At this maturing stage of a global economic top, its turning into a classic epic battle out there in the markets... and there are some medals of bravery that should be handed out to bullish and bearish trading soldiers alike... to paraphrase one of the field reports my contacts gave me from one of the Generals in the Fed Centrist Bull Market Battalion yesterday:
'I lost my Bernanke leg! get me one of them crutch SIV rescue clubs, some of them Blue Magic Bailout pills, and a Barry Bonds steroid injection... it'll get us over the hill into year end... we need to keep getting these 3% and 30% fees boys... lets go! go! go!!'
In the end, inflating their pipes with what some of the T Bay boys used to call "the sauce" didnt help Major League Baseball, did it? And all of this self serving US market and investment banker bailout nonsense is taking the US down a road that the Japanese have been travelling since 1989, and that some of Baseball's best are marching down now... its sad, but its reality.
The risk, of course, is that this is becoming obvious to anyone with an objective fundamental pulse... and you know i'm a strong believer that consensus concerns tend to flare up into the "waterboarding" (per Wikipedia - 'a torture technique that simulates drowning in a controlled environment') of the late to the game short selling community...
But, this time... with Global Industrial Production Growth slowing and Global Inflation accelerating ... Sherlock may have it right:
"There is nothing more deceptive than an obvious fact"...
For the first time, in a long time, I'm having fun in this business again. Thanks for engaging me in our intraday discussions and debates.
'I lost my Bernanke leg! get me one of them crutch SIV rescue clubs, some of them Blue Magic Bailout pills, and a Barry Bonds steroid injection... it'll get us over the hill into year end... we need to keep getting these 3% and 30% fees boys... lets go! go! go!!'
In the end, inflating their pipes with what some of the T Bay boys used to call "the sauce" didnt help Major League Baseball, did it? And all of this self serving US market and investment banker bailout nonsense is taking the US down a road that the Japanese have been travelling since 1989, and that some of Baseball's best are marching down now... its sad, but its reality.
The risk, of course, is that this is becoming obvious to anyone with an objective fundamental pulse... and you know i'm a strong believer that consensus concerns tend to flare up into the "waterboarding" (per Wikipedia - 'a torture technique that simulates drowning in a controlled environment') of the late to the game short selling community...
But, this time... with Global Industrial Production Growth slowing and Global Inflation accelerating ... Sherlock may have it right:
"There is nothing more deceptive than an obvious fact"...
For the first time, in a long time, I'm having fun in this business again. Thanks for engaging me in our intraday discussions and debates.
This is what makes this game great!
Have a great weekend,
KM
_________________________________________________________
ASIA closed out its worst performance week since the August lows... reminder that China wasnt showing decelerating Industrial Production growth, and accelerating/stifling inflation, back then... it is indeed "different this time"!
1. Hong Kong down again, losing 65bps to close the week at 27,563 = MCM Trend remains positive, but barely... and testing my patience
2. China finally had a better than bad day, gaining 1%, which was nice, given the 18% decline since the October highs = cost of Chinese capital continues to tighten, alongside local inflation, where food represents 1/3 of their reported CPI... it makes zero sense, objectively, to listen to your local Manhattan Market Strategist tell you that they are bullish on Equities "Because its Global this Time", and that they think Inflation is under control because "you have to look at Core inflation, and back out food/energy"...
3. South Korea underpeformed all of Asia, closing down 1.7% = MCM Trend here remains negative, expressed by our short EWY (Korea etf) position...
EUROPE continues to have issues, trying its best to not register its 4th consecutive down day ... Eurozone inflation (November) reported this morning of +3.1% hits the highest monthly level since May of 2001, and a sharp acceleration from October's 2.6%, when the ECB opted to keep rates unchanged - "as the facts change, i change...what do you do Sir" -Keynes
1. FTSE in London hangs in better than most equity tapes, trading up 33bps so far, and holding what i see as critical technical support of 6,346 = if the FTSE cracks that level; find a bunker (preferably in the Maldives)
2. Fance's CAC broke technically yesterday, and has no bid again this morning as a result, trading down another 29bps = MCM Trend in France moving to negative; shorting EWQ (French etf)... the recently divorced Sarkozy paddling hairy chested in his canoe vs. buffed up team of Putin/Medvedev in their cigar boat - long RSX (Russian etf), short EWQ...
3. Russia down 55bps, making it 3 days in a row here, and giving us our chance that we've been patiently waiting for = MCM Trend remains bullish on Russia; buying RSX on todays weakness...
4. Poland down -1.1%, underperforming Europe = negative divergence; and alongside weakness in base metals, this remains a tell the "Its Global This Time" narrative of the Bulls continues to be more of a question mark than ever...
OTHER MCM Geopolitical/Country callouts...
1. Hong Kong down again, losing 65bps to close the week at 27,563 = MCM Trend remains positive, but barely... and testing my patience
2. China finally had a better than bad day, gaining 1%, which was nice, given the 18% decline since the October highs = cost of Chinese capital continues to tighten, alongside local inflation, where food represents 1/3 of their reported CPI... it makes zero sense, objectively, to listen to your local Manhattan Market Strategist tell you that they are bullish on Equities "Because its Global this Time", and that they think Inflation is under control because "you have to look at Core inflation, and back out food/energy"...
3. South Korea underpeformed all of Asia, closing down 1.7% = MCM Trend here remains negative, expressed by our short EWY (Korea etf) position...
EUROPE continues to have issues, trying its best to not register its 4th consecutive down day ... Eurozone inflation (November) reported this morning of +3.1% hits the highest monthly level since May of 2001, and a sharp acceleration from October's 2.6%, when the ECB opted to keep rates unchanged - "as the facts change, i change...what do you do Sir" -Keynes
1. FTSE in London hangs in better than most equity tapes, trading up 33bps so far, and holding what i see as critical technical support of 6,346 = if the FTSE cracks that level; find a bunker (preferably in the Maldives)
2. Fance's CAC broke technically yesterday, and has no bid again this morning as a result, trading down another 29bps = MCM Trend in France moving to negative; shorting EWQ (French etf)... the recently divorced Sarkozy paddling hairy chested in his canoe vs. buffed up team of Putin/Medvedev in their cigar boat - long RSX (Russian etf), short EWQ...
3. Russia down 55bps, making it 3 days in a row here, and giving us our chance that we've been patiently waiting for = MCM Trend remains bullish on Russia; buying RSX on todays weakness...
4. Poland down -1.1%, underperforming Europe = negative divergence; and alongside weakness in base metals, this remains a tell the "Its Global This Time" narrative of the Bulls continues to be more of a question mark than ever...
OTHER MCM Geopolitical/Country callouts...
1. Pakistan +4bps = positive divergence; continuing to outperformance vs. most of Asia/Europe this week, as Musharraf concerns have fallen out of the mainstream media...
2. Australian stocks hammered overnight, closing down 1.6%, after Aussi Treasury Secretary Wayne Swan called said "inflation is a major threat to sustaining Australian prosperity" = negative divergence vs. Asia, with a glaringly negative MCM Fundamental = bad combo (everyone says Paulson is a good guy, but "good guys" can mean a lot of things, including unobjective... Europeans and now the Aussis providing leadership to the global economic system by simply stating the facts as they lay)
3. Mexico down another 79bps, despite the SP500 closing up = negative divergence: MCM Trend remains negative on Mexican fundamentals for 2008...
4. Brazil down a big 2.7% yesterday; day 4 of selling, taking the correction in the Bovespa to -4.4% since the december 6th all time high = new and concerning...
3. Mexico down another 79bps, despite the SP500 closing up = negative divergence: MCM Trend remains negative on Mexican fundamentals for 2008...
4. Brazil down a big 2.7% yesterday; day 4 of selling, taking the correction in the Bovespa to -4.4% since the december 6th all time high = new and concerning...
COMMODITIES gave back 74% of Wednesdays love, but still outperforming US and Global Equities significantly for the week to date...
1. CRB Commodity index down 1.7% to 349 = CRB still +2.04% for the week to date vs. the SP500 down 1.06%
2. Oil corrected and explained most of the losses in the index, but has popped its head back up this morning to $93 = inflationary
3. Gold roughed up yesterday, closing down 1.7%, in line with the index loss, to $801 = MCM Trend here remains bullish; i received more emails/calls yesterday from my network on my long Gold (via GLD) position than any other... the one day answer was fairly straightforward: A) the US$ made a 2 month high = negative for commodity prices, obviously and B) if gold cracks technical support, you should be more worried about a US Stock Market Crash, than this low beta/low risk investment...
4. Corn up again! $4.38/bushel; wheat outperformed everything in the CRB pushing higher to $9.62/bushel as talk if India's harvest being lower than expected dominated the buzz in the trading pits - Canadian and Aussi wheat supplies are a problem, but thats not new = short Einstein Noah Bagels (BAGL)
5. Base Metals weakness is now pervasive and consistent; copper down for the 5th consecutive session, lead down another 4%, zinc down 3.5% = keep beating this economic tell into your research staffs; its not an aberation and continues to provide us a proxy for Global Industrial Production (GIP) slowing in 2008...
RATES/CURRENCIES... again, US interest rates are RISING, alongside the US$ reflating = negative for US Equities
1. 2yr rates up AGAIN, to 3.22% (+38 basis point move up since Dec 5th); 10 yr rates testing the Fed Funds rate all of a sudden, moving up to 4.17%...
2. US$ having another solid week, trading up big yesterday and testing the $77 level = i wont dare say this is a Trend yet, but its certainly been a profitable MCM Trade...
3. Euro 1.45, Yen 112.50, CAN$ 1.02 = all new 6 week lows, in the face of our 'US$ Bottoming is a Process, not a Point' -November07' call...
Private Equity/M&A/Credit ... Citigroup -12% now since the Pandit Bandit arrived to save the Fed Centrists...
1. Hearing of a major "Quant Fund" having major issues = rumors... but believable ... remember how some of the "Quants" called the August lows "unprecedented Standard Deviation Moves"... well, i am getting quite curious as to how the math works when these "standard deviation" moves start happening every 90 days?... just curious...
2. Citigroup gets #1 Bloomberg Headline again this morning with "Citigroup Rescues SIV'S, takes on $58B in Debt"... most financial analysts would probably agree that 'off balance sheet' has erred on the side of having a negative connotation since Enron... is this headline positive or negative?
3. Article in the WSJ suggesting Goldman made over $4B in taking the other side of the "Subprime Bet"... Goldman and Lehman are crushing Bear and Citi like bugs, and you have to be impressed by these two houses... problem however, is my MCM Theme of Rebalancing to the Left; look for Socialism to regain her footing, Globally, in 2008... -November 07' ... if you havent heard Hillary's stump speech on what Wall Street is doing to the hard working blue collar American, you will... and Goldman printing these huge EPS numbers are likely going to morph into political ammo, more than anything else - something to keep up on your watch list; GS stock is breaking down, technically...
4. Lufthansa taking a 19% stake in JetBlue (JBLU) = trading inflated euros for cheap US$ hard assets; great trade for the Germans here; i might buy JBLU
2. Citigroup gets #1 Bloomberg Headline again this morning with "Citigroup Rescues SIV'S, takes on $58B in Debt"... most financial analysts would probably agree that 'off balance sheet' has erred on the side of having a negative connotation since Enron... is this headline positive or negative?
3. Article in the WSJ suggesting Goldman made over $4B in taking the other side of the "Subprime Bet"... Goldman and Lehman are crushing Bear and Citi like bugs, and you have to be impressed by these two houses... problem however, is my MCM Theme of Rebalancing to the Left; look for Socialism to regain her footing, Globally, in 2008... -November 07' ... if you havent heard Hillary's stump speech on what Wall Street is doing to the hard working blue collar American, you will... and Goldman printing these huge EPS numbers are likely going to morph into political ammo, more than anything else - something to keep up on your watch list; GS stock is breaking down, technically...
4. Lufthansa taking a 19% stake in JetBlue (JBLU) = trading inflated euros for cheap US$ hard assets; great trade for the Germans here; i might buy JBLU
____________________________________________________________________________________________________________________________________________ MCM Trades/Fades
1. bought our 2nd traunch of Brunswick (BC) on sale at $18.46... boats, bowling, and biceps, for the baby boomer with free time in 2008-2010 (if you are a legitimate Private Equity shope with any sort of duration, call me, i'll walk you through it)... i know, i know - the likes of some of the "smartest", highest octane fee earning hedge funds, used to absolutely love this name as a "value play" and "sum of the parts play" and these geniuses are managing even more of people's money out there today, despite making these claims with this stock in the $35 to $48 price range where my partner and i were short it... but where are they now that its at my MCM Value price?... hello Eminence Capital, are you out there any more? we saw you file on this name, a lot higher... do you hear me now?... 7.4% of the float is held short; great global brands (Mercury Outboards, LifeFitness, etc..) trading at 5x trailing EBITDA; with a 3.2% dividend yield... and all i hear into year end are crickets... i like crickets... and so will someone in private equity land with an investment process, if they do the work on this one... if you're all beared up on this name, get in line - go to "Seeking Alpha's" website, and check out the sophistication of the short seller, who wrote "I put a heavy short in"... i've been around the hedge fund business for a little while now, and i have never heard of someone "putting a heavy short in" - this guy must be serious!
2. bought our 3rd tranche of Dreamworks (DWA), on sale at $24.05 yesterday; going to a full position... less than 100M shares outstanding, $2.4B in market cap, and just inside of $2B in Enterprise Value (because the Shrek Franchise is a perpetual cash machine, and they have a sizeable heap of net greenbacks building on their balance sheet; cash machines are cool), for the best long dated call option on becoming the next Walt Disney Company of content? i'll take that... Yes, they have the Oger, the Bee, and the furry Madagascar dudes, but its all about the Panda coming next ( Kung Fu Panda, with Jack Black), which could be THE movie for the Boomers to take their grand kids to in 2008, and a stealth backdoor play on the Chinese Olympics (the Panda is one of the mascots) next yr... "Prepare For Awesomeness" is the Panda's slogan; to be released Summer 2008!
3. shorted more InterParfums (IPAR), because it was up... short it every day that its up (thesis remains)...
4. watching Chico's (CHS); this CEO insider purchase has some conviction behind it ... the "conviction" in what is becoming a consensus hedge fund short however, is theoretically a lot higher... creating a potential 2008 opportunity on the long side for MCM; stay tuned
5. thinking about buying some Jet Blue, JBLU.... but waiting for a down day (see Private Equity/M&A note in section above)
6. shorting Taubman Centers (TCO), into the CEO guiding up this morning ... Taubman himself is turning into the unwaveringly promotional Bob Toll of the US Homebuilder top (remember ole Bob's bullishness at the peak - he and TOL's stock, to use one of the good guys i used to work with, "Got Wrecked"); Taubman is gonig to be the prophet of the US Shopping Mall top... As Shakespeare said "Expectations, are the root of all heartache"... be careful setting expectations out there Mr Taubman.
____________________________________________________________________________________________________________________________________
MCM Trends/Themes
Fed Centric/Fed Cut bull case is the Tree; Access to Credit/Capital the Forest... -November07'
Rebalancing to the Left; look for Socialism to regain her footing, Globally, in 2008... -November 07'
Bonds, Banks, and Bailouts; Blue Magic is bad, in the end... -November 07'
'US$ Bottoming is a Process, not a Point' -November07'
'YouTubing America' - Transparency/Accountability will transform Washington to Wall Street -Dec08
'Paulson & the Fed Centrists want you to call 1-888-995-HOPE' -Dec08'
'The Double Edged Fear Sword: Fear is now the dominating market factor, not Credit - Fear for Fed Centric Bulls & Consensus Bears alike'-Dec08'
'Global Basic Food Consumption Growth will takeover from the consensus "Its Global this time" Industrial Production Growth story in 2008'-Dec08'
__________________________________________________________________
Closed Out Positions (realized gains in green, losses in red)
Long
EWH (bought 20.70, sold 21.35) = +3.1%
BBY (bought 46.60, sold 49.40) = +6.0%
MLHR (bought 26.70, sold 27.65) = +3.9%
HOG (bought 45.10, sold 49.96) = +10.8%
EAT (bought 21.54, sold 22.44) = +4.2%
EBAY (bought 31.70, sold $34.91) = +10.1%
TOL (bought 22.30, sold 21.51) = -3.5%
Short
RIMM (short 113.90, cover 111.60) = +1.0%
DAVE (short 14.24 , cover 13.60) = +4.5%
DLTR (short 28.51, cover 26.47) = +7.2%
HTZ (short 19.29, cover 18.58 ) = +3.7%
TGT (short 57.93 , cover 59.04 ) = - 1.9%
SPG (short 90.60, cover 94.10) = -3.9%
LIZ (short 25.58, cover 24.19) = +5.4%
BKC (short 26.74, cover 25.80) = +3.5%
EWP (short 68.03, cover 67.47) = -0.82%
HAS (short 27.51, cover 26.35) = +4.2%
DLTR (short 29.52, cover 28.18 ) = +4.5%
CPB (short 35.62, cover 36.76) = -3.2%
IPAR (short 20.48, cover 16.47) = +19.6%
TLF (short 4.04, cover 3.27) = +19.1%
AN (short 16.99, cover 16.70) = +1.7%
WYN (short 28.19, cover 27.39) = +2.8%
MCD (short 63.35, cover 61.22) = +3.4%
DLTR (short 29.46, cover 27.66) = +6.1%
MA (short 219.44, cover 212.72) = +3.1%
MCM Disclosure/Disclaimer: This email and/or blog is for a select group of my friends, and represents a beta test of an idea that i am incubating. My email and blog writings are prepared without regard to the unique circumstances or goals of those who read them. They do not provide investment advice that should be specifically acted upon without considering the all encompassing range of investment information and/or considerations available in the public domain and/or without considering all appropriate professional advice. This should not be considered a solicitation to buy or sell any security or to participate in any investment strategy. The information and editorials in these writings are not necessarily complete or perfectly accurate and are not guaranteed by Keith McCullough or MCM. This information is protected from disclosure and constitute opinions only as of the date of their issuance. Opinions are subject to change without notice, and Keith McCullough or MCM do not accept any liability whatsoever for any losses estimated to be attributable to any use of this content. Keith McCullough and/or McCullough Capital Management, Inc. likely owns and/or is currently trading in all of the securities cited in these emails and/or blogs.
2. bought our 3rd tranche of Dreamworks (DWA), on sale at $24.05 yesterday; going to a full position... less than 100M shares outstanding, $2.4B in market cap, and just inside of $2B in Enterprise Value (because the Shrek Franchise is a perpetual cash machine, and they have a sizeable heap of net greenbacks building on their balance sheet; cash machines are cool), for the best long dated call option on becoming the next Walt Disney Company of content? i'll take that... Yes, they have the Oger, the Bee, and the furry Madagascar dudes, but its all about the Panda coming next ( Kung Fu Panda, with Jack Black), which could be THE movie for the Boomers to take their grand kids to in 2008, and a stealth backdoor play on the Chinese Olympics (the Panda is one of the mascots) next yr... "Prepare For Awesomeness" is the Panda's slogan; to be released Summer 2008!
3. shorted more InterParfums (IPAR), because it was up... short it every day that its up (thesis remains)...
4. watching Chico's (CHS); this CEO insider purchase has some conviction behind it ... the "conviction" in what is becoming a consensus hedge fund short however, is theoretically a lot higher... creating a potential 2008 opportunity on the long side for MCM; stay tuned
5. thinking about buying some Jet Blue, JBLU.... but waiting for a down day (see Private Equity/M&A note in section above)
6. shorting Taubman Centers (TCO), into the CEO guiding up this morning ... Taubman himself is turning into the unwaveringly promotional Bob Toll of the US Homebuilder top (remember ole Bob's bullishness at the peak - he and TOL's stock, to use one of the good guys i used to work with, "Got Wrecked"); Taubman is gonig to be the prophet of the US Shopping Mall top... As Shakespeare said "Expectations, are the root of all heartache"... be careful setting expectations out there Mr Taubman.
____________________________________________________________________________________________________________________________________
MCM Trends/Themes
Fed Centric/Fed Cut bull case is the Tree; Access to Credit/Capital the Forest... -November07'
Rebalancing to the Left; look for Socialism to regain her footing, Globally, in 2008... -November 07'
Bonds, Banks, and Bailouts; Blue Magic is bad, in the end... -November 07'
'US$ Bottoming is a Process, not a Point' -November07'
'YouTubing America' - Transparency/Accountability will transform Washington to Wall Street -Dec08
'Paulson & the Fed Centrists want you to call 1-888-995-HOPE' -Dec08'
'The Double Edged Fear Sword: Fear is now the dominating market factor, not Credit - Fear for Fed Centric Bulls & Consensus Bears alike'-Dec08'
'Global Basic Food Consumption Growth will takeover from the consensus "Its Global this time" Industrial Production Growth story in 2008'-Dec08'
__________________________________________________________________
Closed Out Positions (realized gains in green, losses in red)
Long
EWH (bought 20.70, sold 21.35) = +3.1%
BBY (bought 46.60, sold 49.40) = +6.0%
MLHR (bought 26.70, sold 27.65) = +3.9%
HOG (bought 45.10, sold 49.96) = +10.8%
EAT (bought 21.54, sold 22.44) = +4.2%
EBAY (bought 31.70, sold $34.91) = +10.1%
TOL (bought 22.30, sold 21.51) = -3.5%
Short
RIMM (short 113.90, cover 111.60) = +1.0%
DAVE (short 14.24 , cover 13.60) = +4.5%
DLTR (short 28.51, cover 26.47) = +7.2%
HTZ (short 19.29, cover 18.58 ) = +3.7%
TGT (short 57.93 , cover 59.04 ) = - 1.9%
SPG (short 90.60, cover 94.10) = -3.9%
LIZ (short 25.58, cover 24.19) = +5.4%
BKC (short 26.74, cover 25.80) = +3.5%
EWP (short 68.03, cover 67.47) = -0.82%
HAS (short 27.51, cover 26.35) = +4.2%
DLTR (short 29.52, cover 28.18 ) = +4.5%
CPB (short 35.62, cover 36.76) = -3.2%
IPAR (short 20.48, cover 16.47) = +19.6%
TLF (short 4.04, cover 3.27) = +19.1%
AN (short 16.99, cover 16.70) = +1.7%
WYN (short 28.19, cover 27.39) = +2.8%
MCD (short 63.35, cover 61.22) = +3.4%
DLTR (short 29.46, cover 27.66) = +6.1%
MA (short 219.44, cover 212.72) = +3.1%
MCM Disclosure/Disclaimer: This email and/or blog is for a select group of my friends, and represents a beta test of an idea that i am incubating. My email and blog writings are prepared without regard to the unique circumstances or goals of those who read them. They do not provide investment advice that should be specifically acted upon without considering the all encompassing range of investment information and/or considerations available in the public domain and/or without considering all appropriate professional advice. This should not be considered a solicitation to buy or sell any security or to participate in any investment strategy. The information and editorials in these writings are not necessarily complete or perfectly accurate and are not guaranteed by Keith McCullough or MCM. This information is protected from disclosure and constitute opinions only as of the date of their issuance. Opinions are subject to change without notice, and Keith McCullough or MCM do not accept any liability whatsoever for any losses estimated to be attributable to any use of this content. Keith McCullough and/or McCullough Capital Management, Inc. likely owns and/or is currently trading in all of the securities cited in these emails and/or blogs.
No comments:
Post a Comment