prev

THE M3: LAND LAW; S'PORE AIRPORT DATA; RUSSIA VISA; ANGELA LEONG

The Macau Metro Monitor, December 15th, 2010


GOVERNMENT SAYS NO MORE DIRECT LAND GRANTS TO CASINOS Macau Daily Times, Intelligence Macau

According to the Land, Public Works and Transport Bureau (DSSOPT) director Jaime Carion, there will be no more land plots granted for casino projects without a public tender once the new Land Law comes into effect.  The second public consultation for the law revision begins today and will continue until the end of January.

 

The new Land Law will focus on "economic diversification". Carion said,  “We are looking for integrated family-friendly resorts, where the whole family can come and have fun together.  It is believed that the plots of land already granted to SJM, WYNN, and MGM, were awarded without a public tender and will not be affected by this decision.  But IM believes unless a Cotai project has a clear non-gaming focus, it would be difficult to approve that project anytime soon.

 

José Pereira Coutinho, a lawmaker, believes the new Land Law will be enforced in 2012, at the earliest. 


NOVEMBER PASSENGER DATA Changhi Airport Group

The number of passengers arriving into Singapore's Changhi airport rose 7.7% to 3,623,080 in November. It is a sequential slowdown from October's 7.9% YoY growth in number of passengers.

 

MSAR, RUSSIA MULL VISA EXEMPTION Macau Daily Times

On December 7, the Macau government held a discussion with the Russian Federation Delegation led by director of the Consular Department of the Ministry of Foreign Affairs, Andrey Karlov, in regard to the text of the mutual visa exemption agreement.  During a 2011 Policy Address session, Secretary for Security, Cheong Kuoc Vá, announced for the first time that the SAR was planning to relax the visa rules to Russia, as well as to loosen rules for Russian passport holders to enter Macau.  The agreement is expected to be reached in 2011.


NO.4 GENS 4BN Intelligence Macau

Stanley Ho gave all of his direct shares in SJM to his fourth wife, Angela Leong On-kei.  The shares are valued around HK$4BN, which would raise her stake in SJM to 8%.


THE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - December 15, 2010

As we look at today’s set up for the S&P 500, the range is 16 points or -0.93% downside to 1230 and 0.36% upside to 1246.  Equity futures are trading below fair value in the wake of yesterday's late session pull back which saw early gains on some strong data erased after Treasury yields rose again following comments from the Fed it would maintain its $600B asset purchase program.  News that Moody's put Spain's Aa1 rating on review for possible downgrade has knocked European and Asian markets. Japan's Tankan Large Manufacturer sentiment index reported its first decline since March 2009. Today's macro highlights include Nov CPI, Dec NY Empire Manufacturing Survey and Industrial production numbers

  • Boston Beer (SAM) raised 2010 EPS forecast to $3.30-$3.60 from $2.85-$3.15, vs adj. EPS est. $3.20
  • Broadcom (BRCM) sees 4Q net rev. ~$1.9b vs previous guidance $1.8b-$1.9b, est. $1.85b
  • Cubist Pharmaceuticals (CBST) cut 2010 rev. forecast to $634m-$640m from $645m-$650m, vs est. $625.3m
  • First Solar (FSLR) sees 2011 EPS $8.75-$9.50 vs est. $8.51
  • WD-40 Co. (WDFC) said it may buy back as much as $25m shares in the next year

PERFORMANCE

  • One day: Dow +0.42%, S&P +0.09%, Nasdaq +0.11%, Russell 2000 (0.06%)
  • Last Week:  Dow +0.25%, S&P +01.28%, Nasdaq +1.78%, Russell +2.70%
  • Month-to-date: Dow +4.28%, S&P +5.17%, Nasdaq +5.18%, Russell +6.14%;
  • Quarter-to-date: Dow +6.38%, S&P +8.80%, Nasdaq +10.94%, Russell +14.13%;
  • Year-to-date: Dow +10.05%, S&P +11.34%, Nasdaq +15.80%, Russell +23.39%
  • Sector Performance: Telecom +1.6%, Healthcare +1.1%, Industrials +0.5%, Consumer Spls +0.4%, Utilities +0.3%, Tech +0.1%, Materials +0.04%, Consumer Disc (0.01%), Energy (0.3%), Financials (0.9%)                

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -368 (-131)  
  • VOLUME: NYSE 953.01 (-1.05%)
  • VIX:  17.61 +0.34% YTD PERFORMANCE: -18.77%
  • SPX PUT/CALL RATIO: 1.10 from 1.26 -12.40%  

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 16.70 -0.304 (-1.790%)
  • 3-MONTH T-BILL YIELD: 0.15% +0.02%  
  • YIELD CURVE: 2.83 from 2.68

COMMODITY/GROWTH EXPECTATION:

  • CRB: 319.51 -0.11%
  • Oil: 88.28 -0.37%
  • COPPER: 420.90 +0.05%
  • GOLD: 1,403.45 +0.64%

CURRENCIES:

  • EURO: 1.3412 +0.22%
  • DOLLAR: 79.367 +0.10%

OVERSEAS MARKETS:

 

EUROPEAN MARKETS:

  • European markets trade lower led by the periphery as European debt contagion fears returned after Moody's put Spain's Aa1 ratings on review for possible downgrade.
  • Portugal is due to hold a T-bill auction today.
  • Economic data also weighed following a cautious assessment of the US economy by the Fed yesterday, as Japan's manufacturers sentiment worsened, though less than expected, for the first time in two years and UK unemployment data disappointed.
  • The Swedish Central Bank raised its benchmark interest rate by 25bps to 1.25%.
  • Declining sectors lead advancers 14-4 with banks the worst performers down (2.2%).
  • UK Nov claimant count (1.2K) vs con (3K)
  • UK Oct ILO unemployment +7.9% vs con +7.7%
  • EuroZone Q3 employment due at 5ET
  • The pound and the euro are trading at $1.5695 and $1.3305 respectively
  • Pound was pressured as the number of people out of work rose for the first time in six months  

ASIAN MARKTES:

  • Asian markets were mixed today, though losing markets fell more than rising markets gained.
  • Australia gave up early gains to finish flat.
  • Exporters rose to help Japan finish flat despite a downbeat tankan.
  • China fell on profit-taking and lower commodity stocks.
  • Cathay Pacific dropped 7% to lead Hong Kong down on IATA’s saying airline profits may be hurt next year by slower economic growth and higher fuel costs.
  • Japan Q4 large manufacturer tankan +5 vs consensus +4 and prior +8. October tertiary industrial activity +0.5% m/m.

Howard Penney
Managing Director

THE DAILY OUTLOOK - levels and trends

 

THE DAILY OUTLOOK - S P

 

THE DAILY OUTLOOK - VIX

 

THE DAILY OUTLOOK - DOLLAR

 

THE DAILY OUTLOOK - OIL

 

THE DAILY OUTLOOK - GOLD

 

THE DAILY OUTLOOK - COPPER



Keith McCullough on CNBC Tonight

Good afternoon friends:
 
As a valued Hedgeye client or prospective client, I thought you might like to be aware of upcoming events and media appearances. Tonight, our CEO Keith McCullough, will join Larry Kudlow on CNBC's Kudlow and Company to discuss QE2 and the global economy. Tune in tonight, December 14th, at 7:00pm EST.
 
As always, we are very grateful for your support and we hope you'll enjoy tonight's segment.

Click here for a video of Keith's introductory CNBC segment from yesterday morning where he briefly discussed our global macro outlook for 1H11.
  
Yours in risk management,
 
The Hedgeye Macro Team

HEDGEYE RISK MANAGMENT


investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

Fed Fighting

This note was originally published at 8am on December 14, 2010. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.

“Pick a fight.”

-Jason Fried & David Heinemeier Hansson

 

Seth Godin said “ignore this book at your own peril.” Tom Peters said “the clarity, even genius, of this book actually brought me to near tears on several occasions. Just bloody brilliant, that’s what.”

 

I gave this book to everyone on our team for a recent strategy session. It’s called “REWORK” and I think you can not only apply it to how you think about your company and portfolios, but how you think about your life. Learn, Unlearn, and Rework. It’s healthy.

 

Some people don’t like to fight. I do. Especially when I find someone on the other side of something that I am passionate about. If you’re going to pick a fight though, and take this from a 5 foot 9 inch hockey player, you better pick the ones you can win.

 

Conventional wisdom says don’t “fight the Fed.”

 

We live in unconventional times.

 

Not only do I think it’s a great time to pick a fight with the Chairman of the Federal Reserve, I think we can win.

 

“We” isn’t a group of passionate people in New Haven, Connecticut. “We” isn’t all of the Americans who are, pardon the pun, fed up with Big Government Intervention in our markets. “We” are the world’s risk managers.

 

The Chinese are fighting the Fed. So are the Australians, Brazilians, and Germans.  So let’s line up what’s in our corner this morning and go through who and/or what can help us engage in Fed Fighting:

  1. Global Inflation
  2. Global Bond Yields
  3. The US Dollar

Let’s go in reverse order and start with the US Dollar first. Last week the US Dollar was up another +0.86% for the week.  It closed higher for the 5th week out of the last 6 and +5.3% higher than its YTD low established on November the 4th (post QG2 and the midterm elections).

 

We’ve been long the US Dollar (UUP) since November the 4th in anticipation of both global inflation accelerating and globally interconnected risk compounding. We’ve also had a keen eye on the macro calendar catalyst pending in the new year of both Ron Paul being able to subpoena the Fed and Republicans having a mandate for American Austerity measures.

 

Global bond yields are chasing higher and breaking out on both our TRADE and TREND durations. Despite US Treasury yields selling off in the last 24 hours ahead of The Ber-nank’s FOMC decision today, they remain in a very bullish pattern – and, as a result, the entire bond market is in a very bearish immediate-term position.

 

The TRADE and TREND lines for 2s, 10s, and 30s across the US Treasury Yields curve are as follows:

  1. 2-year yields have TRADE and TREND lines of support of 0.49% and 0.46%, respectively.
  2. 10-year yields have TRADE and TREND lines of support of 2.87% and 2.68%, respectively.
  3. 30-year yields have TRADE and TREND lines of support of 4.26% and 3.94%, respectively.

All of these moves in US yields are being perpetuated by:

 

A) Asian yields rising on government interest rate hikes, and

B) European yields rising on both inflation and sovereign debt risk.

 

This morning’s Spanish 12-month bond auction yielded 3.44% versus 2.36% in the prior auction and inflation in the UK remained above the Bank of England’s token target, pushing to +3.3% in November versus +3.2% in October.

 

Global inflation has been driving bonds lower for the last 6 weeks. No matter what Ben Bernanke says about inflation in his statement today, the market is already running way ahead of him on this. Remember, markets don’t lie; politicians do.

 

Sure, you can make a case that in the face of tax cut extensions US growth expectations are rising as well. But don’t mistake short-term levered-growth (cutting taxes and ramping the deficit/GDP ratio) for sustainable organic GDP growth.

 

Whether it’s the price of the CRB Commodities Index (up +20.5% since the day in August that The Ber-nank decided to inflate), or the price of copper hitting an all-time-high of $4.22/lb this morning (+31% since August), I don’t think I’m alone in picking a fight with the Fed on this fine December day of 2010.

 

Global markets have my back. If you are politicking to debauch the dollar again today Mr. Bernanke, keep your head up.

 

My immediate term TRADE support and resistance lines for the SP500 are now 1226 and 1246, respectively. We remain short both the SP500 (SPY) and the short end of the US Treasury markets (SHY) in the Hedgeye Portfolio.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Fed Fighting - 1



Strategist's 'Ron Paul' Trade: Avoid Stocks, Stay Long US Dollar


the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

next