inc. He previously served in top executive roles at Coach Inc (COH.N), J Crew Group Inc (JCG.N) and Gap Inc (GPS.N). Lucky Brand is one of the handful of apparel brands that Liz Claiborne retained in a major overhaul of its business in which it shed underperforming wholesale units to focus on faster-growing brands with retail potential. <reuters.com>


Cyber Monday Sales Surge - According to Coremetrics Inc., a web analytics firm, sales were up 13.7% on Cyber Monday over year-ago levels. The average dollar amount consumers spent per online order rose 38.2% from Cyber Monday 2008 ($180.03 versus $130.24), led by apparel retailers. Consumers bought nearly 10% more items per order on Cyber Monday 2009 compared to Black Friday 2009 and nearly 30% more compared to Cyber Monday 2008. Consumer shopping hit its peak from 9-10 a.m. PST, but maintained stronger momentum throughout the day than on Cyber Monday 2008. On Black Friday, only sales grew 24.1% compared to Black Friday 2009. Consumers spent more per online order ($180.03 versus $170.19 for an increase of 5.8 percent) compared to Black Friday 2009. <sportsonesource.com>


Most Major Retailers Plan Flat Holiday Ad Spending - More than half (55%) of retailers say that their 2009 advertising budget is flat this holiday season, up from 43% in 2008, according to a study conducted by BDO Seidman, LLP. Only 19% of retailers have increased their advertising budgets this year, while one-quarter (26%) of retailers cite budget reductions. Of the retailers who do not expect a turnaround until the third quarter of 2010 or later, 50% say their holiday marketing and advertising budget in 2009 is lower. The retailers who expect the turnaround to happen sooner, (second quarter of 2010 or earlier) 62% plan to keep those budgets about the same. When it comes to advertising expenditures, a strong majority (64%) of the retailers will spend most of their holiday advertising and marketing budgets on print advertising, which is up from 57% in 2008. Interestingly, more than half (51%) of retailers are including social media in their marketing strategy this year – a severe increase from only 4% in 2007.  <sportsonesource.com>


Mitsukoshi Cuts 1,500 Jobs Through Retirement Scheme - Isetan Mitsukoshi Holdings Ltd.’s payroll is set to shrink. Japan’s largest department store retailer said Tuesday that about 1,500 Mitsukoshi workers have applied for its early retirement program. Those employees represent just over 22 percent of Mitsukoshi’s full-time workforce. They are expected to retire by Jan. 31. Mitsukoshi was looking to reduce its workforce after closing a number of stores including one in Tokyo’s Ikebukuro neighborhood. As reported, Japanese consumers have been cutting back on shopping as their country’s economic problems persist. Luxury goods companies and department store operators have suffered the most in the current climate as consumers find stylish bargains at low-priced chains like Uniqlo and Hennes & Mauritz. <wwd.com>


Cotton Exporters Lean on U.S. Over Subsidies - Trade ministers from poor West African nations Burkina Faso, Mali, Benin and Chad said Tuesday that a recent increase in subsidies to U.S. farmers threatened to bury their cotton industry. Ahmadou Abdoulaye Diallo, Mali’s minister of trade, said the U.S. was subsidizing 20,000 cotton farmers for about $3 billion a year or an estimated $150,000 per cotton farmer. He said Mali has three million cotton farmers and Africa has more than 20 million who are pressuring their governments for an accord to eliminate all subsidies, which he said create unfair trade. Diallo and ministers from the other nations “did not exclude the possibility” they might follow Brazil and launch a legal case against the U.S. policy in the World Trade Organization. But he also told WWD, “If there was no acceptable deal on cotton, there would be no deal on Doha [trade talks] — we would execute our veto.” <wwd.com>


Target Links With Liberty of London - Target is partnering with Liberty of London, the luxury brand known for its bold florals and exuberant prints, to launch one of the largest collections it’s ever undertaken with an outside brand. The line will encompass fashion, home and other categories. Liberty of London for Target will bow on March 14 in Target stores nationwide and on target.com. The fashion segment will feature apparel and accessories for women, men and children. Target did not reveal details or prices for the collection other than to say it will be “well priced.” Liberty’s Web site features signature print shirts in abstract and floral fabrics priced at 75 pounds, or $125 at current exchange, and 85 pounds, or $141. The British retailer offers dresses and skirts in Liberty prints in collaboration with designers such as Theory and APC. Target did not discuss specifics of the home collection. However, products could be similar to the pillows, cosmetics bags, lamp shades and notebooks in iconic prints found on the Liberty site. <wwd.com>


Lacroix Shrinks to Licensing Operation - High fashion received another blow Tuesday as the commercial court here approved a plan to convert troubled couture house Christian Lacroix to a licensing operation. A judge read the decision to a packed courtroom, setting the stage for Florida’s family run Falic Group, majority owner of the 22-year-old firm, to cut Lacroix’s workforce by 100 to about a dozen employees, putting an end to its high-fashion and retail operations. Potential suitors — including an Ajman sheikh and French turnaround firm Bernard Krief Consulting — failed to provide financial guarantees for their relaunch plans by court-imposed deadlines. Italy’s Borletti Group, parent of Printemps and La Rinascente department stores, withdrew from the process in September. <wwd.com>


LVMH, Standard Chartered to Expand Sincere Watch - LVMH Moet Hennessy Louis Vuitton SA’s L Capital Asia LLC and Standard Chartered Private Equity Ltd. plan to bolster Sincere Watch Ltd. after taking control of the Singapore-based retailer of luxury timepieces. L Capital, Standard Chartered and Tay Liam Wee, the company’s chairman and managing director, now own “close to” 80 percent of Sincere Watch, with a group of banks holding the rest, according to a statement handed out in Singapore today. LVMH plans to back Sincere when negotiating for retail space and share its database of high net-worth customers. “We are seeing signs of improvement in luxury spending as the global economy recovers,” said Tay, whose family founded the company. “With the backing of two of the strongest global icons, we will be able to sharpen our competitive edge and accelerate our growth plans.”  <bloomberg.com>


Poised to Grow, Kellwood Eyes Deals - After a stormy 2009 of its own, Kellwood Co. is looking forward to 2010 and hoping to ink a deal for at least one acquisition to add to its portfolio of brands. The company in recent weeks has been working with two investment banks to identify possible acquisition targets. There are two offers on the table and two letters of intent signed, according to Michael W. Kramer, Kellwood’s president and chief executive officer. While he declined to provide details about the targeted brands, Kramer is hoping at least one deal could materialize within the next two months. The firm remains on the prowl for even more acquisitions throughout next year and beyond. <wwd.com>


Selective Beauty Sues Claiborne - Selective Beauty, a onetime distributor of Juicy Couture and Usher fragrances in Europe, has sued Liz Claiborne Inc. for $20.2 million, alleging that Claiborne’s licensing of its fragrance brand portfolio to Elizabeth Arden contributed to the beauty distributor’s bankruptcy. In a lawsuit filed in U.S. District Court in Manhattan on Nov. 24, the French firm said that, starting with a partnership for Juicy Couture in February 2007, it helped build both brands in its markets at its own expense. The company alleges the sudden loss of the Claiborne business in June 2008 contributed to its financial woes earlier this year. Nick Rubino, senior vice president and chief legal officer of Claiborne, said, “We believe the allegations are without merit and we plan to conduct a vigorous defense.” A spokesman for Arden declined comment. <wwd.com>


Some major e-retail sites experienced problems during the holiday weekend - While the majority of e-retailers performed well during the holiday weekend, retailers such as Hewlett-Packard Co., Kohl’s Corp. and Staples Inc. experienced major problems and slow page-loading times that may have led fickle consumers to shop elsewhere, says Matt Poepsel, vice president of performance strategies at Gomez, which monitors web site performance. The issues led the site to record overall availability of 83.59% for the weekend, well below the 97.60% average for the top 50 retailers, according to Gomez Inc.’s Retail Benchmark. The firm measures web and mobile web performance and experience. Moreover, the site’s average response time was 7.79 seconds for the weekend, more than three times slower than the top 50 retailer average of 2.25 seconds. <internetretailer.com>


Europe Producer Prices Fall for 10th Straight Month - European producer prices declined for a 10th month in October as companies continued to cut costs even after the economy emerged from the recession. Factory-gate prices in the euro region dropped 6.7 percent from a year earlier after falling a revised 7.6 percent in September, the European Union’s statistics office in Luxembourg said today. Economists had projected a decrease of 6.8 percent, the median of 18 forecasts in a Bloomberg News survey showed. From the prior month, October producer prices rose 0.2 percent. European companies may struggle to increase prices as rising unemployment prompts consumers to cut back spending and a stronger euro makes exports less competitive abroad. <bloomberg.com>

American Ignorance

“If ignorant both of your enemy and yourself, you are certain to be in peril.”
-Sun Tzu

Sun Tzu was a heroic Chinese General who authored The Art of War. While the timing of Sun’s writings remains a debate, some of his strategies remain timeless.
Don’t worry, I am not going to impose career risk at year end and infuse my views of President Obama’s new military strategy. I know what I don’t know. I will, however, remind the President that he may not know what he doesn’t know about this country’s newly revealed weakness – our currency.
Currency is built on credibility. Currency is backed by trust. Currency is what allows you to gain leverage against your enemies. If you have political currency, that helps. But you better be damn sure you have credible economic currency standing behind it. Wars are financed.
Never mind the very high correlation between recently waning American Consumer Confidence readings and Presidential approval ratings (despite the stock market sitting just inside of YTD highs). Now is the time to take a long hard look at this Global Game of Risk and think through America’s newfound vulnerability. Timmy Geithner may not get this, but Americans do. The Buck is Burning.

The days of entering geo-political and military conflict as the CREDITOR nation are over. The United States of America is now the DEBTOR nation. If we think our enemies are ignorant of this New Reality, we are “certain to be in peril.”
The US Dollar got hammered again yesterday, breaking down to lower-YTD-lows. Lower-lows, in my risk management model, are very bad. The only lower-lows that the US Dollar Index have not breached are those that were a leading indicator for the 2008 global equity market crash.
I have been saying this while doing meetings in CA this week, and I’ll write it again this morning. At a price, DOLLAR DOWN is bearish. That price is anything with a 74 handle on the US Dollar Index or lower.
This morning the US Dollar Index is trading at $74.41. From here, why is Dollar down bearish? For starters, across hundreds of years of country currency history it has been. Sure, there have been plenty of currency devaluation (REFLATION) rallies in stock markets. These are the daily market battles we engage in today. However, there has never been a country who has torched their currency and come out the winner of a global economic war.
Given the economic Generals on his team (Geithner, Summers, Romer, etc…), my greatest fear about the world today is not some whack job who needs to be smoked out of his cave in Afghanistan – it’s the Perceived Wisdom of Washington on systemic US currency risk. I fear America is becoming ignorant of herself.
To find the most obvious signs of American Ignorance in our financial leadership, you just have to realize that Geithner has been at the Treasury and/or Fed since 1988. He is the system. Less obvious is Bernanke; but very obvious are the bubbles that he is willfully blind to.
As a reminder, here are bubbles, across durations, that He Who Sees No Bubbles (Bernanke) is ignoring:
1.      Immediate term = Gold

2.      Intermediate term = Short Term US Treasuries

3.      Long term = Government financed Banker Bonuses

Another immediate term bubble being created by American Ignorance is that in price of the Japanese Yen. Again, Geithner has never proactively managed risks ahead of any bubble he has been part of creating. So take his word for it right now when he says he sees no currency risk. He never has.
Dollar DOWN, at a price, has many unintended consequences. One is bubbling up the Yen to 14-year highs. As a reminder, when it comes to sovereign currency and debt – CURRENCY UP doesn’t get DEBTORS PAID. It gets them to blow up.
Japan is still the world’s 2nd largest economy. It is also an island economy with negative population growth. This, we know (I hope). What we don’t know is what exploding debt will look like if exploded upon mountains of debt. This ticking time bomb is levered.
In trying to arrest recent currency strength in the Yen, Japan’s latest bureaucrat leader, Hatoyama, has reverted right back to his predecessors longstanding view of Quantitative Easing. Put simply, the latest government solution in Japan is not unlike General Motors – zero percent financing to commercial banks – and if you didn’t know how that war ended, ask now ex-CEO of GM, Fritz Henderson, this morning. Now he knows.
Japan’s latest stimulus is for another 10 Trillion Yen. Let me put that in block letters in an attempt to take the numbness of it all away. TEN TRILLION YEN.
I know. I know. That’s only $115 BILLION DOLLARS. Heck, what’s a US Dollar worth anymore anyway?
President Obama, I’ll send that credibility question right back to your aide who is prepping my special tax audit. But remember, when it comes to the Global Economic War of the 21st century, the Chinese are watching your Burning Buck very closely.
My immediate term support and resistance lines for the SP500 are now 1082 and 1117, respectively.
Best of luck out there today,



XLK – SPDR Technology We bought back our position in Tech on 11/20. Rebecca Runkle has an innovation story in Mobility and Team Macro has an M&A story in our Q4 Theme, the “Banker Bonanza”. We’re bullish on XLK on TREND (3 Months or more).

We bought back our long standing bullish position on gold on a down day on 9/14 with the threat of US centric stagflation heightening.   

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.

FXY – CurrencyShares Japanese Yen
We took the opportunity to short a 14-year high in the Japanese Yen on 11/27.  The BOJ will definitely be intervening if the unintended consequences of a Geithner Buck Burning persists.

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.

XLI – SPDR Industrials We shorted Industrials again on 11/9 on the up move as the US market made a lower-high.  This is the best way for us to be short the hope of a V-shaped recovery.   

EWU – iShares UK Despite areas of improvement, broader fundamentals remain shaky in the UK: government debt continues to expand, leadership in critical positions lacks, and the country’s leverage to the banking sector remains glaringly negative.  Q3 saw its GDP contract by -0.4%. Further bank stimulus and the BOE’s increase in its bond purchasing program suggest that this will not end well.

XLY – SPDR Consumer Discretionary We shorted Howard Penney’s view on Consumer Discretionary stocks on 10/30.

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.

get free cartoon of the day!

Start receiving Hedgeye's Cartoon of the Day, an exclusive and humourous take on the market and the economy, delivered every morning to your inbox

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.


WHAT A DAY! - The S&P rallied 1.2% yesterday; the DOW was up 1.2%, the NASDAQ up 1.5% and the Russell 2000 up 1.6%. The strength was broad based with every sector outperforming the S&P 500 except for the Financials (XLF), which was down for most of the day. 


The MACRO calendar benefited the RECOVERY trade, which dominated the mood of the market yesterday.  The reality is that the SAFETY trade outperformed.  The best performing sector was Materials (the RECOVERY trade), but Utilities and Healthcare outperformed too, which suggests a flight to safety.  In addition, the underperformance of the Financials suggests a move away from RISK.  


That being said, the market’s upward momentum was driven by data from the manufacturing sector, which was a key driver for the RECOVERY theme.  Over night the focus was on China, where the manufacturing sector expanded for a ninth straight month in November.  In the US, the manufacturing sector expanded for a fourth straight month in November.  Some additional support came from the 3.7% month-to-month increase in October pending home sales, which marked the ninth consecutive monthly gain and pushed the index to its highest level since March of 2006.  As a result, the XHB +2.2% (the homebuilder ETF), outperformed the S&P 500.


The appetite for risk accelerated with the VIX down 10.6% on the day.  The potential for a Dubai contagion is slipping into the past as the dollar sold off 0.69% to 74.36 yesterday.  The “broken buck” continues to have favorable implications for the RECOVERY trade as the Materials (XLB) was the best performing sector on the day, up 1.9%.  Within the XLB the outperformance was driven by steel, copper, aluminum, and paper and forest product names. 


As I mentioned above, yesterday every sector outperformed the S&P 500 except the Financials (XLF).   The Financials have been chronic underperformers over the past three months and over the past 5 trading days are down 0.2% versus the S&P up 0.3%.  The XLF continues to underperform despite the better-than-expected economic data and an increased appetite for risk.  Dragging the XLF down are the larger names in the index like JPM, GS, C and AXP.  What’s wrong with the XLF?


From a risk management standpoint, the ranges for the S&P 500, the Dollar Index and the VIX are seen in the charts below.  The range for the S&P 500 is 35 points or 1% upside and 2.5% downside.  At the time of writing the major market futures are trading slightly lower.


Crude is trading down today after the American Petroleum Institute reported crude inventories rose 2.89 million barrels last week, while gasoline and distillate fuel stockpiles also climbed.   The Research Edge Quant models have the following levels for OIL – buy Trade (75.31) and Sell Trade (78.69).


Gold climbed as much as 1.4% to a record $1,213.88 per ounce in Singapore. The Research Edge Quant models have the following levels for GOLD – buy Trade (1,170) and Sell Trade (1,224).


Copper fell in London trading, erasing an earlier gain to more than a 14-month high.  Copper for three-month delivery on the London Metal Exchange fell 0.1% to $7,068 a metric ton.  The Research Edge Quant models have the following levels for COPPER – buy Trade (3.08) and Sell Trade (3.23). 


Howard Penney

Managing Director















The Macau Metro Monitor.  December 2nd, 2009.




Macau’s casinos generated “a little more than” MOP 12 billion (US$1.5 billion) in gross gaming receipts in November, an increase of approximately 60% compared to November 2008, according to a source cited by The Macau Post Daily.  According to the source, gaming gross receipts during the first eleven months of the year rose approximately 6% compared to the same period of last year.  SJM remains the market leader with 35% market share, followed by LVS. 





Consumer prices in Macau dropped 1.1% year-over-year in October, according to data released by the Statistics and Census Service.  On a month-over-month basis, consumer prices were up 0.3% in October.  In the first ten months of the year, the consumer price index grew 1.4% over the same period last year.

MCD – Perspective on the executive changes

After the close, MCD announced that Ralph Alvarez has decided to retire as President and COO for health related reasons.  Importantly, Mr. Alvarez was the clear heir apparent to become the next CEO of MCD.  While I can personally sympathize with his orthopedic issues, his sudden resignation and stepping down from the board of directors seems somewhat odd.


To put this resignation in context there are some things to consider:


(1)    On December 8th MCD will report its second straight months of declining same-store sales in the USA.


(2)    I continue to contend that the largest new product in the history of the company (McCafe) is not going well, but it might be too early for someone to take the fall for this.  Think Don Thompson!


(3)    If he was such a great asset to the company why is he leaving the board?


(4)    There is a big void to be filled by his potential replacement!  I’m betting on Denis Hennequin, President of McDonald’s Europe!


(5)    MCD accelerated unit growth in Europe and MCD’s Europe Chief Financial Officer Jerome Tafani  said, "the trend in sales

we have seen up until October is not going to change in the coming months." 


Despite Ralph’s personal headwinds the timing and magnitude of this move does not completely rest comfortable with me. 


We will have our estimates for MCD November sales trends out shortly.   

Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.