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Over the last two days we have been making the case that a housing bottom is forming, but it’s a case of “Government stimulus vs. Gravity.”  Today, gravity is gaining momentum as government stimulus may be waning.


Sales of new homes in the U.S. dropped in December; the number of homes purchased declined 7.6% to an annual pace of 342,000, the lowest sales pace since March 2009.  For all of 2009, sales dropped 23% to 374,000, the lowest level since records began in 1963.


Part of our bullish call on housing in 1Q09 was based on the fact that the government was coming to the rescue of the real estate industry by providing enormous support to consumers wanting to buy a new home.  Not surprising, as the sales of news home began to take off in 1H09 housing prices (as measured by the Case-Shiller home price index) began to improve sequentially; though still declining year-over-year.


Yesterday’s Case-Shiller data, which is a lagging data point, showed that sequential home price momentum is starting to slow.  On top of this, we have now seen new home sales decline 9.3% in November and 7.6% in December.   It would only make sense that price support will wane further. 


As we head into 2Q10 we are starting to get incrementally concerned as we will be lapping the not as easy comparisons from late 1Q09/2Q09, particularly as gravity takes over from government stimulus.  This concern is reflected in our portfolio; we are short Toll Brothers (TOL).



Howard Penney

Managing Director


HOUSING BOTTOM FALLING? - housing v prices

Oil is Broken

We wanted to highlight a point from our morning call today, Oil is broken from both a trade and trend perspective.  As we highlight below, the next big line of resistance in the sand is the $73 level.  From a fundamental perspective, the action in Oil in the year to date is supportive of two of our Q1 Themes, Buck Breakout and Chinese Ox in a Box.


As we discussed ad nausea last year, the direction of the price of the U.S. dollar is critical for determining the price of those commodities priced in dollars.  In the year to date, the U.S. Dollar Index is up ~0.74% and, not surprisingly, Oil is down ~-6.61%.  While last year the inverse correlation was more like 4.5:1, early on this year it seems like that factor is accelerating.  One driver of this is likely the slowdown occurring sequentially in China.


As we wrote in our September 2009 Black Book on Oil, Chinese demand for oil, and demand for oil in China is a derivative of economic growth in China, is the single largest global driver for demand.  As we wrote then:


“China has been the primary driver of global oil demand over the past fifteen years. In 1994, the Chinese used roughly 3 million barrels of oil per day and fifteen years later the country uses north of 8 million barrels of oil per day.


This dramatic growth in aggregate oil consumption should be no surprise given the base from which the Chinese started. At a population base that was estimated at ~1.3 billion in 2008 versus the United States at ~304 million, the potential growth in per capita energy demand is fairly obvious. China has more than 4x the population of the United States, but uses less than half the energy of the United States.”


The decline in the price of oil is a leading indicator for what we will see in terms of economic growth from China in the coming quarter.


Domestically, supply of crude oil continues to be above its 5-year trend.  According to the DOE’s report last week, there are currently 23.8 days of supply of oil, which is ~3% above where supply was last year at this time.  If we compare price year-over-year from the release of this supply data point, so January 20th of this year versus January 20th of last year, the price of oil is up more than 100% . . .despite increasing inventories.


Until further notice, the price of Oil is broken.


Daryl Jones

Managing Director


Oil is Broken - oildj



In Timmy, Do You Trust?

For the sake of my arthritic hockey knuckles and their likely margin for transcription error, here is a paraphrasing of some of Timmy’s opening comments. Predictably, he went with the fear-factor strategy. This is consistent with Investment Banking Inc’s self-compensating view that “we didn’t see it coming” and “we had to purge the citizenry’s savings or we’d all be greatly depressed.”




‘the consequences would have been catastrophic…’


‘our actions cost us far less than the alternative…’


‘we were threatened like no time since the great depression…’


‘Your children, your security…’


‘AIG posed a threat much greater than Lehman…’


‘it stretched across the globe…’



This is a conflicted and compromised view. In Timmy, Do You Trust?  I don’t and neither does Mr. Macro Market. The market is down because the market fears this Bubble in US Politics.


The intermediate term TREND line of 1096 is broken. The next line of support is 1068.



In Timmy, Do You Trust? - geithner2


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In the last 24 hours the latest reading on confidence and sentiment are headed in two different directions - confidence up, sentiment down.


Yesterday, the Conference Board’s January confidence index increased to 55.9 (higher than the Bloomberg survey) from a revised 53.6 in December.  The January figure is up 111% from the record low of 25.3 in February 2009, but 65% below the 92.3 average over the past 10 years.  This is the highest reading since September 2009, when the index stood at 61.4.


Like we have seen with the “bottoming” in housing statistics (both starts and prices), confidence is bottoming too.  While the popular press will make a big deal about yesterday’s move, any print below 60 on the Conference Board Index is just not that meaningful. 


The bottoming feeling in confidence was also seen in the ABC number reported last night.  The index improved to -48 from -49 last week.  Personal finances improved to -6 from -10, while the state of the economy deteriorated to -84 from -82 last week.   


The difference between the bulls and bears contracted dramatically to +15.7%; it was +33.3% last week and +37.5% two weeks ago.  According to Investors Intelligence, readings above +30% are very bearish.  The levels over the last two weeks were the highest since the spread was +42% at the October 2007 market peak.


The markets are fighting to maintain upward momentum as the S&P 500, the CRB and China are all broken on TREND and TRADE.  What is not working currently is the buy-the-dip mentality that has been in place since the March 2009 low.  The latest surge in pessimism, however, is a net positive for equities.


Howard Penney

Managing Director







MPEL should miss badly but that isn’t exactly new news. What will matter is the balance sheet issues and whether share can improve after a tough Q4 to capitalize on the strong market trends here in Jan.



We see a big miss for MPEL this quarter, largely driven by poor hold (and poor sell-side modeling of hold) at both Altira and City of Dreams.  Our $406MM revenue estimate and $23MM EBITDA estimate are respectively 42% and 20% below consensus estimates.  This miss probably won’t be a surprise since MPEL is down 25% since early December.


One major focus will be the balance sheet where MPEL needs to communicate its refinancing plans.  Also, investors will want to know whether MPEL’s dreadful Q4 market share has improved in January and whether City of Dreams has figured out how to drive the Mass business.  Macau gaming revenues are up 67% through January 20th which could be a positive for MPEL assuming its market share didn’t deteriorate further.  The negative will be if the VIP segment cannot withstand the slowing China economy, down stock market, and tightening liquidity.  These macro variables are hugely significant in driving VIP play.





City of Dreams

  • Net revenue of $243MM 
  • EBITDA of $22MM 
  • RC volume of $8.6BN and 2.5% hold 
  • Mass drop of $450MM and 17% hold  
  • Slot handle of $315MM and 6% win percentage 
  • Net casino revenues of $236MM, $23MM of non-gaming revenues and $16MM of promotional expenses
  • Variable expenses (primarily taxes & junket commissions that aren’t recorded in net revenues) of $156MM, $7MM of non-gaming related costs, and $57.5MM of fixed costs (remember that Hyatt should be fully open so there should be a step up in fixed costs from last quarter)



  • Net revenue of $138MM 
  • EBITDA loss of $6MM 
  • RC volume of $8.8BN and 2.3% hold 
  • Mass drop of $62MM and 15% hold  
  • Net casino revenues of $136MM, $7.6MM of non-gaming revenues and $6MM of promotional expenses
  • Variable expenses (primarily taxes & junket commissions that aren’t recorded in net revenues) of $120MM, $2.5MM of non-gaming related costs, and $22MM of fixed costs


Mocha Slots

  • Net revenue of $25.4MM 
  • EBITDA loss of $6.7MM




  • Net interest expense of $19.6MM, up materially from last quarter due to MPEL no longer being able to capitalize costs for CoD
  • D&A of $74MM
  • Pre-opening expenses of $5MM





Mass Market / COD ramp/ Present business

  • “The area where we have some heavy lifting to do to drive growth and improvement is in the grind mass-market business at City of Dreams. Although our growth trend in this segment continues to improve, we have not gotten close to our full potential yet. We are not going to provide our detailed marketing play-book in this area, but we have a clear plan of attack to boost awareness of the mass gaming experience at City of Dreams, which will drive visitation, length of stay, and, of course, profitability.”
  •  “We believe we'll end up with 2009 being 5% to 10% ahead of 2008 in GGR terms and we expect next year to deliver a top line growth of around 20% with limited additions in new supply.”
  • Our direct -- premium direct VIP businesses at City of Dreams is….17%, life to date.
    • Our math suggests that it was just north of 11% through 3Q09, and we assume 12% for 4Q09


Guidance/ Outlook

  • Response to lower market share in Oct 2009
    • “ We had lower hold on the rolling chip side across both properties in the month of October, as compared with the previous quarter…. also, October, remember, is a month that is distorted, particularly in the first week, the holiday week, towards the mass segment, so any month that is strong because of holiday periods, you're going to see that distortion downwards.
  • “We're probably looking like we're seeing better volume in November against October and that's against the background of a market that looks like it's grown north of 50% over the course of the first two weeks of November.”
    • November Junket RC volumes were up around 58% y-o-y for the market as a whole.   However, RC in Nov was lower for MPEL than the volumes they saw in Oct.  Mass win does look like it increased nicely month over month in November
  • “We're not going to provide any forecast in terms of the volumes that we expect to see in any segment of the business, not least of which because do one segment and it's not really a complete picture. But we've seen an improvement in the volume of drop that we have at City of Dreams of more than 35%, nearly 40%, if you look across the five months that we've been open as a property.”
  • “We would certainly expect to see our hold move from 16% up towards 18%, and the properties that are performing at the most efficient level in Macau are indicating that you can hold up to 20%, 21% on the mass side. So that's obviously a future target for us.”


Other (Cash flow/ Balance sheet/ Costs)

  • “We've got about $1.7 billion drawn on our facilities; we won't be drawing any more of the capacity that is there.  And we've already banked about $300 million in our balance sheet off the back of a couple of equity placements that we did earlier this year that will be used at some point during the earlier part of next year to effect an accelerated repayment of those facilities.”
  • “Construction of City of Dreams is essentially complete with the recent opening of Grand Hyatt Macau. We expect to outflow approximately $115 million in closing out final accounts on the site during the course of the fourth quarter of this year…  the remaining $40 million are really retention payments that apply to the warranty periods on the various construction contracts and they won't get settled until the early part of the second half of next year in the main. As we then look forward into 2010, there's about another $40 million of CapEx that is primarily associated with the final fit-out of the Dragone Theater. That equipment will arrive in Macau in early 2010 and so we'll pick up and be settling that cost during the course of the first half…. We've then put in place a program of additional CapEx expenditure that runs through 2010….roughly in the order of $40 million to $50 million, which is basically an application of what you would normally expect in the first full year of maintenance CapEx. But because we're under warranty periods, we'll push it into new developments, new amenity development.”
  • “MPEL-wide cost structure of approximately $1.3 million a day, and that obviously includes City of Dreams, Altira, Mocha, and our centralized and corporate costs. With the addition of the Hyatt property and its staff during the course of the last few weeks, that amount has increased by approximately $75,000 a day, so we're up to a little bit shy of $1.4 million per day.

R3: Back on (the) Course in 2010?


January 27, 2009


With the golf season still a ways off here in most of the U.S, there appears to be more optimism ahead for the industry than we have seen in a while. Last night, Calloway management offered some insights into their outlook for the coming year and thoughts on the recent and severe recession. While it’s hard to envision a major rebound in the industry at this point in 2010, there are some positive signs setting up for the intermediate term.





With the golf season still a ways off here in most of the U.S, there appears to be more optimism ahead for the industry than we have seen in a while. Last night, Calloway management offered some insights into their outlook for the coming year and thoughts on the recent and severe recession. While it’s hard to envision a major rebound in the industry at this point in 2010, there are some positive signs setting up for the intermediate term.


  • Consolidation at retail should lead to a better pricing environment and less discounting. ELY management suggests 250 golf doors were shuttered in ’09 or 12% of supply. Golfsmith management believes 22% of golf retail has disappeared over the past 5 years. No matter what metric you use, distribution capacity has been reduced and heavy discounting is likely to subside along the way. At the very least, “going out of business” and liquidation sales have likely peaked. This trend clearly favors the well-capitalized survivors, like DKS/Golf Galaxy and ultimately manufacturers who can better align inventory with demand.
  • Discounting is likely to subside but pricing pressure should persist as mix favors lower priced products. The $299 driver is expected to be the dominant price point in the category, with the $399 product remaining under pressure in the coming year. Lean inventories at retail are not expected to lead to inventory build, but should also be a key factor in a more benign promotional environment.
  • While it is the offseason and likely not a great time to make a judgment, ELY management indicated the impact of the Tiger Woods saga has little to no impact on Calloway or the industry. Trends before and after the recent Tiger media frenzy are consistent.
  • Interestingly, rounds played in 2009 were essentially flat despite the challenging economic environment. Perhaps early retirements and layoffs have given golfers more reason to get out and play?
  • Golf was officially added to the 2016 Olympic Games in Brazil and will become a major industry focus and opportunity in the next few years. By then, we’d bet that Tiger will be back and the Olympic stage will be a key driver for the apparel and equipment brands. For now however, the Olympics is merely “hope”, and not something to even consider as relevant in the near term.
  • With inventories cleaned up as reflected in the 4Q sales/inventory spread (Revs +9%, Inventories -15%), it finally appears that the ELY SIGMA chart is turning the corner. See below:


R3: Back on (the) Course in 2010? - 1




  • Delta Apparel executives offered some insights into the company’s most recent acquisition, Art Gun Technologies. Through its innovative software and technology, Art Gun allows consumers to customize styles, graphics, and colors on an individual garment. Additionally, the software allows the customized design and order to be fulfilled and integrated with production with virtually no human intervention. Sounds like NikeID meets T-shirts…
  • When asked by an investor to share the company’s macro assumptions embedded in guidance, Sherwin Williams CEO replied, “we're not great economic forecasters and so we rely on kind of the consensus of economists and there's a pretty broad range of assumptions out there right now, especially in the new construction markets but we think -- what makes sense to us would be, you know, total residential starts and completions to be up in the mid-teens for full-year 2010, and probably with growing momentum over the course of the year.” At least they admit they don’t have their own macro process…
  • An internal memo revealed that Whole Foods is rewarding it’s team members with higher employee discounts if such employees participate in the company’s Healthy Discount Incentive Program. Team members are measured on four key categories including nicotine use, blood pressure, cholesterol, and BMI (Body Mass Index). By meeting certain “healthy” thresholds, an employee can earn up to an additional 10% discount on store purchases (base discount is 20%). Talk about creative ways to lower health care costs and foster “healthy” competition amongst employees…




Shoe Carnival Secures New Bank Agreement - Shoe Carnival, Inc. announced the successful completion of a new revolving credit facility. The new credit agreement provides for up to $50 million in loans and commercial and standby letters of credit through April 30, 2013. The new agreement revises and updates certain terms and covenants contained in the prior credit agreement. At January 30, 2010, the end of its current fiscal year, the Company expects to have approximately $40 million in cash and cash equivalents. The Company believes that its existing cash and cash flow from operations will be sufficient to fund its working capital and anticipated capital expenditures for its expansion plans in 2010. "We are very pleased to announce the successful completion of the agreement with Wachovia Bank and believe this facility, in conjunction with our existing cash and cash flow from operations, will adequately meet our capital requirements for anticipated growth over the next several years," said Kerry Jackson, Shoe Carnival's Chief Financial Officer and Treasurer. "We appreciate our lenders' confidence in Shoe Carnival as we continue to execute our long-term growth strategy." <sportsonesource.com>


Rue La La expands its men’s line, hires a Backcountry exec to lead the way - Members-only web retailer RueLaLa.com is adding a slew of new men’s apparel, footwear, sportswear and accessories brands as it aims to boost its men’s category. To oversee the effort, Rue La La hired Jeffrey Snyder as senior vice president and general merchandise manager. Snyder will oversee all aspects of the company’s men’s division, as well as the company’s active lifestyle product categories. He will report to Shari Shakum, chief merchandising officer. “We’re not just looking to add menswear, but rather, items that appeal to men,” says Snyder. Those items can include wines, vacations and accessories, he says. Snyder most recently was vice president of merchandising and planning at outdoor gear merchant Backcountry.com. Prior to Backcountry, he was vice president of the outdoor division of the Sports Authority. “Rue La La is the future of online retailing,” Snyder says. “It’s changing the way we shop as consumers.” Rue La La was launched in 2008 and has attracted more than 1.2 million members. GSI Commerce Inc. acquired Retail Convergence Inc., the parent company that operates RueLaLa.com, in November.  <internetretailer.com>


It’s only been a year, but Borders looks for a new permanent CEO - CEO Ron Marshall is leaving Borders Group only a year after taking on the task of revitalizing the bookselling chain and establishing it as a full-fledged e-commerce player. Borders announced this morning that Marshall, who took over as CEO last January, is leaving the company, effectively immediately, to become CEO of another publicly traded retail company. Borders didn’t name Marshall’s new company. To replace Marshall on a temporary basis, Borders has named chief merchandising officer and executive vice president Michael Edwards as interim CEO. Edwards will report directly to Borders chairman Mick McGuire. Edwards joined Borders in September after having been president and CEO of Ellington Leather, a wholesaler of leather handbags and accessories. Marshall, who joined Borders after serving as a principal at private equity firm Wildridge Capital Management, was hired to help the company improve its financial position and establish the multichannel books retailer’s fledgling e-commerce program. <internetretailer.com>


Woolrich Fills New Apparel and Accessories Post - Woolrich has named Brian Mangione to the newly created position of executive vice president. Mangione will be responsible for overseeing all aspects of Woolrich branded apparel and accessories and will report directly to Woolrich President Jim Griggs. "Brian compliments the team we've been assembling over the past several months," said Griggs. "Woolrich is experiencing a resurgence and Brian will be integral in keeping Woolrich relevant in the market as we enter into our 180th year of operation." Mangione will be responsible for overseeing merchandising, design, wholesale apparel, corporate marketing, direct retail, licensing, product development, and sourcing. Reporting to Mangione will be Rick Insley, SVP merchandising, licensing & retail stores, Jerry Rinder VP wholesale apparel & corporate marketing, Gary Gifford, director product development and sourcing, and the catalog and Internet team. Mangione comes to Woolrich with a diverse background and experience as a leader in wholesale, direct retail, marketing, sales, product development and sourcing. He most recently was the VP sales, marketing and product development of 180's. Mangione's additional experience includes executive leadership roles at Broder Brothers, New Balance and as the President of Lilian Vernon's business-to-business division. He has held executive positions at Fila USA and Adidas. <sportsonesource.com>


Pets at Home sold to KKR for £955m - Pets at Home has been sold to private equity house Kohlberg Kravis Roberts (KKR) for £955m, including the debt. The pets specialist, which has flourished in the recession, had been mulling a sale or a possible stock market flotation for some months.

Matt Davies will stay on as chief executive at the pets specialist. Previous owners Bridgepoint bought Pets at Home for about £230m in 2004. Davies said: “We are thrilled to embark on this new chapter in our history with the strong support of KKR. “KKR’s investment represents a resounding endorsement of our success to date and a validation of our colleagues’ commitment and enthusiasm towards pets and pet owners across the UK.” KKR executive John Pfeffer said: “We are delighted to have the opportunity to back the outstanding Pets at Home management team led by Matt Davies and to invest in this exceptional company. <retail-week.com>



Chinese Retailer JNBY to Land in U.S. - JNBY will unveil in March a 2,250-square-foot flagship in SoHo here, its first U.S. store. Founded in 1994 by a group of Shanghai Institute of Design students, JNBY operates as a collective with a staff of 13, led by a senior designer. The group creates 150- to-200-piece collections each season, priced from $80 to $600. China is poised to become the world’s second-largest economy this year and the government has been nurturing domestic companies in an effort to become less dependent on exports. JNBY operates more than 500 stores in Asia, Europe and North America, with new stores planned for Barcelona and Tbilisi, Georgia. Sales were strong enough at a temporary store at 93 Mercer Street in SoHo, that JNBY was encouraged to open a permanent boutique at 75 Greene Street. “I’m hoping [to open] one more store in Manhattan by the end of the year,” said Michelle Wohlers, U.S. brand manager of JNBY and a former executive of Juicy Couture. “Our next target will be Northern California.”  <wwd.com>


Coin Lays Out Plan for Upim - Gruppo Coin SpA said Tuesday it expects to become the country’s largest clothing retailer following the acquisition of the Upim clothing chain in December, and to reach consolidated revenues of 2 billion euros, or $2.8 billion at current exchange, in the next three years. “This is an extraordinarily important operation for Gruppo Coin,” said chief executive officer Stefano Beraldo, pointing to Upim’s 149 directly operated stores, more than 2.2 million square feet of selling space, most often centrally located in top Italian cities, and 2009 revenues of 430 million euros, or $597.7 million at average exchange rates. Beraldo said between 10 and 20 Upim stores will be converted into Coin units by 2011. By August, around 60 Upim stores will morph into points of sale dedicated to Coin’s brand OVS Industry. Upim also counts more than 200 franchised stores, which will maintain their original banners. The group will reach a total of 900 stores.  <wwd.com>


Kohl’s Department Stores Achieves 100 Percent Green Power - Kohl’s Department Stores (NYSE: KSS) announced today that the company has purchased enough green power to meet 100 percent of its purchased electricity use with an annual green power purchase of nearly 1.4 billion kilowatt-hours (kWh). With this latest purchase of renewable energy, Kohl’s increased its ranking to no. 2 overall and among Fortune 500 companies on the U.S. Environmental Protection Agency’s (EPA’s) listings of top green power purchasers. Kohl’s retains its top ranking among retailers.  <businesswire.com>


American Apparel Pulls New Line of Nail Polish Off Shelves - American Apparel didn't nail its new nail polish line. The store had just launched its first collection of eighteen lacquers in December for $6 a pop, but according to a leaked internal company e-mail, there were "quality issues with the glassware," and all products had to be taken off the floor immediately. It is also no longer available online. A new polish is expected to hit stores within the next two weeks. <nymag.com>


H&M, NY & Co. Settle Lead Complaint - H&M and New York & Co. agreed to abide by new restrictions on lead in purses last week when the retailers settled a lawsuit brought by a California consumer watchdog group. The Oakland-based Center for Environmental Health sued the companies, along with dozens of other co-defendants, last June. The advocacy group alleged the retailers violated California’s Safe Drinking Water and Toxic Enforcement Act of 1986 by selling handbags, wallets and other accessories containing unsafe levels of the lead. Hennes & Mauritz AB, New York & Co. parent Lerner NY and two vendors settled with the nonprofit organization in consent judgments approved Jan. 21 in Alameda County Superior Court. The Center for Environmental Health said that, according to the independent testing that prompted its lawsuit, the four companies offered accessories that contained lead levels between 13 times and more than 115 times a 300 parts per million standard reached in the settlement. In its complaint, the nonprofit said consumers, including pregnant women and children, risked lead exposure through average use of the products. It called the settlements a landmark because, in the absence of legislation on the matter, they create the first legally binding rules on lead levels in purses in the country.  <wwd.com>


From Twitter to Youtube, Brands Get Creative - Get ready for marketing via social media — the sequel. The next hot TV show, music or fashion video is coming soon from a brand near you. Content is not only king, it’s multiplying rapidly and is in the hands of growing numbers of people — much to the joy, the chagrin and even fear of brand marketers who are learning from and leveraging these networks, executives said. By engaging in social media marketing, brands are putting their images and reputations on the line, associating their names with potential controversy, in hopes of entertaining, informing and provoking their followers. Whether it’s a tweet from Tommy Hilfiger, a new program on A|X TV, or a consumer’s thoughts on a Burberry trenchcoat posted at Burberry’s artofthetrench.com, content is engaging enthusiasts, spreading the day’s news, creating spur-of-the-moment parties, sports events and volunteer efforts — even sparking some purchases. “The people who win will be thinking more like a content publisher than an advertiser,” said Brian Halligan, a former venture capitalist who is now chief executive officer of HubSpot, a marketing software company. <wwd.com>


Consumers `clipped` 92% more coupons from the web last year, study says - The recession prompted consumers to turn to coupons more in 2009 than they did the year before, the first increase in 17 years, according to a new study. Online coupon access increased 92% and redemption shot up 360%, although the Internet still accounts for only 1.5% of coupons redeemed, says the report from Inmar, a coupon transaction processor. Despite the rapid rise of online coupons, newspaper inserts still account for 89% of coupons distributed to consumers and more than half of coupon redemption, says Matthew Tilley, director of marketing for Inmar. Web sites accounted for 0.3% of coupons distributed to consumers and 1.5% of redemptions, Tilley says. 19.6% of online coupons are redeemed. The primary method of measuring online distribution of coupons is by tracking the printing of web pages with coupons, although other metrics, such as page views, can also be used to estimate web coupon distribution, Tilley says.  <internetretailer.com>


Consumer Confidence Lifts Retail Shares Tuesday - Retail stocks shot ahead Tuesday morning, rising as much as 1.4 percent on an increase in consumer confidence and a modestly upbeat 2010 sales forecast, but the sector couldn’t hold on and ultimately kept less than half of its earlier gains. The S&P Retail Index ended with a 0.6 percent, or 2.24 point, rise to 398 while the Dow Jones Industrial Average slid 2.57 points to 10,194.29. Retailers joining in on the rally included Limited Brands Inc., up 4.3 percent to $19.40; Target Corp., 2.5 percent to $52.02; Nordstrom Inc., 2.1 percent to $35.03; Macy’s Inc., 1.9 percent to $15.82, and Abercrombie & Fitch Co., 2 percent to $31.05. (For more on stocks see page 14.) Investors now turn their attention to commentary on interest rates from the Federal Reserve today. The National Retail Federation predicted retail sales, excepting automobile sales, gas stations and restaurants, would rise 2.5 percent this year after falling 2.5 percent in 2009. And The Conference Board’s Consumer Confidence Index rose for the third straight month, advancing to 55.9 for January from 53.6 in December.  <wwd.com>

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