China Not So Yummy

Posted on December 1, 2012 by macromon

Wow!

Take a look at YUM! Brands’ swan dive today on huge volume after they announced Q4 same store sales in China will be negative.

For the fourth quarter, stronger than expected operating performance from Yum! Restaurants International and our U.S. division is offsetting softer sales in China, where we now expect same-store sales to be negative as we overlap 21% same-store sales growth from last year. Full-year same-store sales growth in China is expected to be 6%. Next year will be another strong year for our China division, given this year’s record development of at least 800 new units and significant innovation in the pipeline, underpinned by world class operations. We are extremely confident Yum! China remains the best growth story in the restaurant industry.

We posted back in August,

Anyone who thinks the slowdown in China will not affect growth and corporate earnings in the U.S. and elsewhere is, well, should we say,  smoking crack.

Interestingly,  YUM! management cites the difficulty in beating comps after such a rapid period of growth and remains confident that China is their best growth market.   Let’s hope that is the case as many companies are betting on the rise of the Chinese consumer.

Could be why Apple was weak today even after announcing the iPhone5 will start sales in China this month.   Idiotic since Apple has barely made a dent in the Chinese market so it doesn’t have the YUM! problem of beating huge comps.  We suspect the big pop comes when an agreement with China Mobile announced, expected to come early next year.

Then, again, maybe Apple just needs a little more time to consolidate its big bounce off $505 over the past two weeks.

Dec1_Yum(click here if chart is not observable)

Posted in Apple, China, Earnings | Tagged , , | 1 Comment

Fast Future: The Rise of the Millennial Generation – Ted Talks

Posted on November 30, 2012 by macromon

Interesting talk on the up and coming generation.

In this inspiring talk David Burstein talks to us about the Millennials, the generation currently coming of age and as David shows us — they’re going to change everything.

About David Burstein
David is a graduate of NYU’s Gallatin School of Individualized Study, and founder of the nation’s largest youth political engagement group – Generation18.

– TedxTalks

(click here if chart and video are not observable)

Posted in Demographics | Tagged , , | 2 Comments

Cliff Diving – Day 15 “…almost nowhere”

Posted on November 30, 2012 by macromon

Image_Cliff DiveSame old same old.

Politician speaks, market sells off, shorts cover, market closes unchanged.  This is getting old.

Boehner came out throwing flames today saying the negotiations are “almost nowhere” and calling the President’s opening offer not a “serious proposal”.  This caused some brief selling before the shorts had cover their fat tail.

Utilities were up over 1 percent as many are beginning to believe a final deal will only increase the dividend tax rate to 20 percent.  Gold remains weak and the VIX moved up over 5 percent today.

The S&P500 is caught between its 200-day moving average on the downside and the 50-day on the upside.  That probably won’t change until movement towards a deal is more visible or time begins to run out with no compromise on the horizon.   End of next week is our estimate when markets start to get concerned.

Stay tuned.

Nov30_S&P500

What would a real fiscal cliff panic look like?

Stocks down hard;  Russell 2000 down harder;  consumer discretionary down hard;  gold up;  dollar down;  VIX spiking;  and defense stocks in the tank.

Bonds?   Tough to extract a clear signal with the Fed’s financial repression, but, initially,  the cowboys would most likely be in buying on recession fears and increased worries about going over the cliff.

Nov30_FCM(click here if chart and table are not observable)

Posted in Fiscal Cliff Monitor | Tagged , , | 1 Comment

U.S. Equity Sector ETF Performance

Posted on November 30, 2012 by macromon

ETF_WeekETF_Q4ETF_YTD(click here if charts are not observable)

Posted in Sector ETF Peformance | Tagged , , , , , | 3 Comments

Stratfor: Latin America’s Economic Divide

Posted on November 30, 2012 by macromon

Stratfor Latin America Analyst Karen Hooper examines the regional effects of two Latin American trade blocs, the left-leaning Mercosur and the right-leaning Pacific Alliance.

For more analysis, visit: http://www.Stratfor.com

(click here if video is not observable)

Posted in Geopolitical | Tagged , | Leave a comment

Weekly Eurozone Watch

Posted on November 30, 2012 by macromon

Key Data Points
German 10-year Bund 5 bps lower;
France 10-year 6 bps tighter to the Bund;
Ireland 7 bps wider;
Italy 20 bps tighter;
Spain 25 bps tighter;
Portugal 23 bps tighter;
Greece 30bps tighter;
Large Eurozone banks up  0.5-3 percent;
Euro$ up 0.33 percent.

Comments
– France, Italy, and Greece 10-year yields at lowest weekly close of the year;
– Rumors circulate about downgrade of ESM and EFSF bailout funds;
– Bundestag approves Greek deal without the Chancellor’s Majority and only with the support of the opposition  – 473 MPs in favor and 100 MPs against, 100 MPs abstained;
– October youth unemployment rate in Eurozone rises to 23.9 percent, up from 21.9 percent a year ago;

Nov30_Euozone_Greece

Not all countries have the same sense of urgency as some months ago.

– José Manuel Barroso, President of the EC

WEZ_Spread_WeekWEZ_Bank_WeekWEZ_Spread_YTDWEZ_Bank_YTDWEZ_YieldsWEZ_EuroFX(click here if charts are not observable)

Posted in Weekly Eurozone Watch | Tagged , , , , , , , | 3 Comments

Nonlinear Thinking: Wireless Doctors

Posted on November 29, 2012 by macromon

The wireless revolution in the delivery of health care services is coming,  folks.  We’ve been all over this story.  Click here, here, and here.

Scanadu is a new company with a mission to give consumers affordable medical care alternatives and to take more control of their own health.  The company is about to unveil three new products:  1) the Scout is a device that you hold up to touch the electrodes to your temple to take vital signs and sends the data to a  smartphone;  2) ScanaFlo acts as a urine analysis reader;  and 3)  ScanaFlu is a low-cost disposable cartridge that can test for cold and flu symptoms though testing a person’s saliva.

Here’s Forbes on Scanadu,

Using imaging and sound analysis, molecular diagnostics, data analytics and algorithms, Scanadu is aiming to gather health data in a new way. The company is competing for the Qualcomm Tricorder X Prize and the Nokia Sensing X Challenge. De Brouwer, who has an academic background in linguistics and data analysis, wants to use new mobile technology as well as new ways of collecting and analyzing data to give consumers more control. De Brouwer’s goal is to create a noninvasive device that is fast, cheap and easy to connect with a smart phone. He says it could be the biggest change to home healthcare since the thermometer. “It’s a superb strategy but in retrospect it’s very, very hard to do this,” he says.

The Scout, which will cost less than $150, will prevent the need for many people to have to go to the doctor’s office. People will be able to easily gather data about themselves instead of having to rely on a doctor, which should also cut costs, de Brouwer says. In addition, the app will save this data so that people can see how their health is changing or improving over time and look at the readings to determine whether something is “normal” or out of the ordinary.

(click here if picture and video are not observable)

Incredible stuff.  Beam me up, Scotty!

Posted in Innovation, Nonlinear Thinking | Tagged , , | 2 Comments

Staring Down the Cliff

Posted on November 29, 2012 by macromon

Nice chart from the Economist laying out the impact of the automatic tax hikes and spending cuts to begin on January 1st if Congress and Administration cannot reach a compromise.

(click here if chart is not observable)

Posted in Fiscal Cliff Monitor, Fiscal Policy | Tagged , , | 1 Comment

Cliff Diving – Day 14

Posted on November 29, 2012 by macromon

This market wants to rally.

It certainly feels that way after yesterday’s trading — big downdraft at the open only to reverse and close up big and at the highs — coupled with today’s resilience after speaker Boehner’s negative comments.  We sense a market with real money sidelined and dominated by traders with a short time horizon.  Real short.

Stocks are almost back to unchanged since the election.  The Russell was up over 1 percent today and flat post election.  Defense stocks are now positive signalling “don’t fear the sequester.”

We also sense the massive monetary stimulus is starting to gain some real traction.   Furthermore, the European sovereign debt and banking crisis is moving to the back burner with Italian 10-year bond yields and spreads hitting 52-week lows today.   China’s ugly stock market concerns us,  however.

As we have experienced over the past few days betting on going over the fiscal cliff is not without risk.  With so many running money, so far behind their benchmarks, December is about to get very interesting.   The market feels it is spring loading for a huge pop on any sign of movement toward a deal.

The Wall Street Journal is just out with a piece stating the Republicans have rejected the President’s opening offer, which includes $1.6 trillion in tax revenues and a permanent lifting of the debt ceiling.  The debt ceiling is the Republicans nuclear option and doubt they will give it away for nothing.

We expect continued volatility as negotiations progress and by the end of next week the market will need to  see some movement on both sides or stocks may start to kick into panic mode.   Enough of this posturing in front of cameras that is causing the nauseating market whipsaws.

Place your bets.

Despite claims that the president supports a balanced approach, the Democrats have yet to get serious about real spending cuts…Secondly, no substantive progress has been made in the talks between the White House and the House in the last two weeks.

– Speaker John Boehner

What would a real fiscal cliff panic look like?

Stocks down hard;  Russell 2000 down harder;  consumer discretionary down hard;  gold up;  dollar down;  VIX spiking;  and defense stocks in the tank.

Bonds?   Tough to extract a clear signal with the Fed’s financial repression, but, initially,  the cowboys would most likely be in buying on recession fears and increased worries about going over the cliff.

(click here if picture and table are not observable)

Posted in Fiscal Cliff Monitor | Tagged , , , | Leave a comment

Trends in U.S. Energy Trade

Posted on November 29, 2012 by macromon

These charts from the EIA look very promising and illustrate why many are so lathered up over U.S. medium and long-term economic prospects.   Here’s to hoping the politicos don’t screw it up.

Click on chart to enlarge and for better resolution.

(click here if charts are not observable)

Posted in Energy, Geopolitical | Tagged , , | 1 Comment