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EARLY LOOK: Don't Eat Yellow Snow

 

 

“Even if you are on the right track, you will get run over if you just sit there.”

-Will Rogers

 

 

EARLY LOOK: Don't Eat Yellow Snow - Will Rogers

 

 

 

Oklahoma’s favorite son, Will Rogers, probably didn’t know it at the time but he made a very important contribution to modern day risk management with the aforementioned quote.

 

Rogers was our kind of guy. Multi-factor, multi-duration, and not afraid to put his thoughts out there for everyone to criticize every day. He was transparent and didn’t feel compelled to live a professional life of opacity. He lived his life out loud.

 

By the time he passed away in 1935, Will Rogers penned more than 4,000 nationally syndicated newspaper columns and produced 71 movies. He also traveled across the world 3 times. This gave him a unique perspective on the interconnectedness of human behavior.

 

The most important thing we can acknowledge about human behavior when we buy or sell something is that we are human. By nature, we are more likely to think something we own is worth more than it’s worth. Ultimately, the market’s last sale decides the price.

 

Another critical acknowledgment in modern day risk management is that the game is changing at a rate that’s representative of global economic imbalances, fund flows, and geopolitical risks. Never before has the US government sponsored so much market volatility. Never before has the hegemony of US economic power been such a question mark. Never is a long time.

 

My son Jack is barely 3 years old, but as winter approaches he will be old enough to learn his first few rules in risk management. Never eat yellow snow, and never trust a professional politician.

 

Whoever chooses to trust Greek, Irish, or US politicians who are telling us that they’ll never have to default on any long term liability because they have figured out how to print short term debt-upon-debt-upon-debt subscribes to a belief that the history of sovereign debt cycles doesn’t support.

 

 

EARLY LOOK: Don't Eat Yellow Snow - Flags

 

 

If you choose to trust what you see, recognizing this globally interconnected game of risk is always “risk on”, you are most likely going to see this Fear of Government trading environment plainly. You don’t have to “just sit there” and suck it up. You can keep moving.

 

There are two ways that I’ve applied this basic strategy of motion to express my investment views: 

  1. Hedgeye Asset Allocation Model: Managing the gross exposure of my CASH position dynamically.
  2. Hedgeye Virtual Portfolio: Managing my LONG versus SHORT positions, aggressively, on a net basis. 

I don’t run a hedge fund anymore. So far, this is the best I can do to communicate what it is that I am trying to recommend you do out there. I know that other people don’t do it this way. I also know that I’ll need to keep changing what it is that I do or I’ll get “run over.”

 

Back to explaining what it is that I’ve been doing this week…

 

1. Dynamic Asset Allocation to CASH:

  • On Tuesday when I “Walked The Line” (title of Early Look note that morning) and the SP500 was testing a breakout above my intermediate term TREND line of 1144, I moved to 64% CASH = selling strength.
  • On Thursday, after the SP500 closed down for the 3rd day in a row, I reinvested 6% of that CASH position into Commodities (DBA) and German Equities (EWG), taking my CASH position down to 58% = buying weakness.
  • This morning my Hedgeye Asset Allocation is as follows: Cash 58%, Int'l FX 21%, Bonds 9%, Int'l Equities 6%, Commodities 3%, US Equities 3%.

 

2.       Aggressively Managing Risk Around My Net LONG/SHORT position:

  • On Monday morning at SPX 1125 I had 13 LONGS and 10 SHORTS.
  • On Wednesday morning at SPX 1139 I had 8 LONGS and 10 SHORTS.
  • This morning at SPX 1124 I have 11 LONGS and 7 SHORTS.  

 

Naturally, some “fully invested” asset managers are going to look at this and say a few things: 

  1. You can’t hold a cash position like that.
  2. You can’t time markets like that.
  3. You can’t … 

But, yes I can.

 

Rather than just sit here and accept that at any given moment in my day the government can either squeeze me or displease me, for now I’m going to keep moving with an explicitly large amount of cash on the sidelines to deploy whenever I see the opportunity to do so.

 

My immediate term support and resistance levels for the SP500 are now 1113 and 1143, respectively.

 

Enjoy your weekend and best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

 

EARLY LOOK: Don't Eat Yellow Snow - 1



EARLY LOOK: QE Mees

 

“Lacking much experience with this option, we do not have very precise knowledge of the quantitative effect of changes in our holdings.”

–Ben Bernanke

 

 

EARLY LOOK: QE Mees - Bernanke Hedgeye Image

 

 

While it’s entertaining, it’s also quite frightening to watch the same failed policy makers and the pundits that pander to them fundamentally believe that they understand exactly how this “QE” experiment is going to play out. Fortunately, Ben Bernanke is not one of those people.

 

Now that they’ve been liberated from Larry Summers assuring them that he knows exactly what he is doing, here’s a simple risk management exercise for Groupthink Inc in Washington today.

 

 

EARLY LOOK: QE Mees - Summers Hedgeye Image

 

 

Consider this part of your post Summers rehab – baby steps guys:

  1. Re-read the aforementioned quote
  2. Then count how many times you hear the media say QE today
  3. Then re-read that quote again before you go to bed tonight

Now we don’t purport to have “precise knowledge of the quantitative easing effects” on the US economy either. Einstein himself said that “if we knew what we were doing, it wouldn’t be called research, would it?” That said, our fundamental macro research does point us toward Japan’s experiment with QE as being an unsuccessful one.

 

While the United States of America in 2010 may not “precisely” be Japan of 1997, there are plenty of similarities developing in terms of Big Bureaucratic Government resolve. If you have any recovering friends from Groupthink Inc who make it past the remedial exercise above, please send them our Chart of The Day (see below) that overlays the Japanese real estate bubble with ours. *Note the duration.

 

 

EARLY LOOK: QE Mees - Japan U.S. Real Estate

 

 

For really advanced stage rehabilitation from the Academic Dogma that’s been driving Ben Bernanke and Larry Summers policy making decisions, you can overlay Japanese Government Bonds Yields (JGBees) with US Treasury Yields (QE Mees). While we don’t have “precise” measurements on how low the rate-of-return on America’s aging population’s hard earning savings accounts can go, we do see ZERO percent as a credible gravitational force.

 

We’ll be expanding our Japanese research effort in Q4, but if you’d like a taste of the contrarian Hedgeye cool-aid, please send an email to sales@hedgeye.com and we’ll get you a solid report from our Hedgeye Jedi, Darius Dale, who punched out a not yesterday titled, “Japanese Pensions: Risks to the Global Economy.”

 

Post-rehab students of objective macro-economic research have learned that the Japanese demographic curve started to age before America’s baby boomers did. Importantly, this doesn’t mean America can’t age in due course. Advanced research studies on campus here in New Haven have revealed that time, as a risk management factor, is actually quite hard to reverse.

 

All the while (alongside time), there’s this other little research critter we monitor here at Hedgeye called price. Again, this is getting into the really advanced stuff folks, so try to “dumb this down” if you attempt to explain this to anyone in Congress, but TIME and PRICE are significant factors in a modern day risk manager’s search for more “precise” knowledge about future probabilities.

 

Now let’s go to the future state - if we really want to dial up Washington’s fully loaded rehab research engine we gotta go where Heli-Ben has never gone before. As Buzz Lightyear would say, “to infinity and beyond” – the cosmic galaxy of the hedgie universe – REAL-TIME PRICES!

 

I know, I know… this is deep. But let’s suspend disbelief for a moment and take a gander into the cosmos of Hedgeye REAL-TIME PRICE research and look at what we see:

 

1.  Currencies: The US Dollar is down for the 14th week out of the last 17, breaking to lower-lows that we havn’t seen since mid-April when chaos theorists in New Haven said something about May Showers. Sounds serious, because when you Burn The Buck at the stake, it starts to become a very bad thing - importing crazy critters that Bernanke has never seen (like inflation, shhh…).

 

2.  Bond Yields: US Treasury yields are getting pulverized again this morning on the short end of the curve, with 2-year yields in America hitting their lowest levels ever. Ever, of course, is a long time… and while we can’t tell you “precisely” how poorly this ends for a lot of people in this country, we can assure you this ended poorly in Japan.

 

3.  Equities: US stocks have backed off of the line I said I was going to walk this week (1144 in the SP500), leaving our intermediate term TREND line of resistance intact. Whether or not the perma-bulls want to admit that lower-highs in everything US equities since 2007’s leverage-cycle-peak matter or not is something that Nikkei bulls in Japan have been powdered by since Gordon Gekko’s last 1980’s dance.

 

QE ain’t for me.

 

My immediate term TRADE lines of support and resistance for the SP500 are now 1127 and 1146, respectively.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

 

 

This note was originally published at 7:59am, this morning September 23, 2010. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK and PORTFOLIO IDEAS in real-time.


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.32%
  • SHORT SIGNALS 78.48%

THE GRIND: SEPT 23, 2010

 

 

THE GRIND: SEPT 23, 2010 - Notebook Image Hedgeye

 

Another day, another grind…

 

THE GRIND: SEPT 23, 2010 - NOTEBOOK BULLISH

 

1.      SP500 continues to hold immediate term TRADE support of 1127

2.      Range in my 3-day SPY probability model remains tight and trade-able

3.      Volatility (VIX) already shot up this week from where it should have (21 support) and is now immediate term TRADE overbought

4.      All 9 sectors in our SP500 Sector Risk Mgt model remain bullish from an immediate term TRADE perspective (XLF barely holding on however)

5.      Larry Summers is leaving

6.      US Housing Starts improved finally (month-over-month) to 598,000 (AUG) vs 541,000 (JUL)

7.      TED Spread remains very narrow at 14bps wide, showing little to no counterparty risk

8.      FTSE and DAX continue to trade bullish on both our TRADE and TREND durations – both look healthier than the SP500

9.      Brazil flashing positive divergences versus global equities this week and remains bullish TRADE and TREND despite Brazil’s inflation accelerating this wk

10.  Commodities (CRB Index) remain in a Bullish Formation (bullish across all 3 of our risk mgt durations: TRADE, TREND, and TAIL)

11.  Agricultural and “soft” commodities like cotton are leading the overall bullish trend in the CRB Index (energy is the drag)

12.  Gold maintains its Bullish Formation, making higher-highs and higher-lows in the face of the Fear of Government Trade

13.  China’s Premier Wen tells Groupthinkers in Washington like it is this week (ie a sharp 20-40% appreciation of the Yuan would blow things up)

14.   Czech government issues a 2011 plan to cut deficit by 17%

15.  Russian government continues to cut spending and attempt to issue sovdebt in order to meet 2011 strategic plans

 


THE GRIND: SEPT 23, 2010 - NOTEBOOK BEARISH


1.      SP500 remains broken from an intermediate term TREND perspective w/ our “Walk The Line” level sustaining overhead resistance at 1144

2.      US stock market breadth continues to deteriorate (hyper early signals, but they aren’t the bullish factors they were 3 weeks ago)

3.      US stock market down days are led by the Financials (XLF) this week and the low-beta dividend trade (XLU) is flashing bullish again

4.      ABC Washington Post Consumer Confidence dove wk over wk back down to -46 vs -43 last week (2wks of not up despite stocks being up)

5.      MBA mortgage applications fall for the 2nd consecutive week to -3.3% this wk (this is one of our lead high-frequency US growth indicators)

6.      Jobless claims rise for the 1st week in 4, to 465,000, reminding risk managers that what we have here is JOBLESS STAGFLATION

7.      II Bullish to Bearish weekly indicators are now flashing one of the most bearish contrarian signals I have seen on immediate term TRADE basis ever

8.      US Existing Homes Inventory drops from 12.5 months to 11.6; that’s still a gargantuan mountain of reported supply (ex-shadows)

9.      Baltic Dry Index is down for 8 days in a row

10.  Japanese equities were down when they traded this week

11.  Asian Equities that traded last night caught an inflation cold as the inflation data for AUG in Singapore, Malaysia, and HK all ramped month over month

12.  Eurozone Manufacturing PMI slowed in SEP to 54 from 55 in AUG

13.  Eurozone Manufacturing Services-PMI slowed in SEP to 54 from 56 in AUG

14.  Germany’s Manufacturing and Services PMIs tracked the same sequential rollover that the overall region did

15.  French and German Unions made headline news today; everything about Austerity isn’t kind

16.  Italy finally reported Q2 unemployment and it went up again to 8.5% vs 8.4% in Q1; Italy continues to concern us more and more on the margin

17.  Russian and Norwegian Equities are breaking down as the price of oil does

18.  Oil price has confirmed an intermediate term TREND line breakdown this week with critical TREND line resistance = $76.16/barrel

19.  Natural Gas remains in a Bearish Formation (bearish TRADE, TREND and TAIL) and looks like it wants to test $3.60

20.  Portugal is selling more and more sovereign debt at higher and higher yields; this won’t end well

21.  Greek stocks look horrendous again this week despite Papandreaou doing roadshows in America

22.  US Treasury yields continue to break down to lower-lows across the curve with 2-yr yields hitting all time lows

23.  Yield Spread (10s minus 2s) has compressed 17bps week to date (explains why XLF (Financials) is flashing another negative divergence vs SPY today

24.  US Dollar is breaking below APR and AUG lows; pervasive BURNING OF THE BUCK becomes a bad thing for globally interconnected risk

25.  US Rumor Mill chasing about everyone buying everyone has yielded ZERO takeouts of the 69 we observed as “rumors” this week; sad

 
Time is running out on both September month end and Q3. There are performance problems in our industry and I think this reality combined with a liquidity squeeze to cover shorts has kept this market from going down this week. That said, it hasn’t gone up either – and that is new. So are the DATA and PRICES tilting demonstrably to the bearish side (relative to where they were 3 weeks ago) in my notebook.
 
As a result, I continue to:

    A)    take down gross invested exposure in the Hedgeye Asset Allocation Model and...

 

    B)    sell longs in our Hedgeye Portfolio. On a weak market open today, I covered 3 short

            positions (WYNN, HOT , and CRI) and bought 1 long (DBA).

 

I plan on staying in a low-gross-exposure position and at the same time aggressively trading (or managing risk around) short positions for the next few weeks. I am increasingly worried about October.
 
KM


Keith R. McCullough
Chief Executive Officer
HEDGEYE RISK MANAGEMENT


The Grind: What's In My Notebook?

Another day, another grind…

 

BULLISH:

  1. SP500 continues to hold immediate term TRADE support of 1127
  2. Range in my 3-day SPY probability model remains tight and trade-able
  3. Volatility (VIX) already shot up this week from where it should have (21 support) and is now immediate term TRADE overbought
  4. All 9 sectors in our SP500 Sector Risk Mgt model remain bullish from an immediate term TRADE perspective (XLF barely holding on however)
  5. Larry Summers is leaving
  6. US Housing Starts improved finally (month-over-month) to 598,000 (AUG) vs 541,000 (JUL)
  7. TED Spread remains very narrow at 14bps wide, showing little to no counterparty risk
  8. FTSE and DAX continue to trade bullish on both our TRADE and TREND durations – both look healthier than the SP500
  9. Brazil flashing positive divergences versus global equities this week and remains bullish TRADE and TREND despite Brazil’s inflation accelerating this wk
  10. Commodities (CRB Index) remain in a Bullish Formation (bullish across all 3 of our risk mgt durations: TRADE, TREND, and TAIL)
  11. Agricultural and “soft” commodities like cotton are leading the overall bullish trend in the CRB Index (energy is the drag)
  12. Gold maintains its Bullish Formation, making higher-highs and higher-lows in the face of the Fear of Government Trade
  13. China’s Premier Wen tells Groupthinkers in Washington like it is this week (ie a sharp 20-40% appreciation of the Yuan would blow things up)
  14.  Czech government issues a 2011 plan to cut deficit by 17%
  15. Russian government continues to cut spending and attempt to issue sovdebt in order to meet 2011 strategic plans 

BEARISH:

  1. SP500 remains broken from an intermediate term TREND perspective w/ our “Walk The Line” level sustaining overhead resistance at 1144
  2. US stock market breadth continues to deteriorate (hyper early signals, but they aren’t the bullish factors they were 3 weeks ago)
  3. US stock market down days are led by the Financials (XLF) this week and the low-beta dividend trade (XLU) is flashing bullish again
  4. ABC Washington Post Consumer Confidence dove wk over wk back down to -46 vs -43 last week (2wks of not up despite stocks being up)
  5. MBA mortgage applications fall for the 2nd consecutive week to -3.3% this wk (this is one of our lead high-frequency US growth indicators)
  6. Jobless claims rise for the 1st week in 4, to 465,000, reminding risk managers that what we have here is JOBLESS STAGFLATION
  7. II Bullish to Bearish weekly indicators are now flashing one of the most bearish contrarian signals I have seen on immediate term TRADE basis ever
  8. US Existing Homes Inventory drops from 12.5 months to 11.6; that’s still a gargantuan mountain of reported supply (ex-shadows)
  9. Baltic Dry Index is down for 8 days in a row
  10. Japanese equities were down when they traded this week
  11. Asian Equities that traded last night caught an inflation cold as the inflation data for AUG in Singapore, Malaysia, and HK all ramped month over month
  12. Eurozone Manufacturing PMI slowed in SEP to 54 from 55 in AUG
  13. Eurozone Manufacturing Services-PMI slowed in SEP to 54 from 56 in AUG
  14. Germany’s Manufacturing and Services PMIs tracked the same sequential rollover that the overall region did
  15. French and German Unions made headline news today; everything about Austerity isn’t kind
  16. Italy finally reported Q2 unemployment and it went up again to 8.5% vs 8.4% in Q1; Italy continues to concern us more and more on the margin
  17. Russian and Norwegian Equities are breaking down as the price of oil does
  18. Oil price has confirmed an intermediate term TREND line breakdown this week with critical TREND line resistance = $76.16/barrel
  19. Natural Gas remains in a Bearish Formation (bearish TRADE, TREND and TAIL) and looks like it wants to test $3.60
  20. Portugal is selling more and more sovereign debt at higher and higher yields; this won’t end well
  21. Greek stocks look horrendous again this week despite Papandreaou doing roadshows in America
  22. US Treasury yields continue to break down to lower-lows across the curve with 2-yr yields hitting all time lows
  23. Yield Spread (10s minus 2s) has compressed 17bps week to date (explains why XLF (Financials) is flashing another negative divergence vs SPY today
  24. US Dollar is breaking below APR and AUG lows; pervasive BURNING OF THE BUCK becomes a bad thing for globally interconnected risk
  25. US Rumor Mill chasing about everyone buying everyone has yielded ZERO takeouts of the 69 we observed as “rumors” this week; sad 

Time is running out on both September month end and Q3. There are performance problems in our industry and I think this reality combined with a liquidity squeeze to cover shorts has kept this market from going down this week. That said, it hasn’t gone up either – and that is new. So are the DATA and PRICES tilting demonstrably to the bearish side (relative to where they were 3 weeks ago) in my notebook.

 

As a result, I continue to A) take down gross invested exposure in the Hedgeye Asset Allocation Model and B) sell longs in our Hedgeye Portfolio. On a weak market open today, I covered 3 short positions (WYNN, HOT , and CRI) and bought 1 long (DBA). I plan on staying in a low-gross-exposure position and at the same time aggressively trading (or managing risk around) short positions for the next few weeks. I am increasingly worried about October.

 

KM

 

Keith R. McCullough
Chief Executive Officer

 

The Grind: What's In My Notebook? - The Grind


R3: M, PSUN, CROX, and Moody's

RESEARCH ANECDOTES

  • Sears continues to up the ante with its apparel program, this time recruiting UK retailer Next for its latest collaboration. Sears.com becomes the exclusive retailer of Next product in the U.S in a similar arrangement to the MANGO/JCP partnership (except this deal has no retail presence). Recall that Sears also has a partnership in place with French Connection as well as announced sublet with Forever 21. In other words, Sears is becoming a mall within a mall.
  • According to an InsightExpress study, 45% of consumers prefer receiving mobile coupons via text message, with 28% preferring to locate them via an app, and 27% preferring to receive them in-store. A substantial number of mobile ad and coupon campaigns are currently focused on geographic targeting, allowing advertisers to drive traffic to a specific region or local.
  • Following in the footsteps of Burberry, Gucci livestreamed its Milan runway show as part of its Gucci.com redesign. Unlike other live runway events online, Gucci’s virtual fashion show included virtual guests and virtual seat assignments. Throughout the show, 10,000 “guests” Tweeted and chatted as they watched the latest fashions strut down the runway.

OUR TAKE ON OVERNIGHT NEWS 

 

Macy's Plans To Hire More for Holiday - Macy's Inc. plans to hire 65,000 seasonal workers to staff its stores, call centers and distribution centers for the holidays. The department store, which employs 161,000 year round, said the holiday hiring represented a slight increase from the past given the 3 to 3.5 percent comparable-store sales gain it expects to see in the second half. “It is vitally important that our customers are well-served during the busiest shopping time of the year," said Terry Lundgren, chairman, president and chief executive officer. Most of the positions are part time. <wwd.com/business-news>

Hedgeye Retail’s Take:  Given that customer service has been on the decline for a while in the traditional department store channel, it’s good to see a commitment to holiday staffing.  With that said, if sales don’t materialize expect the temporary help to be cut back and matched commensurately with sales demand.

 

Moody's Cuts Outlook on Retail Sector - This might be about as good as it gets until 2012. Moody’s Investors Service Wednesday cut its credit outlook on the retail sector to “stable” from “positive.” The debt watchdog said growth in U.S. retail earnings, before interest and taxes, would “slow to a modest low-single-digit pace over current levels for the next 12 to 18 months.” “Consumers continue to face high unemployment and personal debt levels along with low asset values and tight credit availability which will continue to make them focused on value,” Moody’s said, noting holiday sales and margins would increase only marginally. Retailers are coming up against tougher comparisons on both the sales and the margin fronts and executives are running out of ways to boost growth. “Retailers have generally exhausted the ability to increase earnings from expense reductions and inventory efficiencies,” Moody’s said. <wwd.com/business-news>

Hedgeye Retail’s Take:  A seemingly proactive move here from Moody’s and an outlook which we can’t disagree with.  We’re simply moving beyond the point of “this is as good as gets”.

 

PSUN Tough Road Ahead - A year after becoming president and chief executive officer of teen retailer Pacific Sunwear of California Inc., Gary Schoenfeld gave a pep talk before the crucial back-to-school season. With the $1 billion company posting an eighth consecutive quarter of losses in August — and forecasting a ninth — he might have to give a few more. It isn’t business as usual at PacSun, which along with the flow of red ink, had to fend off a hostile takeover bid last year by the much smaller athletic brand Adrenalina Inc. The recession has weakened the teen retail sector. There are fewer jobs for young people and their parents have diminished discretionary income. Apparel spending among 13- to 17-year-olds dropped 6% in June according to The NPD Group. In an effort to reverse its slide, PacSun has identified three key areas: product, customer relevance and engaging shoppers in stores. The turnaround blueprint includes pumping up the fashion quotient in juniors, reviving its shoe category and offering more exclusive items from vendors. After years of elevating its private label business, PacSun is courting vendors, including Fox, Volcom, Hurley, Quiksilver, O’Neill and Roxy, as partners for exclusive offers, in-store displays and events that are intended to lure shoppers from other mall-based competitors .<wwd.com/business-news>

Hedgeye Retail’s Take:  Nothing new here except that patience appears to be waning.

 

Niche Team Sports Growing - According to the SGMA, overall participation in the top seven team sports in the U.S. declined in the last year but participation in seven 'niche' team sports is on the rise. Those seven 'niche' team sports which had respectable gains in participation since 2008 are fast-pitch softball (up 13.8%), ice hockey (up 12.2%), rugby (up 8.7%), beach volleyball (up 7.3%), lacrosse (up 6.2%), indoor soccer (3.7%), and gymnastics (3.6%). <sportsonesource.com>

Hedgeye Retail’s Take:  While it’s important to keep on an eye of the demographic trends underlying athletic participation, we don’t see UA or NKE making a big push into softball or beach volleyball anytime soon.

  

Crocs Launches E-Commerce in Canada and Australia - Crocs, Inc. announced the launch of Canadian and Australian websites as well as a new consumer mobile site. In addition to providing supplementary revenue opportunities, the new online offerings are designed to enrich the Crocs online experience.  <sportsonesource.com>

Hedgeye Retail’s Take:  Expanding on the company’s revamped e-commerce platform, we should continue to see additional countries added to Crocs’ direct to customer infrastructure. 

 

The Sports Authority Checks in With a Location Based App - The Sports Authority Inc. is testing location-based promotions by offering discounts to customers who check in at stores and sports stadiums using a location-based rewards iPhone application. The rewards app comes from Loopt Inc., a social mapping company that allows users to check in wherever they are using their mobile phones and see where their friends are, similar to location-based services offered by Gowalla and Foursquare.  <internetretailer.com>

Hedgeye Retail’s Take:  As we’ve noted in recent months, location based applications present the biggest opportunity for marriage between mobile devices and retailing.  Driving traffic to stores may actually be an even bigger opportunity in the intermediate term than actual transactions taking place over an iPhone.

 

Levi's Conducting $100 mm Global Media Review - Levi's is conducting a global media review, the brand has confirmed. The brand spends an estimated $100 million annually on ads worldwide -- about $50 million of that in the U.S., according to Nielsen. Omnicom's OMD is Levi's lead U.S. media shop and is believed to be participating in the review. Another contender is said to be Publicis Groupe's Starcom, which works for the brand in some overseas markets. <brandweek.com>

Hedgeye Retail’s Take:  Despite the review (which is part of any brand’s marketing process) we continue to expect Levi’s to push the envelope with its marketing.  If you haven’t see this, check it out: http://www.youtube.com/user/walkUSA


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