The Joy of Winning

“I'm trying to learn as much as I can out there, but I'm confident in what I can do.”

-Sidney Crosby

 

Sidney Crosby is a 22 year-old from Cole Harbour, Nova Scotia. Sometimes it’s hard to contextualize how young some of these national leaders are, but youth is ambition’s ladder and it’s important to take the time to embrace.

 

The Vancouver Olympics inspired us to live with passion and pride. Between Americans and Canadians, new Olympic records for total medals (USA’s 37) and gold medals (Canada’s 14) were set, and the leadership infused into all of our living rooms for the past few weeks goes well beyond one man’s goal.

 

Immediately after the hockey game, Sidney Crosby said “there's nothing really that goes through your mind besides the joy of winning and to be able to share that with the guys and all of Canada.” I’ll take that one step further Sidney – I think all of Olympic sport shared it with all of the world. We needed that. To all of the champions of Vancouver 2010, from all of us, thank you.

 

“The Joy of Winning” is something we can all can sign up for. Enough of the fear-mongering and threats of the “alternative” that this world’s politicians use as a backboard for their losing strategies. Enough of Selling Fear to our marketplace. Enough is enough. Winners don’t whine. Winners win.

 

Stock markets across the world opened strong this morning, and I have to believe there is a much greater power in all of this than what the Prime Minister of Greece had to say. His conflicted and compromised stock market has lost 1/3 of its value already. He is yesterday’s losing news.

 

From China to India, whose stock markets were up +1.2% and +1.1%, respectively, to the rally we are seeing from Turkey (+2.2%) to Germany (1.6%) this morning, is there time for us to celebrate that we don’t have to live in the fear that our politicians create?

 

China’s February PMI (Producer Manufacturing Index) hit a one-year low last night, coming in at 52 versus 55.8 reported in January. This was proactively predictable (we predicted it on slide 1 of our Chinese Ox in a Box presentation 2 months ago), and the Chinese stock market has obviously been discounting this slowdown for the better part of 2010. Thankfully, markets look forward, like winners do.

 

Are the lows for the Chinese, Spanish, and Greek stock markets for 2010 locked into the rear-view mirror? For the immediate to intermediate term, the answer to that question seems to be very likely.

 

Here’s what history tells us about recent stock market bottoms and how people Selling Fear see them after the fact:

  1. China’s Shanghai Composite saw its YTD low established on February 2nd at 2934 (-5.2% lower)
  2. Spain’s IBEX 35 Index saw its YTD low established on February 5th at 10,103 (-3.2% lower)
  3. Greece’s ATHEX Index saw its YTD low established on February 8th at 1806 (-8.0% lower)

Today is March the 1st, and those who sold the aforementioned fear-mongered lows may very well be feeling shame, as they should. Forward me another You Tube video of an empty Chinese city. I doubt I’ll be shorting Chinese stocks on that tomorrow. Consensus is what consensus does. It’s often a loser’s game.

 

Managing risk doesn’t happen in the vacuum that the manic media creates. Managing risk doesn’t happen when living in fear. Managing risk doesn’t only happen on the way down.

 

Managing risk happens when the proactively prepared have the “confidence in what they can do”, but at the same time maintain an attitude to “try and learn as much as they can out there.” Thank you again and again, Mr. Crosby, for teaching us all that.

 

My immediate term risk/reward levels of support and resistance for the SP500 are now 1092 and 1113, respectively.

 

Best of luck out there today,

KM

 

LONG ETFS

 

FXC – CurrencyShares Canadian Dollar — Canada's currency was on sale on 2/25/10 and we are bullish on the Loonie's long term TAIL, at a price. Look for rate hikes in Canada in the coming 6-9 months.

 

TUR – iShares Turkey — Turkey has been pounded in the last week and fears were delivered upon with the inside information of 40 retired military officers arrested on 2/24/10. We'll buy the fear for a trade. The long term TAIL for Turkey is bullish, from a price.

 

XLF – SPDR Financials — With sentiment negative and a Piggy Banker Spread hitting a record wide spread on 2/23/10, we bought red.

 

XLK – SPDR Technology — Technology is underperforming the SP500 YTD; a down day on 2/22/10 prompted us to buy more. We expect to see some positive mean reversion for Technology as M&A picks up.

 

UUP – PowerShares US Dollar Index Fund — We bought the USD Fund on 1/4/10 as an explicit way to represent our Q1 2010 Macro Theme that we have labeled Buck Breakout (we were bearish on the USD in ’09).

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 mispriced and that TIPS are a efficient way to own yield on an inflation protected basis.
 

SHORT ETFS

 

GLD – SPDR Gold We re-shorted Gold on this dead cat bounce on 2/11/10. We remain bullish on a Buck Breakout and bearish on Gold for Q1 of 2010, as a result.

 

XLP – SPDR Consumer StaplesGiven how many investors own Consumer Staples stocks because it was a "way to play the weak US Dollar" last year, we have ourselves another way to profit from a Buck Breakout with this short position.

   

IEF – iShares 7-10 Year TreasuryOne of our Macro Themes for Q1 of 2010 is "Rate Run-up". Our bearish view on US Treasuries is implied.


Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more

Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

read more

We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

read more

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more