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GOLF CLAPS FOR MAO

CLIENT TALKING POINTS

GOLF CLAPS FOR MAO

China gets us thinking. It is a country that truly puts the brain to work. While getting coffee with a friend this morning, we pondered just what makes China tick. The provincial governments, the “second” balance sheets – can you trust ANYTHING coming out of this country? The consensus in the West is that China will cut rates! It will provide stimulus! Then the People’s Bank of China comes out and says no, they’re not going to do any of that nonsense. They don’t need Keynesian economics driving up food and fuel prices any further. Oh. Well then that would explain why China stocks continue to crash, down -2% this week.

MY DEAR MERCUTIO

Shakespeare was a man of tragedy. Come to think of it, the guy was just downright depressing. Hamlet? Macbeth? Romeo and Juliet? Death all around! Kind of reminds us of the stock market. Yeah, it’s cool to be a bull these days with the levels the SPX and Dow are at, but is this sustainable? We don’t think so. Economic numbers and news are going to get worse, not better. This coincides with our #GrowthSlowing theme that we’ve been pushing for some time now. Bailouts and higher commodity prices are certainly not the answer to our woes – everyone can agree with that.

GET THE DOLLAR RIGHT…

…and you get a lot of other things right. We’ve said this before. And after a nice multi-week fall, the US dollar is now heading to the upside. As a result, the SPX hasn’t gone up in two days. Europeans are playing the quiet game, so what are you going to do for a catalyst? Not even Hilsenrath can spin this one. Instead, let’s see what Romney and Ryan can do to shake up the market over the weekend. Who knows what these two are capable of? It’s certainly better than a President who goes around buying Bud Lights for everyone (and by everyone, he meant the first ten people to bumrush the beer booth). $25,000 down the hole.

More info on ‘Bama Beers here: http://www.indystar.com/article/20120815/NEWS01/120815013/Owner-complains-Obama-s-beer-tent-stop-cost-him-25-000

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ASSET ALLOCATION

Cash:                  Flat

U.S. Equities:   Flat

Int'l Equities:   Flat   

Commodities: Flat

Fixed Income:  Flat

Int'l Currencies: Flat   

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TOP LONG IDEAS

JACK IN THE BOX (JACK)

This company is transitioning from cash burn to $75mm annual free cash flow generation thanks to completion of a reimaging program and refranchising of JIB units. Qdoba is the leverage; a maturing and growing store base will bring higher margins. We see 8.5% upside over the next 6-9 months.

  • TRADE:  LONG
  • TREND:  LONG
  • TAIL:      LONG            

FIFTH & PACIFIC COMPANIES (FNP)

The former Liz Claiborne (LIZ) is on the path to prosperity. There’s a fantastic growth story with FNP. The Kate Spade brand is growing at an almost unprecedented clip. Save for Juicy Couture, the company has brands performing strongly throughout its entire portfolio. We’re bullish on FNP for all three durations: TRADE, TREND and TAIL.

  • TRADE:  LONG
  • TREND:  LONG
  • TAIL:      LONG

LAS VEGAS SANDS (LVS)

LVS finally reached and has maintained its 20% Macau gaming share, thanks to Sands Cotai Central (SCC). With SCC continuing to ramp up, we expect that level to hold and maybe, even improve. Macau sentiment has reached a yearly low but we see improvement ahead.

  • TRADE:  LONG
  • TREND:  NEUTRAL
  • TAIL:      NEUTRAL

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THREE FOR THE ROAD

TWEET OF THE DAY

“rhetoric is QE” -@fearlicious

QUOTE OF THE DAY

“Why be a man when you can be a success?” – Bertolt Brecht

STAT OF THE DAY

The Carlyle Group is looking to buy Getty Images for $3.3 billion.