Macroview 2/21/2011

1. Macroview 2/21/2011 Kingdom of Saudi Arabia – 5yr CDS Spread – where there is smoke there is fire. Literally? Further contagion in the Middle East will suredly rattle financial markets. Where is the safe haven? BRENT 07/10 to CURRENT – Where most US based investors are focusing on WTI as the OIL benchmark BRENT continues to make new highs – IF the WTI BRENT spread normalizes in the middle of the recent range were looking at $92 WTI

2. EEM vs XRT – YOY – knowing markets look forward 6m, it most likely makes sense to begin looking at RETAIL for hedging/Short exposure – the rise in input prices impacts EVERYONE EEM vs IWM – YOY – same as above – recent HIGHER low could be a subtle clue but I expect IWM to underperform on the upside and possibly outperform on the downside.

3. 2/10 SPREAD – 07/10 to CURRENT – they say a steep curve is good for banks and denotes a sound, growing economy. With 2/10 currently trading AT all time highs what would a further steepening curve imply? USD, UST, and further inflation woes? EUR – 06 to Current – downtrend remains intact but real direction can’t be determined – break of downtrend would most likely coincide with a further steepening of 2/10 and renewed mkt dislocation.

4. 5 Horsemen – equal wgt AAPL AMZN CRM FFIV LCAPA – up 554% since 09/08 – 19% ABOVE 200dma and likely due for a bout of profit taking – APPL making 30 day lows could be a warning of beta rollover LIVE vs AG – YOY and scrapping along 25yr lows – With feed prices going thru the roof herds have been culled – with the recent pop in Meat Processors we might have neared an inflection point – Higher ratio puts the cattle farmer back in the saddle.

5. WMT – 1981 to Current – RELATIVE – nearing a LONG TERM uptrend on a relative basis – earnings out next week – I consider WMT a MAKER on the pricing front STAPLES – EQUAL WGT – PG WMT MCD JNJ – 1981 to CURRENT – this basket has underperformed the SP500 by over 16% YOY