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Tonight’s Agenda

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Tonight’s Agenda

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  1. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION DISCUSSED DURING HAWKTRADE MEETINGS.  Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost. Investing in any financial instruments does not guarantee that an investor will make money, avoid losing capital, or indicate that the investment is risk-free. There are no absolute guarantees in investing. HAWKTRADE and its members do not bear any responsibility for losses or gains made by members trading on their personal accounts based on analysis from HAWKTRADE meetings.

  2. Tonight’sAgenda • Updates • Market Recap • Bernanke Speaks • Housing Situation • Q4 GDP revision • High end vs. low end shopper

  3. Hawktrade Inv. Comp. Update

  4. Inv. Comp. Suggestions • Important to have downside protection in this market, several ways to do that. • Buy 2X or 3X leveraged ETF’s :http://www.2xetfs.com/ • Use longer dated put options on stocks/ overall market ETF’s to protect portfolio against correction. (May, June, July expiration)

  5. Inv. Comp. Suggestions- Options To avoid rapid principle loss, only buy options that expire at least 2-4 months away.

  6. Up 0.86% for the week Bernanke boosts markets as Dow Closes at 3rd highest level ever

  7. Bernanke speaks at semi-annual monetary policy report to congress

  8. Summary • Offered strong assurances the FED wouldn’t back away from QE3 until unemployment is near 5-6%. • Warned it would be “quite costly to the economy to pull back too soon” • Said QE has risks of serious inflation but benefits out way risks at this point. • Predicted market interest rates to return to 2007 level of 5% around 2017

  9. GDP • GDP growth is reported on quarterly basis • Quarterly changes are volatile • Chart below is year-over-year changes Q4 02’-12’

  10. 4th Quarter GDP • Measures the economy’s growth over a 3 month period • Real GDP (1st Estimate): -0.1% • Expected Real GDP: 0.5% • Real GDP (Revised): 0.1%

  11. GDP revision Highlights In terms of real GDP, the general picture of the economy for the fourth quarter remains largely the same as what was presented last month Main Positives Main Negatives The deceleration in real GDP in the fourth quarter primarily reflected downturns in: private inventory investment Fed. government spending(-18%) exports state and local government spending • The increase in real GDP in the fourth quarter primarily reflected positive contributions from: • personal consumption expenditures (PCE) • nonresidential fixed investment • residential fixed investment.

  12. Can Markets Push ahead? FRI 01 March 2013 3:30 PM

  13. What 3 magic numbers could derail this rally? • 3.80 national average gas prices • 10-yr Treasury yield at 2.15% • A VIX above 20.

  14. National gas Average: $3.72 • Historically, $3.80 a gallon of gas is were the forward multiple on the S&P tops out. • Investors start paying less for future earnings in anticipation of higher gas prices hitting company profits

  15. 10 Yr. Treasury Yield: 1.85% • Treasury yields have been hovering around 2% the past month due to QE concerns. • 2.15% is average div. yield for stocks in the S&P 500, so a 10-yr risk free return over tat level could increase bond participation.

  16. CBOE Volatility Index: (VIX): $15.36 • Known as “fear gauge of market” • measures the price of puts (market protection) to the price of calls on the S&P 500, a sustained move above 20 has historically been a sign of selling to come. • ETF’s to play VIX: (VXX and TVIX) Up ~14% last week.

  17. Are we heading to all time highs and beyond or is a 5-10% correction coming? DEBATE:

  18. Earnings With Kyle Robinson and Brad Stuba

  19. Tue 26 Feb 13 | 02:14 PM ET Consumer Headwinds for Home Depot?

  20. New Home Sales This is the highest level since 2008

  21. New Home Sales Highlights • The economy is looking good-at least for housing. Low mortgage rates have supported sales but a caution, there are large seasonal factors that can exaggerate housing numbers during winter months. • Overall, home sales are trending up slowly. Low mortgage rates are a positive as well as a stabilized jobs market. The remaining constraints are tight credit conditions and modest employment growth.

  22. Why are New Home Sales so important?

  23. Why New Home Sales are Important? • This has a powerful multiplier effect through the economy, and therefore across the markets and investments. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. • Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase.

  24. Home Depot • Board of Directors declared a 34% increase in quarterly dividend to $0.39 cents per share • Board of Directors also authorized a $17 billion share repurchase program replacing previous authorization

  25. Home Depot

  26. Home Depot

  27. Platform of Brad & Kyle • A seamless continuation of the current leadership • More outside events, like Airliner and TippieBuild • End of meeting Q&A • More education on the history of markets

  28. High End Retailer Pulse:

  29. Michael Kors (KORS) • Luxury handbags, apparel, accessories and footwear retailer • Revenue soared 70% during holiday season • Forecast to report 86% jump in EPS this quarter • Shares hit an all-time high $64.84 on Feb. 19 • Shares have tripled from its IPO

  30. Saks Fifth Avenue (SKS) • Handbag, jewelry and apparel retailer • Reported higher fourth-quarter sales and beat analyst expectations

  31. Coach (COH) • Coach sales plummeted more than 15% in fiscal second-quarter earnings • Grew more slowly than the handbag market for the first time since it went public during holiday season • Mimicking other luxury brands and putting focus on apparel and accessories in response to holiday season

  32. Luxury Retailers Summary: • Biggest concerns are higher income tax on the ultra wealthy • Other concerns include anemic demand, high unemployment, and growing consumer and public debt, which all retailers are dealing with. • Demand is still holding its own and most retailers have had positive revenues

  33. Bargain Retailer Pulse:

  34. The Bargain Consumer

  35. Dollar Tree (DLTR) • Dollar Tree CEO- “Total sales increased 15.4% to $2.25 billion. Anecdotally, this was the first $2 billion quarter in the history of the company, and it was, as always, achieved largely $1 at a time” • “Earnings for the fourth quarter were $1.01 per share. This represents a 26.3% increase over last year's $0.80 per share” • “They were achieved in a tough environment. They speak to the value and continued relevance of our merchandise”

  36. Kohl’s (KSS) and Groupon (GRPN) • Groupon CEO was fired on Friday after a long run of poor management, stock down over 80% since IPO. • Kohl’s CFO- “Total sales increased 5.4% to $6.3 billion for the quarter and 2.5% to $19.3 billion for the year”

  37. Groupon: Lesson to be learned

  38. Groupon CEO Canned but Honest

  39. The Week Ahead: • Jobs numbers come out Friday: last month was 7.9%, another gift card will be given to winner. • Tweet @Hawktrade with guesses • Short term ideas for next week?

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