The Macau Metro Monitor, May 15, 2012




The number of new home sales in Singapore reached 2,487 in April, surpassing March's total of 2,393 units. 



As the first legal poker room in Singapore, ‘Poker World’ opened for business today and will be operating 24 hours, seven days a week for the foreseeable future.  The room has a capacity of seven tables with available stakes ranging anywhere from SGD $5/$10 to $500/$1000. 


TODAY’S S&P 500 SET-UP – May 15, 2012

As we look at today’s set up for the S&P 500, the range is 37 points or -0.70% downside to 1329 and 2.07% upside to 1366. 












  • ADVANCE/DECLINE LINE: on 5/14 NYSE -2114
    • Down from the prior day’s trading of -637
  • VOLUME: on 5/14 NYSE 802.79
    • Increase versus prior day’s trading of 2.17%
  • VIX:  as of 5/14 was at 21.87
    • Increase versus most recent day’s trading of 9.95%
    • Year-to-date decrease of -6.54%
  • SPX PUT/CALL RATIO: as of 05/14 closed at 2.50
    • Down from the day prior at 2.72 


TREASURIES – We shorted the long-bond (TLT) yesterday as our model signaled immediate-term TRADE overbought with the 10yr capitulating intraday at 1.77%. This morning’s bounce is to 1.79% and there’s no mean reversion resistance to 1.89%. Growth Slowing, globally, obviously gets priced in at the most painful pt of the pain trade (which was down). 

  • TED SPREAD: as of this morning 37
  • 3-MONTH T-BILL YIELD: as of this morning 0.09%
  • 10-Year: as of this morning 1.80
    • Increase from prior day’s trading at 1.76
  • YIELD CURVE: as of this morning 1.54
    • Up from prior day’s trading of 1.50

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:30am/8:55am: ICSC/Redbook weekly sales
  • 8:30am: CPI (M/m), Apr., est. 0.0% (prior 0.3%)
  • 8:30am: Empire Manuf., May, est. 9 (prior 6.56)
  • 8:30am: Advance Retail Sales, Apr., est. 0.1% (prior 0.8%)
  • 9am: TIC Flows, Mar. (prior $107.7b)
  • 9am: Long-term TIC Flows, Mar., est. $32.5b (prior $10.1b)
  • 9:30am: Fed’s Duke speaks on housing in Washington
  • 10am: Business Inventories, Mar., est. 0.4% (prior 0.6%)
  • 10am: NAHB Housing Market Index, May, est. 26 (prior 25)
  • 11am: Fed to sell $8b-$8.75b notes in 2/15/2014 to 5/31/2014 range
  • 11:30am: U.S. to sell $30b 4-week bills
  • 4:30pm: API inventories 


  • GOP presidential primary elections in Nebraska, Oregon
  • President Obama delivers remarks at National Peace Officers Memorial Service, U.S. Capitol, 11am
  • House, Senate in session:
    • Senate Finance holds hearing on effects of tax reform on tribes and territories, 10am
    • Trial of EPA lawsuit against Anadarko Petroleum seeking $25b to clean up as many as 2,772 polluted sites, begins in N.Y., 9am
    • NRC meets on developing guidance for U.S. nuclear power plants in wake of the Fukushima Dai-Ichi nuclear accident, 9am
    • IRS holds hearing on how and when some aspects of Foreign Account Tax Compliance Act will be implemented
    • Comment period ends on proposed USDA rules to boost beef exports, 5pm 


  • Euro-area GDP unchanged in 1Q from prior qtr; est. drop 0.2%
  • German first-quarter GDP grew five times more than forecast
  • Moody’s cut ratings on 26 Italian banks, kept outlook neg.
  • Facebook said to plan to raise IPO price range to $34- $38/shr
  • JPMorgan said to weigh bonus clawbacks after $2b loss
  • Coty withdraws $10.7b offer for Avon on “lack of engagement”
  • China foreign investment falls in sixth monthly drop
  • Groupon 1Q profit beat ests. as intl sales expanded
  • Hertz’s bid for Dollar Thrifty seen doubling in price
  • Eastman Kodak seeks interest in patents by today
  • U.S. retail sales probably slowed in April on weather, jobs
  • Amylin said to attract interest from Pfizer, AstraZeneca, Sanofi
  • Euro chiefs may offer leniency to ‘functioning’ Greek govt.
  • MSCI announces index changes, 5pm or later
  • Deadline for funds to disclose quarterly holdings in 13-F filings
  • Credit-card monthly charge-off data released by banks
  • JPMorgan, Morgan Stanley among cos. holding annual meetings 


    • Home Depot (HD) 6am, $0.65 -- Preview
    • Dick’s Sporting Goods (DKS) 7:30am, $0.38
    • Saks (SKS) 8am, $0.18
    • TJX (TJX) 8:34am, $0.54
    • Valspar (VAL) 8:40am, $0.82
    • Alacer Gold (ASR CN) 9:28am, $0.14
    • Carlyle Group (CG) Pre-mkt
    • Acxiom (ACXM), $0.20 Pre-mkt
    • Nationstar Mortgage Holdings (NSM) Pre-mkt
    • JC Penney Co (JCP) 4pm, ($0.08)
    • Sina (SINA) 4:30pm, ($0.22)
    • SEMAFO (SMF CN) 4:50pm, $0.10
    • Ralcorp Holdings (RAH) 5:44pm, $0.85
    • Boardwalk REIT (BEI-U CN) 5:46pm, C$0.61
    • Centerra Gold (CG CN) Post-mkt, $0.04
    • Tumi Holdings (TUMI) Post-mkt
    • Pan American Silver (PAA CN), $0.51 


  • Lead Shortages Loom on Record Demand for Batteries: Commodities
  • Naimi’s $100 Oil Target Challenged by Saudi Heat: Energy Markets
  • Oil Trades Near Five-Month Low on Forecast of U.S. Supply Gain
  • Copper Seen Gaining on Stronger-Than-Estimated German Expansion
  • Gold Seen Gaining as Plunge to Lowest This Year Spurs Investment
  • Coffee Nears a Three-Month High as Prices in Vietnam Advance
  • Soybeans Rebound From Six-Week Low as U.S., Brazil Exports Rise
  • Rubber Declines to Four-Month Low as Greek Impasse Saps Demand
  • Japan to Ration Power Coping With Reactor Shutdowns: Energy
  • Obama Asked by Environmentalists to Halt Shell’s Arctic Drilling
  • Cocoa Grindings in Brazil Advance to Record, Hartmann Says
  • Japan Seeks to Buy Most Milling Wheat in 4 Months in Tender
  • Biggest Ship Hedge Fund Turns Bullish on Supertankers: Freight
  • Palm Oil Gains on Speculation Demand to Climb Ahead of Ramadan
  • Sugar-Cane Area in India’s Biggest Producer to Drop This Year
  • Chesapeake’s Loan Exceeds Highest Bond Yield: Corporate Finance 









EUROPE – covered my Italy short yesterday and have covered both France and Spain shorts as well as we are getting immediate-term TRADE oversold signals in MIB, CAC, and IBEX of 13,629, 3049, and 6726, respectively. Levels and timing matter – Italy’s Stagflation this morning notwithstanding (GDP down -1.3% y/y w/ inflation +3.7%), manage the risk of the bearish range, proactively.






JAPAN – capitulation? Nikkei225 down another -0.8% overnight, leading losers in Asia (which stabilized overall on FDI in China slowing at a slower rate in April). The Nikkei is down 20 of the last 27 trading days (down -13.2%) and few in the manic media have even mentioned it. Keep your eyes on the island importer of oil and Keynesian economics.










The Hedgeye Macro Team

President Obama’s Odds of Winning Reelection Decline to 58.2% -- Hedgeye Election Indicator


If the US Presidential election were held today, President Obama’s odds of winning reelection would be 58.2%, according to the Hedgeye Election Indicator (HEI).  The President’s reelection chance fell to its lowest level in two months, and suffered its biggest weekly decline since November 2011, according to the HEI.



President Obama’s Odds of Winning Reelection Decline to 58.2% -- Hedgeye Election Indicator  - HEI



Hedgeye developed the HEI to understand the relationship between key market and economic data and the US Presidential Election. After rigorous back testing, Hedgeye has determined that there are a short list of real time market-based indicators, that move ahead of President Obama’s position in conventional polls or other measures of sentiment.


Two of those indicators, the relative strength of the US dollar versus a basket of international currencies and the weak overall performance of the US stock market, contributed to President Obama’s weaker chances to win reelection, according to the HEI.


Based on our analysis, market prices will adjust in real-time ahead of economic conditions, which will ultimately shape voters’ perception of the Obama Presidency, the Republican candidates and influence the probability of an Obama reelection.  


The model assumes that the Presidential election would be held today against any Republican candidate. Our model is indifferent toward who the Republican candidate is as the sentiment for Obama and for any Republican opponent is imputed in the market prices that determine the HEI. The HEI is based on a scale of 0 – 200, with 100 equating to a 50% probability that President Obama would win or lose if the election were held today.


Hedgeye releases the HEI every Tuesday at 7am ET until the election November 6.

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 80.47%
  • SHORT SIGNALS 78.68%


Keith bought MPEL in the Hedgeye Virtual Portfolio at $13.02.  According to his model, the TRADE resistance is $14.21 and the TREND support is at $12.96.



Assuming Macau hangs in, better mass volumes should drive higher profitability and continued earnings beats.  MPEL continues to gain Mass share with their focus on the premium segment.  At the end of April 2012, MPEL garnered a 13.2% market share in mass revenues, an all-time high.  Meanwhile, market share losses from the opening of Sands Cotai Central in mid April have been less than expected.  MPEL remains one of the cheapest Macau gaming plays, despite their strong operations and fundamentals.   



Tossing Up BRIC(k)s: India’s Upcoming Roadshow

Conclusion: We do not currently view the announcements of truly positive reforms as a probable events in the near-term and, thus, remain bearish on Indian equities, the rupee and rupee-denominated debt from an intermediate term perspective.


For those of you who may be unable to get allocated a share of the upcoming Facebook IPO, next month the Old Wall will roadshow another “juicy” deal for interested parties. That’s right, gov’t and central bank officials from India will enlist the services of investment banks such as C, GS and JPM to embark on their own version of a global dog and pony show.


The plan is to attract an incremental $75 billion of capital into the Indian economy over the next two years – a marked acceleration from the $117 billion cumulative investment into India’s debt and equity capital markets since they were opened up to the world in 1993. They are certainly working uphill here; global investors have withdrawn 447.8M and 2.1B rupees from India’s equity and debt markets, respectively, from their respective YTD peaks in foreign ownership.


Tossing Up BRIC(k)s: India’s Upcoming Roadshow - 1


Since we are all but certain that the accompanying presentation will be filled with hopeful projections surrounding India’s growth potential and outlook for both urbanization and industrialization, we thought it would be helpful to equip you with a mini-presentation designed to help you appropriately combat the pollyannaish storytelling you’re very likely to hear in these meetings.


Key “Highlights” of the world’s ninth-largest economy:

  • Real YoY GDP growth at an 11-quarter low (+6.1% in 4Q11) and below the rate of headline inflation in every quarter since 4Q10;
  • A fiscal deficit target of 5.1% of GDP in FY13 – 50bps wider than the 4.6% target that was missed in FY12 (actual figure came in at 5.9%);
  • Record sovereign borrowing needs of 5.69 trillion rupees in FY13 to crowd out a record requirement of international capital (all-time wide current account deficit of 3.6% of GDP in 2011);
  • 75% of its 1.2 billion population living on less than $2 per day;
  • A reliance on external supplies for 80% of its crude oil consumption;
  • A ranking of 95th (out of 182 countries) in Transparency International’s 2011 Corruption Perceptions Index;
  • A ranking of 56th (out of 142 countries) in the World Economic Forum’s 2011-12 Global Competitiveness Index (89th in Infrastructure);
  • A currency that has fallen nearly -17% over the LTM to a record low of 53.96 per USD in concurrence with rate cuts and ongoing QE (despite inflation consistently hovering 300-500bps above the central bank’s unofficial 4.5% target since DEC ’09);
  • An local equity market that has a dividend yield of only 1.47% that has fallen nearly -23% from an all-time high in NOV ’10; and
  • Partisan gridlock – made worse by routs of the ruling Congress Party in recent regional elections – that has delayed key economic reforms such as opening up India’s retail market to majority FDI stakes, the so-called Direct Tax Code Legislation and implementing a nationwide goods and services tax (GST). 

Net-net, if economic management were akin to basketball, Indian policymakers have truly put the “brick” in BRIC over the past ~18 months. Moreover, they have yet to introduce a credible strategy to reverse the negative course they are currently on.


That said, however, not only are the aforementioned bearish data points largely in the rear-view mirror, we’d be remiss to ignore the bullish storytelling that is likely to accompany next month’s roadshow. A such, we would view some combination of the following reform proposals as broadly bullish for Indian capital markets (from a price): 

  • An overhaul of the country’s tax code designed to widen the base and discourage tax evasion;
  • A focus on reigning in the country’s outstretched budget deficit via credible fiscal consolidation rather than hopeful expectations of revenue and/or GDP growth;
  • A shift to credible inflation-targeting out of the central bank, rather than hopeful expectations of where they’d like rates of inflation to eventually arrive at;
  • A shift away from supporting financial market liquidity at all costs towards protecting the nation’s currency from making continued all-time lows vs. the USD; and
  • A adoption of a credible system to investigate and, more importantly, punish officials convicted of corruption (currently, the average criminal case for Indian politicians lasts 15 years). 

All told, we do not currently view the announcement(s) of truly positive reforms as a probable event(s) in the near-term and our quantitative analysis of India's equity market affords us confidence in our view. Thus, we remain bearish on Indian equities, the rupee and rupee-denominated debt from an intermediate term perspective – accepting any rallies into next month's storytelling as potential short opportunities if the risk management levels remain supportive of our fundamental thesis.


Tossing Up BRIC(k)s: India’s Upcoming Roadshow - 2


Darius Dale

Senior Analyst


As an aside, we’ve been bearish on Indian equities since early NOV ’10 and the country’s L/C bond and currency markets since MAY ’11. India remains a country that can’t seem to get out of its own way from a monetary, fiscal and regulatory policy standpoint. An increasingly questionable long-term growth outlook and persistently elevated rates of inflation form a colorful backdrop for consistent “misses” relative to the country’s budget deficit, growth and inflation targets. India remains dramatically short of both capital and crude oil – having to import both in size at steep costs to the economy. As detailed in our recent work, India’s latest budget fiasco has set the country up for a repeat of our 2010-11 Nasty Trifecta thesis. 


Recent Relevant Research (email us for copies):

  • 11/9/10: India’s Two Big Problems;
  • 1/6/11: India’s Two-Factor Squeeze;
  • 1/26/11: Top Emerging Market Short Ideas – Indian Equities;
  • 2/28/11: India – Missing Where It Matters Most;
  • 5/3/11: India’s Nasty Trifecta;
  • 10/21/11: Weekly Asia Risk Monitor – Global Bankruptcy Cycle?;
  • 11/28/11: Weekly Asia Risk Monitor – The Many Faces Of King Dollar;
  • 1/20/12: Weekly Asia Risk Monitor – Stress-Testing Asian Risk;
  • 1/9/12: Awful Fundamentals – Out Updated Thoughts On India and Shorting INP Trade Update;
  • 2/17/12: Triangulating Asia – Is It Time for India To Take a Breather?;
  • 3/5/12: Triangulating Asia – Policy Ping Pong Sets Indian Equities Up For a Sustainable Breakout or Breakdown;
  • 3/30/12: India Strikes Out Again; and
  • 4/17/11: Is India Out of Bullets?

Athletic FW: Solid April


Athletic footwear sales for April came in better than we expected up +8% against the toughest month of the quarter. This implies the Feb-Apr quarter was up a robust +12.5% yy - incrementally bullish for FL & FINL as well as DKS & HIBB (even since our DKS note out earlier). The solid start to the quarter as highlighted by both FL and FINL clearly materialized making for a very good start to the year. We are incrementally more positive on both FL and FINL here. The only brand callout that catches our eye is the continued share gain at UA, which reflects steady progress.


Athletic FW: Solid April     - Fw table


Athletic FW: Solid April     - FW market share


Athletic FW: Solid April     - Monthly FW 1 yr growth


Athletic FW: Solid April     - Monthly FW 2 yr

Casey Flavin




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