prev

WSJ READS RESEARCH EDGE

We at Research Edge make an effort to be a step ahead of consensus. Front page headlines from today’s Wall Street Journal highlighted the projected $40 billion budget deficit facing state economies in FY 2009. A slumping housing market and escalating gasoline prices were cited as the primary factors for the upcoming state budget crisis.

Since June 19th we’ve highlighted the historic relationship between state budget deficits and the gaming industry at length. In “Budget Deficits = Craps for Casinos” (posted 6/29) we discussed the state budget crises of 2002-2003 and the resulting state levied tax hikes on the gaming industry to cure over $80 billion dollars in shortages.

Now with deficits reaching nearly $40 billion watch out for legislators once again dipping their hands into gaming’s cookie jar to feed their economic sweet tooth. History has a way of repeating itself. We hope this time it’s more gaming and not more taxes.

Alec Richards
Intern – Research Edge LLC

Financials (XLF): Stuffed Like Lehman's "Level 3" Book

We wanted to stay clear of the Luskin, Gartman, triple bullish Deutsche Bank buy call on the US Financials, so we advised you to do the same. Predictably, the bullish narrative rolled into to the Financials right at the goal line, then ran head first into a Canadian Football League goal post.

The goal line for the consensus crowd is the 50 day moving average (see chart). I don't use the 50 day to make capital decisions, but it's important to watch behavior around that line. It’s kind of like watching pigeons flock to bread crumbs.

The XLF was down -6.3% today, going out at 21.07. If this US Financials index breaks my support line at 20.58, and closes there, I see 23-24% of expeditious downside.

KM
(chart courtesy of stockcharts.com)

The Russian Bear Hunter Chart

Russia's RTSI Index is clearly breaking down.
KM
Andrew Barber, Director

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.

Beijing's composite Air Pollution Index

The South China Morning Post’s, Al Guo, reported on the alarmingly bad air quality scores Beijing is currently printing. The Air Pollution Index hit 89 yesterday and “according to the index, compiled by the Beijing Municipal Environmental Protection Bureau, all but five remote suburbs in the city had air pollution levels higher than 80 yesterday, with a couple of districts registering up to 99. Any figure recorded above 100 is considered harmful to health.”

Bear in mind, the Chinese call this “cleaning it up” before the Olympics.

Never mind that I am long the Chinese ETF (FXI). This is just plain bad.
KM
Picture from the SCMP Article, Yesterday at the Forbidden City

Potash (POT): Ugly Chart Of the Week...

Here's another "Fast Money" chart that's breaking down, big time. POT couldn’t rally today on a solid earnings report, and as long as it can't climb back above the $204.96 line, it won’t be rallying tomorrow either.

I have downside support at $149.96.
KM
POT breaking down (Research Edge Chart)

Eye On Leadership: Bon J-Obama In Berlin!

Barack Obama is being received like a rock star as he gives a speech right now to a massive crowd in Berlin, Germany.

Almost 75% of Germans polled said they'd like to see him as the next American President. Breaking down Washington and Wall Street's walls is all one and the same to me.

This is not about individuals. This is about changing broken organizations...
KM
"Bon J-Obama"

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.

next