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RECEIVABLES DON’T LOOK OUT OF WHACK

We’re more concerned with the potential for a junket commission war between the operators.

 

 

We believe LVS may have struck a sweetheart deal with Neptune which may be more attractive (to Neptune) than the best junket deals with Galaxy, MPEL, or MGM.   Whether other junkets demand the same deal from other concessionaires (there are no secrets) remains to be seen.  It seems likely, however, that market wide commissions and commission advancement are likely to escalate.  How much will that constrict margins?  Will Wynn follow suit?  Could the junkets negotiate as more of a consortium?   We will try and answer these questions in a later note.  This note deals with another area of concern:  receivables. 

 

After Genting Singapore reported a large spike in their provision for bad debts last week (as seen in the chart below), credit issues once again became the topic de jour amongst the gaming community.  Existing fears of a VIP slowdown have made investors already on edge.  We’re not dismissing either issue but the numbers don’t provide a lot of basis for concern.  In addition, we think it’s interesting that the investment community only seems concerned with these charges when they occur at an Asian-based operator.  Wynn has several quarters with large spikes in their provision for doubtful accounts but no one seems to lose a wink of sleep over these.   Namely in 4Q 2010, Wynn Macau took a $10MM charge which they simply explained “was a function of business volumes… in particular in our direct program in the fourth quarter.”  In 3Q08, Wynn Macau took a provision of $19MM as well.   

 

RECEIVABLES DON’T LOOK OUT OF WHACK - 1

 

As the chart below shows, MPEL’s receivables as a % of direct play, while decreasing, are higher than the comp set.  We believe that this is a direct reflection of the lending that goes on in their premium mass segment. 

 

RECEIVABLES DON’T LOOK OUT OF WHACK - 2

 

The 3rd chart shows that while Genting’s receivables as a % of direct play have been increasing, they do not look out of whack with what MBS reports, although we would be concerned if the upward trend continues.

 

RECEIVABLES DON’T LOOK OUT OF WHACK - 3



Range Rover: SP500 Levels, Refreshed

POSITION: Long Utilities (XLU) and Healthcare (XLV); Short Housing (ITB)

 

Into the close yesterday, I got longer. On this morning’s rally off the lows, I tightened that net exposure right back up. Managing risk around a range is the process. That’s not new.

 

What is new (every day) is the uncertainty implied in the range. In order to handicap uncertainty, we use a multi-duration, multi-factor approach that helps us contextualize what different investors across different durations are most likely to do next.

 

As of 11AM EST, here’s what I see in the SP500: 

  1. The long-term TAIL remains entrenched (1269)
  2. The Intermediate-term TREND range (1) is trade-able
  3. The Immediate-term TRADE is under selling pressure (no support to 1221) 

Going long into a weekend with no European catalyst that I can see isn’t for me – but that’s just me. I currently have 10 LONGS and 9 SHORTS.

KM

 

Keith R. McCullough
Chief Executive Officer

 

Range Rover: SP500 Levels, Refreshed - SPX


KEY INSIGHTS FROM THE PETER ATWATER CALL

Below we're re-publishing our Financial team's conference call with Peter Atwater last week and a transcript of his key takeaways. By way of introduction, Peter has run JPMorgan's asset-backed securities business, has been Treasurer of Bank One, CEO of Bank One Private Client Services, and CFO of Juniper Financial among other high-profile roles through the Financial Services Industry. 

 

On the call Peter offers his view on such topics as the EU debt crisis, ratings downgrade ramifications both at home and abroad, and various other trends within the Financial sector.  

 

If you'd like to learn more about the work of our Financials team, headed by Josh Steiner, please contact sales@hedgeye.com.

 

The ideas below are Peter Atwater's.

-------------

 

Key Takeaways From Our Call Yesterday with Peter Atwater

 

For those interested in listening to the replay of yesterday's call, click the following link:

https://app.hedgeye.com/feed_items/16722

Materials (slide deck) from yesterday's call:

"NEW RISKS FOR FINANCIALS"

 

 

Europe

  • It's the willingness, stupid! EFSF and other mechanisms are predicated on the willingness, not just ability, of Germany et al. to support them.  Willingness is increasingly at risk, at the same time that ability is threatened by ratings downgrades. 
  • EFSF leverage isn’t a realistic option at this point.  Things are moving too fast to get the necessary approvals. 
  • No risk has been mitigated by actions so far – only moved.
  • EBA capital shortfall numbers are a pipe dream.  They assume a pan-European deposit insurance scheme, which doesn’t exist.  Moreover, since the end of September, sovereign debt prices have deteriorated significantly, further reducing the validity of the shortfall estimates. 
  • China as bailor! China is better served by picking up assets at fire-sale prices after Euro breakup than preventing it.
  • Banks will concentrate on lending in their home countries and may walk away from foreign branches.  There’s no reason to think that a withdrawal has to be orderly.
  • Bailouts are bailouts of creditors (not debtors). That’s now the view, and it changes the debate.
  • What’s ahead?  A period of extreme turbulence, followed by significant opportunity on the other side. 
  • Ratings contagion: sovereign downgrades lead to bank downgrades, and back again in a vicious cycle.
  • Both Greece and Italy will leave the Eurozone in short order.
  • What would be a positive sign?  An unconditional support agreement.

 

US Ratings

  • Supercommittee failure will trigger “at minimum, cautionary words, if not a further downgrade” at the same time that further spending (supporting banks, boosting economy, stemming European contagion) will be increasingly necessary.

 

US Housing

  • Migration to a nation of renters – 50% homeownership looks more stable in the long term (vs. 66% today)
  • Many questions remain on the structure of housing finance in 5 years.  Congress will pressure a re-syndication of risk back to the private sector.  Expect a fight around the GSEs when their Treasury Support Agreement expires at YE 2012.  Fannie/Freddie now the release valve on the housing market.

 

US Banks

  • Stay away from deeply interconnected "Empire" financials.
  • Consumer product pricing (e.g. debit card fees) increasingly political. 
  • Market no longer accepting “net hedged” for an answer.  The importance and focus on gross exposures is growing – just look at Jefferies.  “Net hedged” assume orderly & liquid collateral markets – which may not be there.
  • Nations will secede from Basel when it becomes inconvenient to comply. Nationalism will increase in bank regulation.
  • The market will demand subsidiary-level and geography-level loan and derivative disclosures from corporates and banks, as capital restrictions mount. 

 

The Following are More Detailed Notes from Our Call

 

 

Europe in flux

  • Stepping back – October breakthrough “merely whack-a-mole” – risk was only moved, not eliminated
  • Lots of conditionality behind promises; don’t underestimate that going forward
  • G-20 and IMF support will come with significant strings attached (progress payments, conditions)
  • Binary outcome – it works or it doesn’t, since all the efforts to stem contagion have been risk-transfer, not risk reduction. 
  • Since October, the question of a disorderly disintegration looks very real

Hardwired Ratings Contagion

  • Can’t emphasize enough the hardwired ratings contagion between sovereigns and banks. Bank ratings drop due to elimination of ratings uplift/moral hazard; recognition that countries are less willing even if able (and some are unable).
  • Willingness to implement austerity is not growing – leaders will require a populist component or referendum to support their policies
  • EFSF and other mechanisms are predicated on ongoing willingness of France, Germany, Netherlands to support the system. Willingness is increasingly at risk, and AAA rating vulnerability puts ability at risk with a downward-spiraling “ratings vortex”

 US Ratings

  • Supercommittee gridlock will bring ratings agencies back out with “at minimum, cautionary words, if not a further downgrade” – meanwhile, the US economic situation will provoke requests for fiscal action (domestically or in Europe) and will see need for bank support and FDIC support
  • AA is a certainty  - the question is what happens then. How do depositors view FDIC insurance in AA US?
  • Bank assets, bank liabilities – all woven into US debt ratings
  • Over 30% of bank assets reflect US government obligations, directly or indirectly.

 US Housing

  • We’ve made “baby steps” in terms of what needs to happen.  We need a “comprehensive solution” and re-syndication of risk.  Nothing seems final yet. You’ll see pressure from Congress & the agencies to come to a resolution where risk is placed in the private sector.  How that syndication takes place is critically important for bond investors.  Right now, GSE Treasury support agreement expires at YE 2012.  What happens then to US support of agencies?
  • We are witnessing the beginning of a significant migration to a nation of renters, including homeownership rates well below current levels.  50% seems more likely and more sustainable.
  • Litigation – still an operating expense.  Until the markets bottom, volumes of litigation will continue to expand. 
  • Most vulnerable: home equity lenders and bondholders most exposed to financial repression/public policy intervention.  Lots of D.C. hostility towards preference to keep HE lines current – will start to see credit card flows be impacted as well.  Card DQs are historically low, yet mortgage delinquencies are well above that. 

 

Becoming more nationalistic, and Basel is a great example.

  • Sovereign nations will secede from Basel and develop their own risk-weighting schema. 
  • Financial repression across capital/labor/goods mounting in Europe and will continue. 
  • Consumer product pricing is increasingly political – BAC had material Washington oversight to their debit card fee
  • Empire banks most vulnerable politically & socially – don’t underestimate Bank Transfer Day last weekend.  There’s underlying sentiment that benefits small, local, mutually owned institutions. 
  • Don’t underestimate the MF Global/Jefferies message either – what it means for hedging.
  • 3Q earnings jargon du jour was “net hedged.”  Moved pretty quickly away from that on gross disclosure mandates (e.g. Jefferies). Just as banks had to disclose mortgage exposure in greater granularity, same thing will happen with derivatives and sovereign exposure.
  • Sovereign and super-sovereign intervention will make hedging questionable as hedges don’t pay out.  Don’t underestimate the potential for disorderly collateral markets – “net hedged” assumes liquid and orderly collateral markets.
  • Potential for interruption of intercompany flows within companies themselves.  Look at Dexia’s de-consolidated balance sheets to see the mismatch in assets and liabilities.  Consequences will flow into non-financial space, as corporates may decide that bearing market risk is better than trying to explain to analysts what their exposure is like. 

 

3Q earnings fundamentals

  • PTPP earnings are extremely vulnerable
  • Limited opportunity for further cost-cutting
  • Credit cycle has peaked - don’t discount the message coming out of HSBC today.  They were early in recognizing issues in 2007, and they’re forward in risk management.
  • Earnings since 2009 show little improvement – it appears random.
  • Prior issues on credit front (litigation, etc.) will come back to bite them
  • Little to prevent deterioration in credit from flowing straight through (no room for Fed cutting, etc.)
  • Deterioration in social mood decreases GDP and economic activity, and it also makes collective solutions in Europe difficult and engenders need for further bailouts from the strong.  Generosity is more a function of confidence of the donor than the need of the recipient – US investors have underestimated this point.  Germany’s willingness to help was finished in October, and it’s hard to imagine Germany stepping up again given what happened immediately afterward with Greece calling for a referendum.

Q&A

Europe & European banks - Capital shortfalls

A: EBA capital numbers – figures were as of the end of October, and merely looking at the market since then, that number is something like 50% light already.  Further, the EBA assumed in those figures that Europe would come up with some pan-European deposit insurance plan.  That appears very unrealistic at this point.  The EBA numbers are “unfortunately a pipe dream.”  The reality will be dramatic reshifting of priority to home country lending support by European banks.  Massive garage sale and/or actual departure from foreign markets.  We’ve all expected orderly disengagement like HSBC’s retreat from the US, but it doesn’t have to be so – the banks could just cut their losses and walk away.  Don’t underestimate the national pressure that may exist for banks to do that – political expedience

 

France’s AAA & ratings agencies

Question for Sarkozy is “how would you like to be downgraded? On your own merits, or because you stepped up to support Europe?” In this political environment, there’s a disincentive to trigger a ratings default tied to stepping up support for other countries.  “They’re going to be downgraded … the EFSF will be downgraded to AA+ as a consequence.”  Does that ultimately bother people, or is AA the new AAA?

Ratings themselves are vulnerable – Europe may “go black” on ratings altogether, which would also facilitate dropping Basel.

 

With Draghi’s appointment, Italians needed to raise some amount of capital.  But at this point, sovereigns will allocate funds to support their banks – can they capitalize them enough to decouple them from the sovereign?  I don’t think that’s likely, without major contractions in the banking system.

 

Will countries be allowed to leave?

Greece is leaving.  Italy is leaving.  There are WSJ articles about how to prepare for Greek secession. The question is whether it’s orderly or in a “crisis weekend.”

 

Plans to expand or leverage EFSF/China to the rescue

Leveraging the EFSF isn’t a realistic solution at this point – Italy is moving too fast.  Given the political constraints, you just can’t get the approvals in place to do that.  On China, I wonder if they realize that the real opportunities are after a country’s exit from Europe.  Expect them to aggressively extend credit to countries that have exited.  And you bet China is looking at assets to purchase. 

 

Which banks are most vulnerable?

All are vulnerable to uplift reversals – uplifts were “hallucinogenic.”  Do banks simply cut the ties to their southern European affiliates?  We’ve operated with a banking system with global branches and capital and liquidity sitting elsewhere.  Worry about the French banks, and Belgian financial institutions still dwarf GDP – ditto the Netherlands. 

 

What would make you more optimistic?

The fiscal union many leaders are discussing isn’t a necessity.  What I think Europe needs to demonstrate isunconditional support for each other, rather than this “mother may I” process featuring big headlines but footnotes full of preconditions.  If Europe is serious about saving itself, it’s got to have “a bazooka that can actually be fired.”  There’s nothing like that on the horizon now, nor from the G-20 or IMF. 

 

Disorder in counterparty netting

Doesn’t necessarily require failure of a major bank.  What we’ve seen in JEF was “a strip search at gunpoint by the market” (quoting WSJ article) – we are now operating without net hedged as an underlying principle.  The days of clamoring for gross data is now upon us, and financial institutions need to be prepared to provide it. You don’t need another failure. 

 

Dexia – had exceptionally poor ALCO risk management.  They were operating as a consolidated entity amid dis-integration of firms left and right.  Much like “net hedged,” we should start to see demand of investors at a legal entity/geographic level – funding, capital, liquidity. 

Liabilities come out of the woodwork, and investors demand greater granularity, and big companies have trouble coping with these kinds of information requests.

 

Change in leadership in Greece & Italy – how does it alter the outcome?

In both cases, what we have is an interim government in a protracted period of re-formation not unlike what we see in Egypt, Libya, etc.  Ousting an existing regime is easy – coming back together has any number of risks.  In Western Europe, for the last 20 years there’s been a belief that political leaders could commit their populations to various things (sovereign debt, austerity, etc.)  The real message from Europe is that political leaders can make a commitment but it might be different tomorrow depending on the political will.  I don’t think the raters of sovereign debt considered willingness.  What’s the value of AAA (EFSF) if tomorrow the willingness to support it just evaporates?

Iceland – be careful what you ask for.  What we have in Italy today is far greater uncertainty. 

 

Near-term catalysts

What we’re seeing in Italy is more likely to result in a Euro dissolution.  Barrosso talking about “euro deviance” – members of EU who are not Euro users – there’s little to stop that kind of departure.   The expectation was that Greece would go first, but now it looks like Italy might go first, and Greece thereafter.  Bailouts are bailouts of creditors.  That recognition skews the debate from here.

Mechanism – countries lie, lie, lie, devalue.  If you look at currency flows, they’ve become unsustainable.  To slow the process, FX controls within the EU would have to develop – but that’s a momentary lapse before dissolution. 

 

US growth

Growth we’ve seen has been much more commodity price inflation and less actual growth.  There hasn’t really been growth since 2009.  High correlation between markets (denominated in Gold) and consumer confidence back to 2000.  Bright spot to the economy is at the high end.  Risk now (flowing back to banks) is a very asymmetric, barbelled economy.  Dependence on high end since 2009 has only grown in both real economy and in bank portfolios.  Just look at card – spending huge money on acquisition side. 

 

US Housing

Lobbies entrenched – housing finance policy changes?

PA: policymakers need to look less at homeownership and more at home occupancy.  Alternatives that encourage rent-to-own, rental solutions need to be developed.  We don’t want to own homes now even with record affordability – we want a roof over our head.  Can’t keep people in a mortgage even cutting the rate in half – they’re thinking like owners, not renters

 

Financial repression and burden-sharing in housing

2008 was a clear public policy decision to support existing mortgage industry infrastructure.  Relief valve became the balance sheet of Fannie and Freddie.  That’s an unsustainable sinkhole for losses.  You can’t have mortgage default rates rising concurrent with record-low credit card default rates. I expect a dramatic change in consumer default laws – the reallocation of funds within a failing consumer’s portfolio.  Student loans will also come into that equation.  Mounting nationalism will encourage policies that shift risk & losses out of the country. 

 

Underappreciated indicators

Consumer confidence – worry that right now we’re 11 years into a recession for the average American. 

Metrics of generosity/selfishness on the government level – much more protective of funds – it now appears to be a zero-sum game.  Look at growing hostility to military spending. Also pay attention to consumer credit extension (G.19)

 

Black swans

Vulnerability of FDIC – how do depositors react to FDIC fund backed by a Government with a falling credit rating? 

 

Recommendations

What we have is a “relatively short period of extreme turbulence” to get through – we can’t drag this one out a la 2008.  So what will the opportunities be on the other side of this?  The thunderstorm is bearing down, so put up the umbrellas, but also consider what’s on the other side. Prudently managing risk will be paramount in the next 9-12 months.   I’m much more hopeful about opportunities on “main street” than I have been in a long time- we’re going local. 

 

 

Joshua Steiner, CFA

 

Allison Kaptur


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THE HBM: DNKN, WEN, BWLD

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Consumer

 

Initial jobless claims came in at 388k versus 395k consensus and a revised 393k the week prior. 

 

THE HBM: DNKN, WEN, BWLD - initial claims 1117

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: DNKN, WEN, BWLD - subsector fbr

 

 

QUICK SERVICE

 

DNKN: Dunkin Brands priced its secondary offering, previously announced on November 1st, at $25.62.  In addition, the underwriters have been granted a thirty-day option to purchase up to an additional 3.3 million shares from certain of the selling stockholders.

 

WEN: Wendy’s is launching the “W” cheeseburger.  As we wrote in our Commodity Chartbook, published this morning, WEN and other companies exposed to spot market beef costs are likely to be impacted by what the supply and demand dynamics seem to suggest will be higher prices in 2012. 

 

 

CASUAL DINING

 

BWLD: Buffalo Wild Wings announced yesterday that it plans to buy 15 franchise units in Ohio and South Carolina. 

 

THE HBM: DNKN, WEN, BWLD - stocks 1117

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 

 


JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA

Trouble viewing the charts in this email?  Please click the link at the bottom of the note to view in your browser.  

 

Single-Family Housing Starts Rise 3.9%; Multifamily Continues Higher

Single-family housing starts rose in October, climbing 3.9% to 434k.  September data was revised down to 414k from 427k.  Single-family permits rose 5.1% to 430k. On a long-term basis, single-family activity remains very low.  The modest improvement in starts and permits is a positive sign for new homes, reported later this month.  

 

We had cautioned that excitement around the NAHB Housing Market Index print was misguided, as it often doesn't accurately forecast an increase in starts.  October starts did not change this conclusion.  

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - single family

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - multifamily

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - single family LT

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - contrary

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - HMI and starts

 

Initial Claims Drop 2k to 388k

Initial claims fell 2k last week to 388k (-5k from the upwardly-revised 393k).  We have been looking for claims between 375-400k as the level that allows unemployment to improve, and an extended stay in this range will be a positive signal.  Rolling claims fell 4k to 397k.  

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - Rolling

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - Raw

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - NSA chart

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - Fed and Claims

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - S P 07 10

 

2-10 Spread Indicates Ongoing Margin Pressure

The 2-10 spread widened 1 bps versus last week to 175 bps.  The ten-year bond yield increased 4 bps to 200 bps.

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - 2 10 spread 1

 

JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - 2 10 spread QoQ 1

 

 

Financial Subsector Performance

The table below shows the stock performance of each Financial subsector over four durations. 


JOBLESS CLAIMS CONTINUE TO IMPROVE; STARTS & PERMITS RISE OFF OF DOWNWARDLY-REVISED SEPTEMBER DATA - Subsector Performance

 

Joshua Steiner, CFA

 

Allison Kaptur

 

Having trouble viewing the charts in this email?  Please click the link below to view in your browser.   

 


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - November 17, 2011

 

As we look at today’s set up for the S&P 500, the range is 28 points or -1.04% downside to 1224 and 1.22% upside to 1252. 

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - levels 1117

 

THE HEDGEYE DAILY OUTLOOK - daily sector view

 

THE HEDGEYE DAILY OUTLOOK - global performance

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -1594 (+795) 
  • VOLUME: NYSE 918.72 (+17.7%)
  • VIX:  +33.51 +7.3% YTD PERFORMANCE: +88.79%
  • SPX PUT/CALL RATIO: 2.54 from 1.51 (+68%)

 

 

CREDIT/ECONOMIC MARKET LOOK:

 

TREASURIES – KM is long both the Long-bond (TLT) and Growth Slowing (Treasury Flattener, FLAT) and have been using an immediate-term TRADE target on 10yr yields of 1.98% - we’re there this morning, so the gross exposure call now is to sell some Treasuries and start allocating assets to US Equities. Take your time.

  • TED SPREAD: 46.60
  • 3-MONTH T-BILL YIELD: 0.00%
  • 10-Year: 2.00 from 2.00    
  • YIELD CURVE: 1.75 from 1.76

 

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30am: Jobless claims, est. 395k (prior 390k)
  • 9:45am: Bloomberg Consumer Comfort, est. -50.4 (prior -51.6)
  • 10am: Philadelphia Fed, est. 9.0 (prior 8.7)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural gas storage change
  • 12:30pm: Fed’s Pianalto speaks on economy in Kentucky
  • 12:50pm: Fed’s Dudley speaks on economy at West Point
  • 1pm: U.S. to sell $11b 10-yr TIP reopening
  • TBA: Mortgage Delinquencies (prior 8.44%)

 

 

WHAT TO WATCH: 

  • Spain sold 3.56b euros of 10-yr bonds with avg yield of almost 7%, the most since the euro’s creation
  • Builders probably began work on fewer homes in Oct; median est. starts fell 7.3% to 610k annual rate
  • Energy Secretary Steven Chu said final decisions on Solyndra were mine”; Chu to testify before House panel this morning
  • American Airlines pilot talks may recess for 2 wks with sides “far apart”
  • Northern Rock agreed to be sold to Virgin Money Holdings for $1.2b
  • AT&T’s Glenn Lurie says co. in talks to start selling Nokia’s WP smartphones next year
  • Guggenheim Partners said to seek buyers for Claymore Investments
  • MF Global subpoenas said to be issued by Chicago U.S. Attorney
  • Gartner sees inventory correction in semiconductor industry to damp sales at least thru 2011
  • House Democratic group urging Congress to overhaul the tax code by lowering corporate rates, removing breaks and easing the burden on U.S. companies’ overseas operations
  • Obama said cutting the U.S. budget won’t reduce the nation’s military and economic commitments to the Asia-Pacific region
  • Olympus pledges $3.3b debt cut, will report earnings by Dec. 14

 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Candy-to-Fuel Demand Cuts Oil Inventory to ‘75 Low: Commodities
  • Gold Demand Rose 6% in Third Quarter on European Debt Crisis
  • Oil Falls From Five-Month High on Signs Europe Crisis Spreading
  • Gold Imports by India Drop 20% as Record Prices Deter Buyers
  • Buffett’s Burlington Exploits Boxed Asia Grain Up 29%: Freight
  • Copper Declines Most in a Week as European Crisis May Spread
  • Gold Falls in New York, London as Equities Drop May Spur Sales
  • Wheat Falls for Second Day as Syria Rejects Tender on Prices
  • Sugar Falls to Seven-Week Low on Indian Exports; Cocoa Slides
  • Gold Top Pick at Morgan Stanley as Europe Debt Spurs Demand
  • Soybean Imports by Japan May Drop 11%, Ministry Says
  • Severstal CEO Mordashov Says Company Deserved U.S. Vehicle Loan
  • Orange Juice May Climb on ‘Cup and Handle’: Technical Analysis
  • U.S. Crude Discount Versus Brent May End Soon: Chart of the Day
  • COMMODITIES DAYBOOK: Candy-to-Fuel Demand Cuts Oil Inventories
  • China’s Gold Jewelry Demand Gains 13% to Make It World’s Largest
  • Japan Restricts Some Rice Shipments After Radiation Found

THE HEDGEYE DAILY OUTLOOK - daily commodity view

 

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - daily currency view

 

 

EUROPEAN MARKETS

 

SPAIN – their bond auction was a mess (3.6B of 10yr fiat at 6.97%) and now both Spanish and French Equities are moving to immediate-term TRADE oversold alongside the Euro. That Goldman call to buy the Euro last week is now officially the worst FX call on Old Wall St of the year; 1.34 last.


THE HEDGEYE DAILY OUTLOOK - euro performance

 

 

ASIAN MARKETS

 

ASIA – we’ve been the 2011 Bear on Growth Slowing and now the high-frequency data is slowing even faster than we thought; I haven’t seen the legacy media lead w/ this yet and I don’t expect them to, but Singapore just printed a DOWN -16.2% y/y export # for OCT vs what was already startling at -4.6% in SEP. Indian stocks joined HK in crash mode overnight.

 

THE HEDGEYE DAILY OUTLOOK - asia performance

 

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

 

 

 

The Hedgeye Macro Team

Howard Penney

Managing Director

 

 

 


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