prev

THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – February 14, 2012

 

As we look at today’s set up for the S&P 500, the range is 20 points or -0.72% downside to 1342 and 0.76% upside to 1362. 

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1607 (3211) 
  • VOLUME: NYSE 682.65 (-9.06%)
  • VIX:  19.04 -8.42% YTD PERFORMANCE: -18.63%
  • SPX PUT/CALL RATIO: 2.38 from 1.40 (70.00%)

CREDIT/ECONOMIC MARKET LOOK:

 

TREASURIES – the 10yr continues to trade between the rock (TRADE support = 1.96%) and the harder place (TREND resistance = 2.03%); still signaling a US Growth Slowdown in FEB (sequentially) as the Yield Spread (10/2s) compresses by 5bps day/day here…

  • TED SPREAD: 40.60
  • 3-MONTH T-BILL YIELD: 0.09%
  • 10-Year: 1.98 from 1.97
  • YIELD CURVE: 1.70 from 1.69

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:30 am: NFIB Small Business Optimism, Jan., est. 95.0 (prior 93.8)
  • 7:45am/8:55am: ICSC/Redbook weekly retail sales
  • 8:30am: Import price index, Jan.; Y/y est. up 7.2% (prior gain 8.5%), M/m est. up 0.3% (prior drop 0.1%)
  • 8:30am: Advance retail sales, Jan., est. up 0.8% (prior up 0.1%)
  • 8:45am: Fed’s Plosser speaks on economy in Newark, Del.
  • 10am: Geithner testifies before Senate Finance Committee
  • 10am: Business Inventories, Dec., est up 0.4% (prior up 0.3%)
  • 11am: Fed to purchase $4.25-$5b notes
  • 11:30am: U.S. to sell $20b 64-day cash management bills
  • 1pm: U.S. to sell $40b 4-week bills
  • 4:30pm: API weekly inventories
  • 5:40pm: Fed’s Lockhart speaks on economic outlook in Sarasota, Fla.

GOVERNMENT:

  • House, Senate in session:
    • Senate Budget committee hearing on proposed FY2013 budget
    • Senate Finance committee hearing on proposed FY2013 budget
    • GE holds conference on “American Competitiveness: What Works” (through 2/16)

WHAT TO WATCH:  

  • Moody’s cut debt ratings of Italy, Spain, Portugal, said may strip France, U.K. of top Aaa ratings
  • Senate Finance, Budget committees to have budget hearings today on Obama’s proposed $3.8t budget plan
  • Deadline today for 13-F filings with the SEC for 4Q
  • Santorum draws even with Romney in poll showing they trail Obama
  • Boeing signs record order from Lion Air for 230 planes worth $22.4b
  • Fed to issue decision “soon” on Capital One, ING Direct deal
  • U.S. Volcker rule faces harsh critics as effective date nears
  • Bank of Japan added $128b to asset-purchase program, set 1% inflation target
  • Google wins U.S. antitrust approval to buy Motorola Mobility

 EARNINGS

  • Michael Kors (KORS), premkt, $0.06
  • Host Hotels & Resorts (HST) 6 a.m., $0.30
  • ACI Worldwide (ACIW) 6:45 a.m., $0.72
  • United Therapeutics (UTHR) 7 a.m., $0.82
  • Marsh & McLennan (MMC) 7 a.m., $0.45
  • Omnicom (OMC) 7 a.m., $0.95
  • Fossil (FOSL) 7 a.m., $0.97
  • Watson Pharmaceuticals (WPI) 7 a.m., $1.76
  • Avon (AVP), 7 a.m., $0.53
  • Generac Holdings (GNRC) 7 a.m., $0.63
  • RioCan REIT (REI-U CN) 7:30 a.m., C$0.35
  • Hospira (HSP) 7:32 a.m., $0.47
  • Goodyear Tire & Rubber (GT) 8 a.m., $0.21
  • HCP (HCP), 8 a.m., $0.68
  • BorgWarner (BWA) 8 a.m., $1.17
  • TransCanada (TRP) 8:11 a.m., C$0.55
  • Valspar (VAL) 8:40 a.m., $0.48
  • Textainer Group Holdings (TGH) 8:45 a.m., $0.99
  • Zynga (ZNGA), post-mkt, $0.03
  • Quest Software (QSFT) 4 p.m., $0.51
  • FMC Technologies (FTI) 4 p.m., $0.50
  • Hittite Microwave (HITT) 4 p.m., $0.53
  • Bob Evans (BOBE) 4:01 p.m., $0.60
  • American Capital (ACAS) 4:01 p.m. $0.20
  • Hatteras Financial (HTS) 4:01 p.m., $0.90
  • Chemed (CHE) 4:01 p.m., $1.48
  • American Campus Communities (ACC) 4:01 p.m., $0.49
  • Weight Watchers International (WTW) 4:01 p.m. $0.86
  • Taleo (TLEO) 4:02 p.m., $0.23
  • TastGroup Properties (EGP) 4:02 p.m., $0.78
  • MetLife (MET) 4:03 p.m., $1.24
  • Arch Capital Group (ACGL) 4:05 p.m., $0.62
  • Masimo (MASI), 4:05 p.m., $0.23
  • Sapient (SAPE), 4:05 p.m., $0.16
  • Tanger Factory Outlet Centers (SKT) 4:05 p.m., $0.41
  • j2 Global Inv. (JCOM) 4:15 p.m., $0.62
  • Home Capital Group (HCG CN) 5:01 p.m., C$1.49
  • Natural Resource Partners (NRP) 5:05 p.m., $0.48
  • Valmont Industries (VMI) 5:30 p.m., $1.67
  • Curtiss-Wright (CW) 5:35 p.m., $0.84
  • Brookfield Office Properties (BOX-U CN) 5:45 p.m., C$0.35

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

COPPER – the Doctor took a good look at his long-term TAIL of resistance ($3.98/lb) and not only backed off but is now breaking down through 3.87/lb immediate-term TRADE support. Watching that global growth signal closely as Hong Kong’s Finance Secretary warned of potentially seeing a down y/y Q112 GDP growth print.

  • Zinc Glut Rising to Two-Decade High Threatens Rally: Commodities
  • Copper Swings Between Gains, Losses on Confidence, Rating Cuts
  • Corn Declines as U.S. Acres May Increase to Highest Since 1944
  • Oil Rises to Three-Week High as Iran Threat Counters Europe Debt
  • Cocoa Falls as Rains May Help West African Crops; Sugar Drops
  • Iron Ore May Advance Amid Seasonal Demand Increase, UBS Says
  • Gold May Decline as Stronger Dollar Cuts Demand After Downgrades
  • Wheat Exports From Australia Seen at Record as Output Gains
  • BP Boosts Cash Before Trial Threatening Image: Corporate Finance
  • Soybeans May Advance on Fibonacci, ADM Says: Technical Analysis
  • BHP, Rio Approve $4.5 Billion Escondida Copper Mine Expansion
  • Oil Supplies Expand to Five-Month High in Survey: Energy Markets
  • China Shale Delay to Boost LNG Imports in Boon for Exxon: Energy
  • Container Rates Rebounding 29% as Cargo to U.S. Expands: Freight
  • U.S. Farmers to Plant Most Corn Acres Since 1944, USDA Says
  • BP Must Face Investors’ Fraud Claims Spurred by Gulf Oil Spill
  • Sino-Forest Truth May Never Be Known as Ardell Defends Founder

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS


THE HEDGEYE DAILY OUTLOOK - 6

 

 

ASIAN MARKETS

 

JAPAN – evidently the Bank of Japan agrees with us in that they could have liquidity issues come the ides of March (massive sovereign debt spike). Surprisingly, the BOJ announced another 10 TRILLION Yens (lots of Yens) in easing last night; this lifted stocks and debauched the Yen. We’re finally seeing the 1.30 TREND line of YEN/USD snap. Stay tuned…

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - 8

 

 

 

The Hedgeye Macro Team

 

 


THE HBM: DPZ, MCD, CMG, DRI, TXRH

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Comments from CEO Keith McCullough

 

US stocks continue to hang in at their YTD highs on really bad volume and skew signals:

  1. JAPAN – evidently the Bank of Japan agrees with us in that they could have liquidity issues come the ides of March (massive sov debt spike). Surprisingly, the BOJ announced another 10 TRILLION Yens (lots of Yens) in easing last night; this lifted stocks and debauched the Yen. We’re finally seeing the 1.30 TREND line of YEN/USD snap. Stay tuned…
  2. COPPER – the Doctor took a good look at his long-term TAIL of resistance ($3.98/lb) and not only backed off but is now breaking down through 3.87/lb immediate-term TRADE support. Watching that global growth signal closely as Hong Kong’s Finance Secretary warned of potentially seeing a down y/y Q111 GDP growth print.
  3. TREASURIES – the 10yr continues to trade between the rock (TRADE support = 1.96%) and the harder place (TREND resistance = 2.03%); still signaling a US Growth Slowdown in FEB (sequentially) as the Yield Spread (10/2s) compresses by 5bps day/day here…

 

Moodys, thanks for coming out.

 

KM

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: DPZ, MCD, CMG, DRI, TXRH - stocks

 

 

QUICK SERVICE

 

DPZ: Domino’s Pizza was rated New Hold at Miller Tabek, price target $36.

 

MCD: McDonald’s said on Monday that it will work with its U.S. pork suppliers to phase out the use of gestation crates, the cramped stalls that millions of mother sows are confined to while they raise piglets, according to Reuters.

 

CMG: Chipotle’s first national TV ad, aired during the Grammy’s, overshadowed even Coldplay’s performance according to adage.com. 

 

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

PNRA: Panera Bread underperformed yesterday.  Earnings last Tuesday disappointed on the top line.

 

 

CASUAL DINING


DRI: Darden Restaurants is rated New Equalweight at Stephens.

 

TXRH: SAC Capital reported a passive stake in Texas Roadhouse equal to 5.4%.

 

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

Volume was low overall in the casual dining space yesterday.

 

<chart3>

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


PNK YOUTUBE

In preparation for PNK's Q4 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.

 

 

Pinnacle Entertainment Enters Into Definitive Agreements to Divest Boomtown Reno and Adjoining Land Acreage (11/10/2011)

  • Total proceeds from the transactions are expected to be approximately $22.2 million, with the potential for an additional $3.8 million if an option granted to the casino-resort buyer is exercised.
  • Sold to M1 Gaming Reno, LLC and SJP Reno Property, LLC for total cash consideration of approximately $12.9 million. In addition, the Company granted the buyers a one year option to purchase 100% of the Company's membership interest in the current gaming licensee, PNK (Reno), LLC and additional land adjacent to Boomtown Reno for $3.8 million. This transaction is subject to regulatory approval and is expected to close by mid-2012.
     

YOUTUBE FROM Q3 CONFERENCE CALL

  • "An interesting trend we're seeing is the growth from the younger customers, although the core growth is coming from 40 to 59 year olds, guests under 40 are increasing when compared to prior years. This growth from those under 40 is seen in both slots and tables, whereas tables usually skew younger."
  • "Bossier continues to be a difficult market while we have outperformed the market over quarter-to-quarter across our market segment, we believe this market will continue to be under some pressure."
  • "At Belterra, we believe the competitive dynamics of this smart deal will continue to be challenged for some time where our focus on rationalizing marketing reinvestment as well across all our portfolio, but particularly at this property, to improve results."
  • [myChoice] "We are recognizing expenses on our books ahead of the actual cash out flow. We have been very pleased with the performance of the program and the program remains at least cost neutral, and we expect to see additional improvements into operations as the program continues to see them."
  • "We continue to work through some of these changes and as stated we expect that the increase will be no more than 3% of the budget. And our opening day continues to be summer of 2012.  We expect to have a more definitive timeframe with a specific date by the end of the year as well."
  • "At River Downs we expect resolution of regards to the horsemen's fee subsidy by the end of the year. All of you likely saw the losses that was filed last week challenging the constitutionality of VLTs at racetracks. So there's more to come on this development in the coming weeks and months ahead. We remain hopeful that we will have authorizations to add VLTs at River Downs and that the redevelopment of that facility will start in 2012."
  • "Approximately $32 million was drawn at the end of the quarter, and as far as liquidity we also expect to receive a refund of the $25 million deposit that we had with the Louisiana Gaming Control Board for the Baton Rouge project following the opening of that facility."
  • [Capex] "We expect the fourth quarter to be roughly around $65 million of which $45 million of that should be Baton Rouge."
  • [St. Louis capex] "To relate to the second question on regards to the $82 million, about two-thirds of that won't get spent until '13, and the reason for this ageing is we wanted to limit our parking disruption associated with the construction there, so we're building the garage first, that should be in line by the end of the year, next year, and the hotel which is a big piece of that $82 million, and the multi-purpose room won't actually get going until '13. So from a timing perspective, two-thirds would probably be a good benchmark to assume goes into '13 versus what will go into '12. And we expect the complete project to be completed by the end of '13."
  • [Margin progression] "I will tell you that we're still in middle innings."
  • "The hotel on the Ho Tram Strip is already topped off and the low rise is closed to being topped off.  MGM, as the operator, is fully engaged and we are extremely encouraged by what we see the progress that they're making. We expect that that property will open the early part of '13, and to date, there's nothing to report on a change in the budget.  There was a financing that was completed prior to us investing of a syndicate of Vietnamese banks as we've noted earlier, and that financing is in place, there will be additional financing mostly driven by working capital needs that will get secured later on through the construction process, at some point towards the end of next year."
  • "We think that the environment from a marketing spend perspective has been very traditional throughout every market that we are in, and I think you've seen similar commentary I think from all our competitors, and that we hope it's sustainable, think that it has been tough to judge what other people will do."
  • "We continue with River Downs and every property to look at the most efficient way to run that property. It's highly unlikely that we're out of racing season right now. We in the simulcast. It's highly unlikely that you'll see in the current quarter where we're in, or even the first quarter, that we would achieve breakeven. You saw from the release that we did have an unusual one-time medical expense there, which we don't know, there could be another medical expense there, but we're working to just try to keep the loss there as small as we can while running a property that we feel good about our guests walking into. So, I would tell you the next couple of quarters you shouldn't expect to see us at a breakeven there, but you shouldn't expect it to be beyond what we reported this quarter, should be even a bit better."
  • [Baton Rouge] "A lot of the actual spend will actually come due until after the facility opens. In River City we saw our last set of bills, call it five, six months after the property opened. So, while it is going to be rather accelerated, by virtue of the delay we're actually able to go into fixed priced contracts on a lot of the things that were part of the GMP on the construction side, and over 95% of the hard cost is now known and under contract. So, we do think that while it will be accelerated next year, that we will be able to maintain that schedule."

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.33%
  • SHORT SIGNALS 78.51%


KSS/JCP: Bring on the Heat

OK, this is purely anecdotal, but check out dot.com for JCP vs. KSS. We won't say that JCP nailed it, but it certainly looks clean. KSS is a mess. Competition WILL heat up. At least one of them actually made an effort to be ready for Valentine's Day.

 

KSS/JCP: Bring on the Heat - jcp

 

KSS/JCP: Bring on the Heat - kss1

KSS/JCP: Bring on the Heat - kss


real-time alerts

real edge in real-time

This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.

next