Themes & Trends

Is Restaurant Growth Stalling?

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January 4, 2011
Is Restaurant Growth Stalling?

So 2011 is off to a bullish start…  The year began with positive manufacturing and construction data, giving the bulls an opportunity to celebrate. But in Monday’s “risk-on” session, one industry was curiously quit.  Restaurant stocks were relatively soft, despite what should have been positive news for broad consumer spending. Whenever the broad market...
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Back in the saddle for precious metals?

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December 29, 2010
Back in the saddle for precious metals?

On Dec 23rd, Mercenary Live Feed members received the following pre-open comment: Elsewhere in the markets, gold and silver are at a critical juncture. Silver’s range has tightened significantly as volume has diminished, suggesting a breakout in either direction will come next. Then on Dec 28th, prior to market open, we added this: Back...
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View From the Turret: The Week in Between

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December 27, 2010
View From the Turret: The Week in Between

The trading week between Christmas and New-Years-Day is notoriously quiet. At this point, most individual investors have finalized their tax planning and asset allocation decisions.  Institutional managers should have been proactive with window dressing because of the anticipated light liquidity. Typically, there is little additional macro-economic news during this period because even policy makers...
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Global Macro Notes: China’s Biggest Export — Deflation

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December 17, 2010
Global Macro Notes: China’s Biggest Export — Deflation

Quick, off the top of your head: What is China’s biggest export? Gym socks? iPods? Wal-Mart knick-knacks? Neo-colonial African infrastructure (e.g. bridges and ports in Congo)? We’ll hypothesize here that China’s biggest export is deflation. Consider — during the boom-boom Bretton Woods II years, everyone talked about “the China price.” As in, “if you...
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Global Macro Notes: Beware the Rip Currents

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December 8, 2010
Global Macro Notes: Beware the Rip Currents

On U.S. beaches, rip currents (also known as rip tides) are responsible for 80% of lifeguard rescues. They are hard to spot (especially if you aren’t looking) and potentially fatal. In an ocean or large lake, a rip current is “a strong channel of water flowing seaward from near the shore.” In markets, a...
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Weekender: Gold is a Credit Default Swap

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December 5, 2010
Weekender: Gold is a Credit Default Swap

Gold is the ultimate Credit Default Swap. It’s meltdown insurance taken out against Federal Reserve Inc. and the global financial system at large. And the best part is, with this CDS you never have to worry about your counterparty. That simple observation is a worthy retort to all those who yammer on about how...
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Global Macro Notes: The Worldwide Fiat Debasement Plan

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December 2, 2010
Global Macro Notes: The Worldwide Fiat Debasement Plan

“We’re talking about huge sums of money going to bail out large foreign banks… Has the Federal Reserve of the United States become the central bank of the world?” - Senator Bernie Sanders, (I) Vermont This is an Ali-versus-Foreman type market environment. The operative mode is “float like a butterfly, sting like a bee.”...
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Global Macro Notes: A Massive Topping Process At Work

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November 23, 2010
Global Macro Notes: A Massive Topping Process At Work

“You look at every bear market and they’ve always basically occurred because of an up-tick in inflation and an up-tick in interest rates.” - Paul Tudor Jones We continue to operate on the thesis that, apart from one or two notable exceptions, there is a massive topping process unfolding. This thesis is being steadily...
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Global Macro Notes: The QE2 Inflation Trade is Collapsing Like a House of Cards

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November 16, 2010
Global Macro Notes: The QE2 Inflation Trade is Collapsing Like a House of Cards

On Monday, an old friend of mine — a mechanical systems trader in Europe — emailed to request my thoughts on gold (and the general state of markets). It should be noted we still have long gold and silver positions on — with partial profits taken and stops above breakeven — as a modest...
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Weekender: Shanghai Noon

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November 14, 2010
Weekender: Shanghai Noon

U.S. stocks fell, giving the Standard & Poor’s 500 Index its biggest weekly drop in three months, as concern about Europe’s debt crisis intensified, speculation China will boost interest rates grew and Cisco Systems Inc.’s projection missed analysts’ estimates. - Bloomberg The big news in the week that was? The huge whackage in commodities....
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Global Macro Notes: What Next For Long Bonds?

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November 11, 2010
Global Macro Notes: What Next For Long Bonds?

If only from a chart perspective, long-dated treasuries are at an interesting juncture here. As you can see from the weekly chart, TLT has retraced approximately 50% of its upward thrust for 2010, finding support at the 50 week EMA (exponential moving average). In further note, TLT saw a big reversal on Wednesday, closing...
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Yes Virginia, There is Food Inflation

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November 10, 2010
Yes Virginia, There is Food Inflation

In case you were skeptical (and apparently some still are) — a quick roundup on the food inflation front.
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Weekender: Swan Spotting

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November 7, 2010
Weekender: Swan Spotting

My favorite piece of research this week: A power-point presentation called China — The Mother of All Grey Swans by Vitaliy Katsenelson. Over the course of 50+ well-researched slides, Katsenelson makes a powerful argument as to why China (and secondarily Japan) is an artificially supported, government orchestrated, large-scale disaster just waiting to happen. Does...
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Global Macro Notes: Winners and Losers in the Fed’s Inflation Game

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November 4, 2010
Global Macro Notes: Winners and Losers in the Fed’s Inflation Game

It is now “the day after,” and commodities have gone insane. As of this writing, mid-morning on November 4th, crude oil is up 2%. Gold and copper are both up more than 3%. The Federal Reserve has expressed a desire to create positive inflation. What they are creating, instead, is a sort of non-optional...
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Weekender: Trick or Trade

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October 31, 2010
Weekender: Trick or Trade

Trick or treat, smell my feet, give me something good to eat… Trick or trade, long or fade, bulls or bears will soon get played… Were I a fresh-faced trick-or-treater roaming the swanky neighborhoods of Greenwich, Connecticut — i.e. the hedgie capital of the world — I would do so in a Ben Bernanke...
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