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FOODSTAMPS: ANOTHER RECORD HIGH

With all of the talk about record highs (Gold) and record lows (Japanese interest rates), it’s important to focus on another record-high number that Americans on Main Street really understand. 

 

Whether the NBER says so or not, the recession persists for many Americans.  A record 41.8 million participants received food stamps in July as part of the Supplemental Nutrition Assistance Program, according to government data.  Furthermore, the White House estimates that an average of 43.3 million people will get food stamps each month in the twelve months that began October 1st, 2010.  The rising costs of food and energy (dare I say it, “inflation”), and the lack of job creation, continues to hurt the consumer – especially those at the low end of the spectrum. 

 

Howard Penney

Managing Director

 

FOODSTAMPS: ANOTHER RECORD HIGH - foodstamps


JAPAN: A REAL GAMING OPPORTUNITY

A primer on the proposed casino legislation in Japan

 

 

Japan is probably as close to legalizing casinos as it ever has.  While difficult to handicap the probability, - we will take flier and say 50% - what is clear is that if it happens it would be a big opportunity for the gaming operators awarded licenses.  In our universe, LVS and WYNN should be considered the front-runners.  The Japanese like to play slots so IGT, WMS, and BYI would certainly benefit from full-scale legalized gambling. 

 

A casino advisory group, comprised of legislators, will try to submit a Casino Act to the Diet when session resumes in February. If the bill has enough support, something could be passed as quickly as 6 months.  The chatter is that at least 100 legislators are in favor. At least 241 votes in the House of Representatives and 122 votes in the House of Councillors are needed for the bill to pass.

 

Japan Casino Act

 

What’s Been Proposed:

 

Drafted by representative Koga, chairman of The General Assembly of International Sightseeing Industry Development Diet Member Association, and Mihara, the advisor of the Assembly, the preliminary Casino Act consists of 68 articles.  Under the Act, there will be two licensed casino sites and based on the performance of the first two sites, 8 more sites could be considered.  The national government will handle the selection procedure for the casino sites while the local governments will choose the operators, who would need to be licensed by the Casino Administration Organization—a division under the Cabinet.

 

Currently, the bill does not address the repeal of Articles 185 and 186 of the Penal Code which prohibits most forms of gambling. The only legal forms of gambling are horse, speedboat, bicycle racing, and lotteries.

 

Who’s Interested:

 

In the past six months, prefectures from Tokyo, Okinawa, Nagasaki, Osaka, Wakayama, Kanagawa, Chiba, Miyagi, Akita and Hokkaido have expressed interest in establishing a casino.  LVS, who has expressed the most interest in Japan among the overseas operators, believes the two IRs will reside in Tokyo and Osaka, with a bunch of smaller casinos in places such as Okinawa and other suburban areas around Japan. LVS thinks if a bill is successful, a tender will be offered in 2012 and a casino could open by 2015. WYNN could also be in the mix since its largest shareholder and President of Japanese pachinko machine maker Universal Entertainment and also of Azure Gaming, Kazuo Okada, had stated that he along with WYNN would submit a joint bid to operate casinos in Japan once it is possible.  Another Japanese company that would bid is Maruhan Corporation, the nation's largest operator of pachinko parlors and a partner in the Ponte 16 casino.

 

What’s the Opportunity:

 

In a White Paper released by the Japan Productivity Center, as of FY-end March 2010, there were 17.2 million pachinko players in Japan. Annual gross wagers hit $245.4 billion, marking the 6th consecutive year of declines after Regulation 5 was implemented which effectively decreased the volatility of the pachislot machines to make them less "slot" like. Estimated gaming revenues reached close to $30 billion in FY 2010.  According to economist Takashi Kadokura, the Tokyo Metropolitan Government may place a 20% gaming tax on the casino's gross sales, a 5% consumption tax on gross sales, and a 30% corporate tax on net profit.

 

A $30 billion slot revenue market and $200 win per day per slot would imply a market of over 400k slot machines.  Of course, pachislot machines are not casino slot machines so it isn't a perfect comparison.  However, there is clearly a demand for gaming machines.  A roll out of casinos would be controlled and the initial legislation only contemplates a maximum of 10 casinos so 30k-40k slot machines would be appropriate to model.  However, longer-term, the potential is huge.

 

What’s Standing in the Way:

 

Not surprisingly, political division and public distrust are the biggest hurdles. One of the reasons the previous casino bill failed was that it proposed an unpopular article stating a state agency to be the collector of casino taxes. Addressing this concern, there is now talk of casino public revenue being directed to a national pension-fund system. There would also be protests from The Japanese Communist Party, the New Komeito party, and pachinko operators who would get squeezed by the proposed casinos.  

 

History of casino legislation in Japan this past decade:


What happened to the previous casino bill? Below is a timeline of a bill that suggested an IR-type casino, modeled after Singapore’s casinos.

  • 2003: The idea of a casino in Japan started to circulate.
  • 2006: LDP (Liberal Democratic Party) formulated a casino proposal.
  • April 15, 2007: Almost half of the House of Representatives—including some opposition lawmakers— supported the idea of legalizing casinos.
  • July 29, 2007: Passage of bill became shaky as the LDP lost control of the House of Councillors in the election, creating political uncertainty. Vote on legislation was pushed back back from July 2008 to the end of 2008.
  • August 7, 2007: Reports confirmed government considering casino legislation could be approved within 12 months.
  • Early 2008: Discussion between the LDP and Diet began speculating that there may be casinos in Tokyo and Okinawa by 2012.
  • June 2008: Sources said cross-party consensus on a casino law could be as close as two weeks away.
  • July 18, 2008: A cross party study group was set up to examine casino legalization right before end of Diet session.
  • Feb 24, 2009: The casino plan was put on indefinite hold because of political disorganization and economic troubles, despite Prime Minister Taro Aso approving such a plan. In addition, gambling continued to have a negative image in Japan and the new laws was not transparent and trustworthy enough to secure public support. Nevada-based operators also suspended their lobbying activities in Japan.  

What’s Next:


It is hoped that final draft legislation will be ready for submission to the National Diet when sessions resume in February 2011. A coalition of the ruling Democratic Party of Japan (DPJ) and the former ruling party, the Liberal Democratic Party (LDP) is needed to pass this bill. Gambling lobbyists believe if the bill is passed, it would take five years to train enough croupiers and other staff to be fully prepared for a casino opening.

 

Legislative Procedure:

  1. Bill submission to Diet
  2. Preliminary deliberation in plenary session
  3. Deliberation in a Committee
  4. Final deliberation in plenary session
  5. Passage in House of Representatives
  6. Passage in the House of Councillors
  7. Submission to Emperor for promulgation

JAPAN: A REAL GAMING OPPORTUNITY - japan1

 

Appendix: Pachinko Market (from Sega-Sammy 2009 Annual Report)

 

JAPAN: A REAL GAMING OPPORTUNITY - japan2

 

JAPAN: A REAL GAMING OPPORTUNITY - japan3


R3: AMZN, Prada, LVMH, and Chinese IPO’s

R3: REQUIRED RETAIL READING

October 6, 2010

 

Amazon continues on its path to build a scalable and profitable apparel business with the addition of BuyVIP.  Private sale e-commerce players apparently remain in demand, despite the belief that access to high quality fashion goods remains limited by tight supply. 

 

 

RESEARCH ANECDOTES

 

- The student-led movement known as Teens Turning Green staged a protest at Abercombie and Fitch in San Francisco. The group, which aims to educate and advocate socially responsible choices for other kids, schools and communities targeted ANF in effort to stop the “toxic” spraying of the company’s fragrance within its stores. No word on the effectiveness of the effort, which also calls for CEO Jeffries to cease the fragrance spraying within 30 days.

 

- On-jersey sponsorships are likely to be heading to the U.S soon, with the NBA expected to be the first major American sports league to sell valuable advertising real estate on team uniforms. As it stands now, the top 20 teams in the English Premier Soccer League are generating $155 million annually from their sponsored jerseys. The NBA development league and WNBA currently allow for jersey sponsors, which is why some believe the NBA may be quick to embrace the incremental revenue opportunity. Clearly Adi/Reebok would be in favor of yet another reason for fans to purchase licensed apparel.

 

- Google is providing a new interface for viewing TV programs, movies and web sites on the same living room screen. E-retailers Amazon and Netflix are among the early partners that will provide access to movies and TV shows through Google TV.

 

- With inventories up +13% in the 3Q on +12% sales growth and the first increase after 4-years of consecutive declines, management at Wolverine World Wide admitted they are now in a position of chasing demand. A 55% increase in backlog reflecting a shift towards earlier ordering, particularly compared to last year when orders came in significantly later, as well as a an increase in advertising spend ahead of the holiday season suggests we’ll be seeing a lot of WWW’s brands this holiday.

 

 

OUR TAKE ON OVERNIGHT NEWS 

 

Amazon Acquires BuyVIP, Enters High-End Retail For First Time - Amazon, the parent of Zappos, recently acquired BuyVIP, a members-only retail club serving Europe, according to the Wall Street Journal. The company reportedly paid $96.5 mm for the business. BuyVIP has more than 7.5 mm members in Spain, Italy, Germany, Austria, Poland, the Netherlands, and Portugal, sells high-end clothing at discounts of up to 70%, according to its website. In 2009, BuyVIP had sales of approximately $96 mm, according to published reports. This year, the company is projecting revenue of more than $179 mm. The acquisition represents Amazon's first step into the high-end retail space. <sportsonesource.com>

Hedgeye Retail’s Take:  Another step towards building a more meaningful (and profitable) presence in the apparel space.  The purchase also leaves Gilt as one of the few private sale operators that has yet to change ownership hands.

 

Prada Said to Study Hong Kong IPO in First Half of Next Year - Prada SpA, the Italian owner of the eponymous fashion label, is studying an initial public offering in Hong Kong for the first half of 2011, according to three people familiar with the situation. <bloomberg.com>

Hedgeye Retail’s Take:  Nothing new here except that an IPO would finally put an end to the multi-year speculation surrounding an offering.

 

Chinese Kidswear Manufacturer IPO, Get It Why Its Hot - Chinese’s leading domestic kidswear manufacturers Boshiwa International has debuted in Hong Kong and saw its share surge 40.96% on its first day of trading. <fashionnetasia.com>

Hedgeye Retail’s Take:  Growth shouldn’t be a problem for this garment maker, with 360 million children under age 16 in China and growing by 20 million each year. 

 

Club Monaco Dipping Into E-Commerce - Club Monaco is getting its feet wet in the world of e-commerce, with plans to dive in head first later this year. In what will be the first time the brand has ever been available online, the retailer has partnered with Shopbop for its e-commerce launch, and a capsule collection for fall and holiday will make its debut on shopbop.com Oct. 13. With 63 stores in North America and more than 100 points of distribution worldwide, Club Monaco’s decision to collaborate with Shopbop was a strategic one, as the two share the same demographic and psychographic. The 30-piece collection ranges in price from $24 for wool thigh-high socks to $1,100 for a shearling coat. In a concerted effort to beef up its selection of “sharp-priced items that a girl can potentially wear to the office,” offerings also include tailored trousers that start at $119 and a camel-colored, men’s wear-inspired blazer that retails for $239. With a continued focus on the digital sphere, Club Monaco is co-hosting a viral tweet-up with Shopbop to promote the collection at its 57th Street store in Manhattan the evening before the launch. <wwd.com/retail-news>

Hedgeye Retail’s Take:  Given that Club Monaco remains almost an afterthought for RL, we’re not surprised to see e-commerce launched with a partner rather than built entirely from the ground up.  Nonetheless, we add the brand to the list of companies finally transacting online.

 

Neiman Marcus Unveils Christmas Book, Offers Lower Priced Items - Neiman Marcus on Tuesday unveiled the 84th edition of a holiday season ritual, the retailer’s Christmas Book, offering requisite fantasy gifts such as a $1.5mm swimming pool floor by glass sculptor Dale Chihuly, as well as a $15 candlewick trimmer. For the second consecutive year, almost half the items are priced at less than $250, said Gerald Barnes, president of Neiman Marcus Direct. In an acknowledgment of tough economic times, there are 63 gifts for $100 or less, including Tweezerman red crystal tweezers, Ugg men’s slippers and a pair of Waterford crystal Champagne flutes. <wwd.com/retail-news>

Hedgeye Retail’s Take: The shift towards lower price points are a reality, but one has to question the value proposition of some of these options…red crystal tweezers? C’mon man! Price AND value are key to the consumer in today’s market – retailers offering one without the other are likely to see customers look elsewhere.        

 

U.K. Clothing Retailers Hold Prices With Cotton at 15-Year High - Charles Tyrwhitt, the U.K. clothing maker known for dressing bankers and executives, will absorb the highest cotton prices in 15 years to keep the cost of its least- expensive shirts at 29.95 pounds ($47).  <bloomberg.com>

Hedgeye Retail’s Take: Similar to what we expect out of most retailers, Tyrwhitt is not absorbing it all. Instead, the company will increase prices in higher end suits and shoes where spend is arguably more discretionary – or at least less noticeable. Most domestic retailers have yet to show their cards regarding pricing as we head into the holiday season and as costs are starting to weigh on the P&L, however, we expect to hear a similar tone in the coming months.

 

Louis Vuitton Blames Price Increase on Leather - Due to increases in raw material prices, Louis Vuitton has raised prices for monogram handbags and other leather goods considered classics by up to 9% in the euro zone. <fashionnetasia.com>

Hedgeye Retail’s Take: While cotton isn’t the only commodity up significantly on the year, it should be considerably easier to pass along raw material increases to the consumer given the price points of luxury handbags and their targeted demographic.

 

Predictions See a Weak Holiday Season Due to Highly Promotional Activity - A sleepy September rounded out an uninspiring back-to-school season, as shoppers held off on purchases until the last minute — and laid the groundwork for a highly promotional holiday. Analysts and other experts preparing for Thursday’s reports on September same-store sales from major retailers believe the heavy-handed promotional cadence established this year during b-t-s will carry into holiday. This would appear to make it virtually certain that the robust gains of the first half, achieved against anemic prior-year results, won’t carry into the second six months of 2010 in regards to sales, margins — or profits. The NRF projected a 2.3% gain in total sales, while the ICSC forecast a 3% - 3.5% increase in comps and a 2.5% rise in general merchandise, apparel, furniture and other categories sales.  <wwd.com/business-news>

Hedgeye Retail’s Take: Concerns over year end consumer demand persist as does the expectation for enhanced promotional activity. Coupled with cost inflation hitting the P&L, margins are sure to be the most variable line in models in Q4.

 


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.

EARLY LOOK: Guido's War

This note was originally published October 06, 2010 at 08:01AM ET.

 

"Not everything that is faced can be changed. But nothing can be changed until it is faced."

- James Baldwin

 

EARLY LOOK: Guido's War - James Baldwin

 

America, we have a serious problem. It’s time to face it, or we will crash again.

 

What’s the problem? A picture (see below) may be more powerful in communicating this simple point to your local professional politician than my interconnected global macro prose. These conflicted and compromised leaders of the Fiat Republic either have no idea what debauching our currency means or they are being willfully blind to it. Either way, they are putting their short term job security over your long-term wealth.

 

Pull up a chart of your Burning Buck. The US Dollar got hammered again yesterday and, sadistically, CNBC cheered. The US Dollar is down for 16 out of the last 19 weeks, losing -12% of its value, hitting fresh 8-month lows. Considering the systemic leverage issues in parts of Western Europe and Japan, this US Dollar crisis tells you everything you need to know about America’s problems relative to the rest of the Fiat Fools.

 

EARLY LOOK: Guido's War - ELwed

 

What does the rest of the world think about this?

  1. FIAT INTERVENTION - Governments are intervening in their respective currency markets at an unprecedented pace. Yesterday alone saw the following countries “intervene”: Japan, South Korea, Brazil, Argentina, India, Thailand, Malaysia, Indonesia, Philippines, and Taiwan.
  2. FIAT POLICY - Ahead of the IMF’s annual meeting with the World Bank in Washington, IMF Chief, Dominique Strauss-Kahn, told the FT, “there is clearly the idea that currencies can be used as a policy weapon” and that this would have “a negative and very damaging longer-run impact.”
  3. GUIDO’s WAR - Last week, Brazil’s Finance Minister, Guido Mantega, labeled this an “international currency war.”

Timmy Geithner, having never traded a currency market or protected the value of his citizenry’s currency in his life, was quick to tell Groupthinkers in DC that he “doesn’t know what” Guido’s War “means”…

 

 

EARLY LOOK: Guido's War - Geither Summers

 

 

Great Timmy… just great. Now that Larry is gone and your ideological overlord Robert Rubin won’t come within a square mile of a YouTube camera on the topic of sovereign debts issued in fiat currencies, America is hostage to your analytical incompetence on global macro matters.

 

America, if the head of the US Treasury doesn’t know … and the US Federal Reserve doesn’t know… but the rest of the free world knows… who in God’s good name is going to show President Obama a chart of the Burning Buck? I can assure you it won’t be Warren Buffett or Bill Gross. They’re both getting paid by short term performance on dollar down days too.

 

What do the other Fed Heads over at the Academy of Academic Dogma think?

  1. New York Fed Head Bill Dudley says “QE me” with as much free moneys from the heavens as Heli-Ben can create!
  2. Chicago Fed Head Charles Evans mercy crushed the US Dollar yesterday when he said QE “may not be enough”?!?

I couldn’t make this up if I tried folks, but markets don’t lie – politicians do. If you didn’t know New York City and Chicago Fed Heads get paid by Burning the Buck, now you know.

 

Admittedly, Dudley’s NYC cronies are getting paid with less immediate-term TRADE intensity than the boys in the pits of Chicago as of late. Check out the refreshed immediate-term inverse correlations between the US Dollar and the following:

 

Chicago Commodities

  1. Gold = -0.97
  2. Silver = -0.97
  3. Copper = -0.97

 

New York Stocks

  1. SP500 = -0.83

*note: Timmy, these are extremely high correlations.

 

 

Again, since the Secretary of the US Treasury will be the first to remind the world that he’s “not an economist”, we don’t expect him to get the math, or have a risk management radar that might signal Guido’s War to him if it was staring him in the face.

 

What I can assure you of my fellow Americans (and Canadians), is this – no country has ever debauched its currency, imposed inflation on its people, and played possum to what real-time markets and prices are doing. And ever, is a long time.

 

 

EARLY LOOK: Guido's War - Bernanke Hedgeye Image

 

As short term stock market bulls beg Bernanke for QE, and the conflicted and compromised Fed Heads from Chicago to New York pander to this “reflation” battle cry that might resonate with 5% of this country’s population, this week’s ABC/Washington Post Consumer Confidence reading tells you that the other 95% of Red, White, and Blue Americans aren’t buying into this sucker’s rally. Been there, done that.

 

After the best September in 71 years for US stocks, weekly Consumer Confidence dropped like the pit that’s in my stomach right now to MINUS -47 from minus -45 last week.

 

NEWSFLASH: The rest of the world and 95% of Americans understand what Guido’s War is – Washington perpetuates it. As for the 5% of you who choose to stand in silence when you should be protesting as your currency burns at the stake, as Abraham Lincoln said, you are cowards.

 

My immediate term support and resistance levels for the SP500 are now 1144 and 1164, respectively. From here on up in the SP500 (north of 1164), and from here on down for the Burning Buck, the probabilities of a US stock market crash will continue to heighten.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer


Guido's War

"Not everything that is faced can be changed. But nothing can be changed until it is faced."

- James Baldwin

 

America, we have a serious problem. It’s time to face it, or we will crash again.

 

What’s the problem? A picture (see below) may be more powerful in communicating this simple point to your local professional politician than my interconnected global macro prose. These conflicted and compromised leaders of the Fiat Republic either have no idea what debauching our currency means or they are being willfully blind to it. Either way, they are putting their short term job security over your long-term wealth.

 

Pull up a chart of your Burning Buck. The US Dollar got hammered again yesterday and, sadistically, CNBC cheered. The US Dollar is down for 16 out of the last 19 weeks, losing -12% of its value, hitting fresh 8-month lows. Considering the systemic leverage issues in parts of Western Europe and Japan, this US Dollar crisis tells you everything you need to know about America’s problems relative to the rest of the Fiat Fools.

 

What does the rest of the world think about this?

  1. FIAT INTERVENTION - Governments are intervening in their respective currency markets at an unprecedented pace. Yesterday alone saw the following countries “intervene”: Japan, South Korea, Brazil, Argentina, India, Thailand, Malaysia, Indonesia, Philippines, and Taiwan.
  2. FIAT POLICY - Ahead of the IMF’s annual meeting with the World Bank in Washington, IMF Chief, Dominique Strauss-Kahn, told the FT, “there is clearly the idea that currencies can be used as a policy weapon” and that this would have “a negative and very damaging longer-run impact.”
  3. GUIDO’s WAR - Last week, Brazil’s Finance Minister, Guido Mantega, labeled this an “international currency war.”

Timmy Geithner, having never traded a currency market or protected the value of his citizenry’s currency in his life, was quick to tell Groupthinkers in DC that he “doesn’t know what” Guido’s War “means”…

 

Great Timmy… just great. Now that Larry is gone and your ideological overlord Robert Rubin won’t come within a square mile of a YouTube camera on the topic of sovereign debts issued in fiat currencies, America is hostage to your analytical incompetence on global macro matters.

 

America, if the head of the US Treasury doesn’t know … and the US Federal Reserve doesn’t know… but the rest of the free world knows… who in God’s good name is going to show President Obama a chart of the Burning Buck? I can assure you it won’t be Warren Buffett or Bill Gross. They’re both getting paid by short term performance on dollar down days too.

 

What do the other Fed Heads over at the Academy of Academic Dogma think?

  1. New York Fed Head Bill Dudley says “QE me” with as much free moneys from the heavens as Heli-Ben can create!
  2. Chicago Fed Head Charles Evans mercy crushed the US Dollar yesterday when he said QE “may not be enough”?!?

I couldn’t make this up if I tried folks, but markets don’t lie – politicians do. If you didn’t know New York City and Chicago Fed Heads get paid by Burning the Buck, now you know.

 

Admittedly, Dudley’s NYC cronies are getting paid with less immediate-term TRADE intensity than the boys in the pits of Chicago as of late. Check out the refreshed immediate-term inverse correlations between the US Dollar and the following:

 

Chicago Commodities

  1. Gold = -0.97
  2. Silver = -0.97
  3. Copper = -0.97

New York Stocks

  1. SP500 = -0.83

*note: Timmy, these are extremely high correlations.

 

Again, since the Secretary of the US Treasury will be the first to remind the world that he’s “not an economist”, we don’t expect him to get the math, or have a risk management radar that might signal Guido’s War to him if it was staring him in the face.

 

What I can assure you of my fellow Americans (and Canadians), is this – no country has ever debauched its currency, imposed inflation on its people, and played possum to what real-time markets and prices are doing. And ever, is a long time.

 

As short term stock market bulls beg Bernanke for QE, and the conflicted and compromised Fed Heads from Chicago to New York pander to this “reflation” battle cry that might resonate with 5% of this country’s population, this week’s ABC/Washington Post Consumer Confidence reading tells you that the other 95% of Red, White, and Blue Americans aren’t buying into this sucker’s rally. Been there, done that.

 

After the best September in 71 years for US stocks, weekly Consumer Confidence dropped like the pit that’s in my stomach right now to MINUS -47 from minus -45 last week.

 

NEWSFLASH: The rest of the world and 95% of Americans understand what Guido’s War is – Washington perpetuates it. As for the 5% of you who choose to stand in silence when you should be protesting as your currency burns at the stake, as Abraham Lincoln said, you are cowards.

 

My immediate term support and resistance levels for the SP500 are now 1144 and 1164, respectively. From here on up in the SP500 (north of 1164), and from here on down for the Burning Buck, the probabilities of a US stock market crash will continue to heighten.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Guido's War - ELwed


THE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - October 6, 2010

As we look at today’s set up for the S&P 500, the range is 20 points or -1.44% downside to 1144 and 0.28% upside to 1164. Equity futures are trading above fair value in a continuation of yesterday's strong performance. Japan's decision to lower rates yesterday has sparked increased expectations that the Fed will implement further QE measures with other countries likely to follow suit in what could be a coordinated action to stimulate global growth.

Today's macro highlight is September's ADP's Employment report ahead of Friday's nonfarm payroll reading.

  • Costco (COST) reported 4Q EPS 97c vs est. 95c
  • Diamond Foods (DMND) forecast FY11 EPS $2.38-$2.48, vs est. $2.45
  • Equinix (EQIX) sees preliminary 3Q rev. $328m-$330m vs est. $336.6 (also watch SVVS, RAX)
  • M&T Bank (MTB); Allied Irish will start selling 22.4% stake
  • Yum! Brands (YUM) raised FY 2010 adj. EPS forecast to $2.48 from $2.43, vs est. $2.49

PERFORMANCE

  • One day: Dow +1.80%, S&P +2.09%, Nasdaq +2.36%, Russell 2000 +2.97%
  • Month/Quarter-to-date: Dow +1.45%, S&P +1.71%, Nasdaq +1.32%, Russell +1.95%
  • Year-to-date: Dow +4.95%, S&P +4.09%, Nasdaq +5.76%, Russell +10.22%

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1092 (+3429)
  • VOLUME: NYSE - 1239.17 (+31.31%)  
  • SECTOR PERFORMANCE: Every sector was higher - The bulk of the yesterdays upside driven by the heightened momentum behind the risk trade following the unexpectedly aggressive easing announcement overnight by the BoJ. The BoJ cut target for the overnight rate to a range of 0.0%-0.1% from its previous target of 0.1% and announced a ¥5T facility to purchase JGBs, commercial paper, corporate bonds, exchange-traded funds and real-estate investment trusts. The accompanying bout of dollar weakness helped drive the outperformance on the part of commodities and commodity equities, while pockets of the market with outsized leverage to global recovery expectations also fared well.
  •  MARKET LEADING/LAGGING STOCKS YESTERDAY: Harley Davidson +9.18%, Juniper +5.98% and Pioneer Natural +5.75%/Iron Mtn -8.58, Colgate Palmolive -1.96% and American Express -1.95%
  • VIX: 21.76 -7.52% - YTD PERFORMANCE: (0.37%)
  • SPX PUT/CALL RATIO: 1.16 from 1.48, -21.88%

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 17.51 -0.741 (-4.061%)
  • 3-MONTH T-BILL YIELD: 0.12%, -0.01%
  • YIELD CURVE: unchanged at 2.09

COMMODITY/GROWTH EXPECTATION:

  • CRB: 288.42 +1.56%
  • Oil: 82.82 +1.66%
  • COPPER: 376.20 +0.83%
  • GOLD: 1,340.25 +1.94%%

CURRENCIES:

  • EURO: 1.3830 +1.02%
  • DOLLAR: 77.49 -0.89%%

OVERSEAS MARKETS:

 

Europe

  • European markets: FTSE 100: +0.92%; DAX +1.00%; CAC 40 +1.22%
  • Major indices remain strong with Mining, Construction, Financial Service sectors pacing other sectors.
  • Peripheral European markets up strongly with Greece's ASE Composite (+2.03%), Ireland's ISEQ (+1.25%) and Spain's IBEX (+0.66%)
  • Eurozone Q2 Final GDP +1.9% y/y vs prelim 1.9%
  • Germany Aug Industrial Orders +3.4% m/m vs cons +0.8%
  • Moody's places long-term ratings of Allied Irish Bank, Bank of Ireland plus ICS, EBS and IL&P on review for possible downgrade
  • Greece's 2009 budget deficit increases to 15.1% of GDP from 13.8% previously stated 

Asia

  • Asian markets: Nikkei +1.81%; Hang Seng +1.07%; Shanghai Composite (closed for public holiday)
  • Markets finished higher following yesterday performance on Wall Street. 
  • The Nikkei extended yesterday's gains building on the BOJ's unexpected rate cut and hopes of further quantitative easing from the Fed. Japanese Financials (+3.4%) led gains despite news that Japan's financial regulator is considering a capital surcharge for the country's largest banks.
  • Record high gold prices, driven by a faltering dollar, have driven gold mining shares higher. 
Howard Penney
Managing Director

THE DAILY OUTLOOK - levels and trends

 

THE DAILY OUTLOOK - S P

 

THE DAILY OUTLOOK - VIX

 

THE DAILY OUTLOOK - DOLLAR

 

THE DAILY OUTLOOK - OIL

 

THE DAILY OUTLOOK - GOLD

 

THE DAILY OUTLOOK - COPPER

 



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.

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