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Some remarks by Sheldon Adelson


  • There is a general consensus that the company should consider making dividend payments.  They are considering it.
  • Won't pursue any developments where they can't get a 20% ROI. Assume any new project would have 30% equity contribution and 70% leverage.
  • Asia expansion is their first priority, however, they will pursue any gaming opportunities that make sense
  • Other jurisdictions all look to MBS to see what they have done there when considering opportunities
  • Spain: Madrid or Barcelona is their location site of choice. Think that a resort in Spain would draw 1BN people that live within a 5 hour flight.  Before they make any investments in Europe, they will thoroughly research the opportunity and feasibility of an integrated resort. They like Spain given the good weather and the high unemployment rate there should garner support from the government - both regionally and nationally.
  • FCPA allegations made by a 'former very disgruntled employee'.  They are fully cooperating with the investigation. 100% certain that he or any other senior executive employee at LVS has never asked their employees to do anything improper. When the lawsuit concludes, he's sure that all of Jacobs allegations will be found to be baseless. In fact, Sheldon asserts that there is no actual allegation of wrongdoing by Sheldon so he can't be found guilty of anything.
  • Predictability and reliability of their revenue and FCF has been greatly improved as they have expanded. Their properties are mostly mature and their success has made them a front-runner for future opportunities.

NKE: Black Book Available


Our NKE Black Book is now available...


We think that investors are underestimating both the depth and duration that Nike’s recent infrastructure investments will have on financial results. It is one of the few companies that fits within our three different durations – TRADE (3 weeks or less), TREND (3 months or more) and TAIL (3 years or less). We like it at current levels, and think that there is upside to earnings in the coming quarter, the remainder of the May 12 year, and throughout the next three years. If Nike puts a lid on guidance on Thursday, as its biorhythm so often leads it to do with 1Q earnings, then we think it will be a great shot to get involved.


True, with a current EBITDA multiple of 10x our F12 estimates, Nike might not look like the cheapest name out there. But we think that earnings and cash flow expectations are too low across all durations, and that Nike has such a commanding lead right now in a global duopoly backed by the tools to sustain it. Combine that with a bullet proof balance sheet and what we think is a permanent structural advantage in sourcing product in a strengthening Yuan climate and this story has some serious legs to stand on.



If you have not received a copy of our report, contact , or at to request access.



NKE: Black Book Available - NIKE HE estimates vs. Street 9 11


NKE: Black Book Available - NKE BB Post Cover 9 11







Notable macro data points, news items, and price action pertaining to the restaurant space.






Gasoline prices continue to shadow the trend of 2008. 


THE HBM: CMG, DPZ, SBUX, WEN - gasoline 9231





Full service restaurants underperformed peer subsectors despite a significant gain of +22.8% day-over-day for KONA on an upgrade.


THE HBM: CMG, DPZ, SBUX, WEN - subsector fbr





CMG dipped yesterday as speculation mounted that the 7% gain following the opening of Chipotle’s new concept, ShopHouse Southeast Asian Kitchen, was overdone. 


DPZ announced yesterday that after three months of operation, the new Domino’s App for iPhone and iPod Touch has achieved $1 million in sales in a single week.


SBUX is planning to build a “major multibillion-dollar business in the grocery industry”, according to Howard Schultz, cited in German newspaper Spiegel. 


SBUX is set to see margin expansion due to the single-serve business, according to Piper Jaffray.


WEN was reiterated “Overweight” by Barclays.


THE HBM: CMG, DPZ, SBUX, WEN - stocks 921




Howard Penney

Managing Director


Rory Green


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The Macau Metro Monitor, September 21, 2011




SJM Holdings executive director Angela Leong On Kei said she is not concerned with the 3% cap on gaming table growth after 2013.  Leong said casino operators will be able to cope with government restrictions, but future amendments may be needed depending on market demand.  She added that the Macau government should not forget that gaming is Macau's biggest industry.



Sands China is expected to sign a 5-yr $3.7 BN loan today.  About 10% of the 5-yr loan was sold in general syndication. 



August CPI increased 6.15% YoY and decreased 0.04% MoM.  Price index of Recreation & Culture; and Transport rose by 0.97% YoY and 0.82% MoM upon higher charges for outbound package tours and airfare.



S'pore Changi Airport reported a 11.2% YoY increase in passenger traffic in August.  July's growth was 13.6% YoY.



A 'system upgrade' caused a three-hour delay as guests were unable to check in.  Without disclosing how many guests were affected, the spokesperson added, "We seek the understanding of our guests and regret any inconvenience caused." 


TODAY’S S&P 500 SET-UP - September 21, 2011


As we look at today’s set up for the S&P 500, the range is 41 points or -1.17% downside to 1188 and 2.24% upside to 1229.






THE HEDGEYE DAILY OUTLOOK - daily sector view


THE HEDGEYE DAILY OUTLOOK - global performance




  • ADVANCE/DECLINE LINE: -814 (+833) 
  • VOLUME: NYSE 926.25 (+1.97%)
  • VIX:  32.86 -0.40% YTD PERFORMANCE: +85.13%
  • SPX PUT/CALL RATIO: 1.91 from 2.33 (-17.87%)




FIXED INCOME: UST Yields look like they want to make higher-lows on whatever Twizzler move Bernanke tries (or no move at all) this afternoon.

  • TED SPREAD: 35.05
  • 3-MONTH T-BILL YIELD: 0.01%
  • 10-Year: 1.95 from 1.97     
  • YIELD CURVE: 1.77 from 1.81


MACRO DATA POINTS (Bloomberg Estimates):

  • 7 a.m.: MBA Mortgage Applications
  • 10 a.m.: Existing home sales, est. 4.75m (up 1.7% M/m)
  • 10:30 a.m.: DoE inventories
  • 2:15 p.m.: FOMC rate decision 



  • FOMC may decide to replace short-term Treasuries in its $1.65t portfolio with long-term bonds; Jefferies estimates $300b-sized action for “Operation Twist”
  • European officials to return to Greece next week to complete review of economy; Greece to hold Cabinet meeting to discuss accelerating budget cuts
  • SABMiller reached deal to buy Foster’s for A$5.10-shr
  • Google faces Senate panel today on the “Power of Google”
  • PepsiCo reaffirms 2011 guidance, forms global snacks group
  • FDA briefing docs due for 9/23 advisory panel on Miltenyi Biotec’s CliniMACS CD34 Selection System
  • Boeing is on schedule to deliver first 787 next week, CEO McNerney said at forum: WSJ
  • Obama addresses U.N. General Assembly as Palestinians prepare to seek full membership at the Security Council and the U.S. promises a veto




COMMODITIES: Gold fails (again) at the Hedgeye TRADE line of resistance ($1820).


THE HEDGEYE DAILY OUTLOOK - daily commodity view




  • Bullion Vaults Run Out of Space as Gold Rallies: Commodities
  • PepsiCo Poised for 49% Gain Imitating Kraft Breakup: Real M&A
  • Wild West Comes to India Where Miners Defy Supreme Court Rule
  • Lynas Slumps Most in Two Years on Rare Earths Price Drop
  • Corn May Reach Record on Supply ‘Nervousness,’ Newedge Says
  • Oil Drops in New York on Bets of Lower Demand, Higher Supplies
  • BHP Says Global Imbalances, High Debt Creating Uncertainty
  • Gold May Gain for Second Day on Growth Concerns, Fed Speculation
  • European Naphtha Exports Sinking to Year’s Low: Energy Markets
  • Rice to Drop as Indian Exports Intensify Export Competition
  • Parrilla Hires Ex-CastleBay Manager for Commodity Hedge Fund
  • Copper Climbs in New York on Speculation Fed Will Support Growth
  • Copper Imports by China Climb for Third Month on Low Stocks
  • Wheat Advances for a Second Day on Unfavorable Crop Conditions
  • Global Sugar Market Will Be in Surplus in 2011-2012, Licht Says
  • Copper Rises in London as Fed Meets to Boost Growth: LME Preview



THE HEDGEYE DAILY OUTLOOK - daily currency view





EUROPE: down, but not the disaster the shorts need here to keep getting paid (Italy is up small this morn and DAX sitting on TRADE line)


GERMANY: at 5514 DAX is still in crash mode (down -27% from May), but up +10% from the Sept12 capitulation low


THE HEDGEYE DAILY OUTLOOK - euro performance





ASIA: bottoming process in the KOSPI (Korea) could be in motion w/ a TRADE line breakout back above the critical 1813 line; China up +2.7%


THE HEDGEYE DAILY OUTLOOK - asia performance









Howard Penney

Managing Director

Let It Flow, Bro

This note was originally published at 8am on September 16, 2011. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.

“I’m just saying, just let it flow, man.”

-Ray Dalio


I think I have milked both the quotes from Ray Dalio’s New Yorker interview and this week’s short squeeze in Global Equities bone dry. While there has been plenty of emotion embedded in this week’s 100 point S&P futures rally, it’s just time to “let it flow”, Bro.


“Bro” is a very sophisticated nickname that Wall Street trader types use when addressing each-other. Examples would be: “Bro, that was a monsta print, bro…” or “Bro, the two-hundo is still broken – this rally doesn’t make sense, bro.”


Both in the Bro Brotherhood and beyond, this week’s +9% rally in the S&P futures (from Monday’s pre-open low to yesterday’s intraday high) has left a mark. Not surprisingly, you’re seeing the commensurate hedge fund blowups that are associated with price volatility. The Goldman Beta Fund shutdown is a Top 3 story on Bloomberg this morning. Yesterday it was the Euro Bro at UBS.


Bull markets generally don’t blow up the Bros. Volatility does. And as a profession we have a lot of work to do in order to evolve the risk management process so that our clients are actually getting the protection we market to them.


Bridgewater’s Ray Dalio doesn’t blow up. To the contrary, his $100 Billion Dollar hedge fund capitalizes on other people blowing up. In the same New Yorker interview (“Ray Dalio’s Richest and Strangest Hedge Fund”, by John Cassidy, July 25, 2011) Dalio explains how emotion has no place on his team – or he, at a minimum, needs a way to govern it:


“What we’re trying to have is a place where there are no ego barriers, no emotional reactions to mistakes… if we could eliminate all of those reactions, we’d learn so much faster.”


Re-think. Re-work. Re-learn.


That’s what getting good at this Globally Interconnected Game of Risk is all about - not pointing fingers, fighting change, and/or Mr. Macro Market’s leading indicators.


Back to the Global Macro Grind


Not surprisingly, after prices have moved higher across the Global Equities universe, my price, volume, and volatility factors look a heck of a lot better than they did last Friday.


Let’s look at those core 3 factors in the SP500 for example:

  1. PRICE – what was immediate-term TRADE resistance at 1178 is now support
  2. VOLATILITY (VIX) – what was immediate-term TRADE support at 35.47 is now resistance
  3. VOLUME – remains less than dead in the water on the up moves with Wednesday’s volume signal being +9% above average

Now to be crystal clear on reading these factors, they are on 1 duration (the immediate-term TRADE), not all 3 (TRADE, TREND, and TAIL). From a long-term TAIL perspective, resistance for the SP500 remains up at 1265. In other words, all of the “long-term” investors out there should still be concerned about the long-term.


The hallmark of my risk management process is to be:


A)     Multi-Factor

B)      Multi-Duration


What that means (and I think Dalio would agree with this) is that you can heighten the probability of 1. not missing something big or 2. being overly exposed to one big thing, if you are analyzing multiple-factors (Countries, Currencies, Commodities, etc.) across multiple-durations.


So, if we broaden the immediate-term TRADE signals to Europe this morning, here’s what I see (and it’s not good):

  1. Germany’s DAX failing to overcome immediate-term TRADE resistance of 5631
  2. Italy’s MIB Index failing to overcome immediate-term TRADE resistance of 15,014
  3. Spain’s IBEX failing to overcome immediate-term TRADE resistance of 8437

Bear markets get immediate-term TRADE oversold. Then they bounce. We get that. That’s why we’ve made 2 calls in Q3 of 2011 (August 8thand Monday, September 12th) titled “Short Covering Opportunity.” And yes, these “calls” have time stamps.


Old Wall Street’s Sell-Side or the pop-media that provides it a marketing platform doesn’t really do the time stamp thing. We don’t champion time stamps to rub it in their face. We are explicitly challenging them to be transparent so that we can figure out if they can be additive to the collective risk management process that this industry needs.


Letting $2 Billion Dollar losses in the UBS bonus pool “flow” or blowing clients out of “risk managed” hedge fund products at every capitulation bottom we’ve had in the 2008-2011 period isn’t cool anymore, Bro.


My immediate-term support and resistance ranges for Gold (which just broke its immediate-term TRADE line of $1817 and has no TREND support to $1630), Oil, and the SP500 are now $1779-1817, $86.54-90.26, and 1178-1212, respectively.


Best of luck out there today and enjoy your weekend with your families,



Keith R. McCullough
Chief Executive Officer


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