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VEGAS: Taxi Tables

Takeaway: Recent data shows taxi trips are down, so we think gaming revenues could be flat or slightly down for August due to the correlation.

Gaming, Lodging and Leisure Sector Head Todd Jordan put out an interesting chart yesterday that shows the correlation between taxi trips on the Las Vegas Strip and table play. Looking at the chart below, you can see that as taxi trips increase, so does table play. The correlation between the year-over-year change in taxi trips and non-baccarat table drop is 0.68 over the past 5 years; strong enough to warrant our attention.

 

The most recent data shows taxi trips are down -1.7% sans McCarran Airport data. Assuming there’s no extraordinary circumstances, gaming revenues could be flat to slightly down with normal hold for August.

 

VEGAS: Taxi Tables  - taxitables


Materials for Today's Presidential Election Preview Call

Takeaway: Materials for today’s Presidential Election Preview Call.

CONFERENCE CALL DETAILS 

  • Materials (follow the link): Analyzing The 2012 Election
  • Today, September 19th  
  • 11 a.m. EST
  • Participant Dialing Instructions
    • Toll Free Number:
    • Direct Dial Number:
    • Conference Code: 324541#

Materials for Today's Presidential Election Preview Call  - obama romney 300x200

 

Based on the major impact of U.S. policy on global financial markets, our Macro Team, Financials Team, and Healthcare Team will join forces and dissect the most likely scenarios leading into and out of the 2012 Presidential Election.

 

Our Global Macro research process at Hedgeye focuses on three key factors: growth, inflation, and policy.  As our Director of Research, Daryl Jones, has noted, the policy and/or perception of future policy is often the most critical factor to handicap.  In the United States, the President, and his or her party (if they control Congress) have the power to set the economic agenda and fiscal outcomes.  Moreover, they appoint the Federal Reserve Board which has increasingly-politicized control of monetary policy.

 

For additional information regarding this call or any other upcoming Hedgeye event please email .  

 

"In America, anybody can be president. That's one of the risks you take."

-Adlai E. Stevenson

 


Strength In Syncrude

Takeaway: Production issues and low supply are propping up the syncrude premium for now, but don't expect it to last forever.

Syncrude is the light, sweet crude oil benchmark in Western Canada. Since August, the product has been very strong and now trades at a $14+ premium to WTI crude oil when normally the discount hovers around $2. That’s huge – so why the strong demand? Energy Sector Head Kevin Kaiser explains:

 

“Strength is attributed to a slew of maintenance going on at Alberta’s heavy oil upgraders, which upgrade bitumen into a light crude (there’s a lower supply of Syncrude hitting the market right now).  Nexen/CNOOC’s Long Lake upgrader and Suncor’s Fort Mac upgrader are down for planned maintenance, and reports are that there are some operational issues at COS’s Syncrude facility that will reduce output there as well.  The plants should return to normal operations in 4Q12, so we don’t expect the Syncrude premium to hold for long.”

 

 

Strength In Syncrude  - syncrude

 

 

Problems at plants, lower supply; these things mean syncrude is at a premium at the moment. When all fades back to normal, expect that $14 premium to WTI to lower significantly.

 


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Taking Issue With Oil

TAKING ISSUE WITH OIL

 

 

CLIENT TALKING POINTS

 

TAKING ISSUE WITH OIL

We put out a note on our website this week discussing oil sentiment and how the current price of WTI crude oil was rather high. We then noted that there would be a good opportunity to short oil soon and sure enough, a few hours later, oil fell fast and hard taking WTI down several dollars. Some claim the drop was due to rumors regarding the Strategic Petroleum Reserves being opened but the way we see it, the issue is correlation risk. Move the US dollar and it’ll move commodities, including oil, in turn. It doesn’t take a massive move in one asset class to greatly affect another.

 

 

OBAMA IN NOVEMBER

Our Hedgeye Election Indicator put up a +220 basis point increase in Obama’s chances of being reelected yesterday, propelling the odds to 63%. This is an all time high for the HEI and in line with InTrade standings. It is beginning to look like Obama will cruise into November and will nab a second term as Commander-In-Chief. It certainly doesn’t help that someone recorded Mitt Romney at a private fundraiser with Mitt speaking off the cuff. Like we’ve said before: if only Mitt would focus on strengthening the US dollar and getting rid of Ben Bernanke more, then he might have a real shot and Obama’s odds wouldn’t be at all time highs. Unfortunately, it may be too late for Mitt…

 

 

_______________________________________________________

 

ASSET ALLOCATION

 

Cash:                  Flat

 

U.S. Equities:   Flat

 

Int'l Equities:   Flat   

 

Commodities: Flat

 

Fixed Income:  Flat

 

Int'l Currencies: Flat  

 

 

_______________________________________________________

 

TOP LONG IDEAS

 

NIKE INC (NKE)

Nike’s challenges are well-telegraphed. But the reality is that its top line is extremely strong, and the Olympics has just given Nike all the ammo it needs to marry product with marketing and grow in the 10% range for the next 2 years. With margin pressures easing, and Cole Haan and Umbro soon to be divested, the model is getting more focused and profitable.

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

 

PACCAR (PCAR)

Emissions regulations in the US focusing on greenhouse gases should end the disruptive pre-buy cycle and allow PCAR to improve margins. Improved capacity utilization, truck fleet aging, and less volatile used truck prices all should support higher long-run profitability. In the near-term, Paccar may benefit from engine certification issues at Navistar, allowing it to gain market share. Longer-term, Paccar enjos a strong position in a structurally advantaged industry and an attractive valuation.

  • 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

  

_______________________________________________________

 

THREE FOR THE ROAD

 

TWEET OF THE DAY

“JP Morgan's strategists are smart, but they can garble English as well as any analyst. This week: "exhibits stationary" for "doesn't move”” -@jmackin2

 

 

QUOTE OF THE DAY

“The world is a tragedy to those who feel, but a comedy to those who think.” –Horace Walpole

                       

 

STAT OF THE DAY

UK inflation for August slows to 2.5%, in line with expectations.

 

 

 


THE M3: GENTING SELLS ECHO STAKE

The Macau Metro Monitor, September 19, 2012

 

 

GENTING SINGAPORE TO SELL ENTIRE 4.8% STAKE IN AUSTRALIA'S ECHO ENTERTAINMENT Dow Jones

Genting Singapore is selling its entire 4.8% stake in Echo Entertainment Group Ltd. (EGP.AU) for about 131.7 million Australian dollars (US$137.5 million) in a move to rationalize its investment portfolio.

 

GENT will sell its 33 million Echo shares through a block trade at A$3.99 per share, it said in a filing to the Singapore Exchange on Wednesday.


 


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – September 19, 2012


As we look at today’s set up for the S&P 500, the range is 28 points or -0.91% downside to 1446 and 1.01% upside to 1474. 

                                            

SECTOR AND GLOBAL PERFORMANCE


THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

 

EQUITY SENTIMENT: 

  • ADVANCE/DECLINE LINE: on 09/18 NYSE -341
    • Increase versus the prior day’s trading of -1137
  • VOLUME: on 09/18 NYSE 632.88
    • Decrease versus prior day’s trading of -4.96%
  • VIX:  as of 09/18 was at 14.18
    • Decrease versus most recent day’s trading of -2.81%
    • Year-to-date decrease of -39.40%
  • SPX PUT/CALL RATIO: as of 09/17 closed at 1.49
    • Up  from the day prior at 1.33 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: as of this morning 28.24
  • 3-MONTH T-BILL YIELD: as of this morning 0.10%
  • 10-Year: as of this morning 1.79%
    • Decrease from prior day’s trading of 1.81%
  • YIELD CURVE: as of this morning 1.54
    • Down from prior day’s trading at 1.55 

MACRO DATA POINTS (Bloomberg Estimates)

  • 7am MBA Mortgage Applications, Sept. 14 (prior 11.1%)
  • 8:30am: Housing Starts, Aug. est. 767k (prior 746k)
  • 8:30am: Building Permits M/m, Aug. est. 796k (prior 811k)
  • 9:45am: Fed’s George at jobs conf. in Kansas City, Missouri
  • 10am: Existing Home Sales, Aug. est. 4.56m (prior 4.47m)
  • 10:30am: DoE Inventories
  • 11am: Fed to purchase $1.5b-$2b notes due 2/15/2036-8/15/2042
  • 7pm: Fed’s Fisher speaks on economy and policy in New York

GOVERNMENT:

    • Washington Day Ahead
    • House, Senate in session
    • Bernanke meets privately with Senate Finance Committee to discuss economy, automatic spending cuts, tax increases set to take effect in January, 4:30pm
    • CME Group President Terrence Duffy, SEC Commissioner Daniel Gallagher among speakers at Georgetown University conference on financial market quality
    • FDA advisory panel meets to consider using cell lines derived from human tumors for vaccine manufacture, 8am
    • U.S. Trade Representative Ron Kirk participates in Global Services Summit
    • House Oversight holds hearing on effectiveness of trade- adjustment assistance, 11am
    • Secretary Janet Napolitano testifies at Senate Homeland Security hearing on threats, agency responses, 10am

WHAT TO WATCH:

  • Bank of Japan unexpectedly expands asset-purchase fund by $126b
  • Goldman names Schwartz to succeed CFO Viniar
  • Samsung loses bid to lift Galaxy sales ban in Apple dispute
  • U.S. housing starts probably climbed to four-year high
  • ThaiBev supports Heineken bid for Fraser & Neave’s beer business
  • China resumes buying U.S. Treasury securities as trade surplus widens
  • Apple, publishers offer to shun price-fixing to end EU probe
  • Google joins Amazon, Facebook in new internet lobbying group
  • Anschutz plans to sell L.A.-based live event promoter AEG
  • Apple iPhone 5 praised for speed, faulted on maps by reviewers

EARNINGS:

    • Cracker Barrel Old Country Store (CBRL) 7am, $1.30
    • AutoZone (AZO) 7am, $8.40
    • Ascena Retail Group (ASNA) 7am, $0.29
    • General Mills (GIS) 7am, $0.62 - Preview
    • Steelcase (SCS) 4:01pm, $0.18
    • Adobe Systems (ADBE) 4:05pm, $0.59
    • Bed Bath & Beyond (BBBY) 4:15pm, $1.02
    • Clarcor (CLC) Aft-mkt, $0.69

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

OIL – get the Dollar right, you get Oil right, evidently. No, that wasn’t a fat finger on Monday; that was a man operating a machine that decided to sell Oil ahead of the USD’s 1st two-day up move in almost 6wks; Oil under price momentum pressure now that my immediate-term TRADE line of $113.95 broke (that’s why we got longer US Equities yesterday).

  • Lithium Boom Spurs Production From California Brine: Commodities
  • Oil at $100 No Spur Yet to Release Stockpiles: Energy Markets
  • Oil Extends Losses as Signs of More Supply Offset Japan Stimulus
  • Gold Seen Gaining From Six-Month High as Stimulus Spurs Demand
  • Soybeans Climb as Price Slump May Draw Importers and Investors
  • Copper Seen Advancing on Japanese Stimulus, Lower Stockpiles
  • Sugar Falls on Signs of Ample Supplies From Brazil; Cocoa Gains
  • BHP Says Pace of China Iron Ore Demand Has Slowed by Half
  • Farmer’s Daughter Haugerud Reaps Riches on Drought-Struck Corn
  • B2Gold to Buy CGA for $1.13 Billion to Add Philippine Mine
  • Saudi Arabia Acting to Reduce Oil Price, Gulf Official Says
  • Platinum Holdings Expand to Record on Mine Disruptions, QE3
  • Milk Powder Prices Advance to Five-Month High Amid U.S. Drought
  • China Sugar Output Seen Curbing Imports
  • Rebar in Shanghai Rises for Second Day on Ore Price, Cash Market
  • Chinese Ore Imports Seen Falling 24% as Australia Cuts Forecast
  • Uranium Recovery Postponed as Price Drops to 2-Year Low: Energy

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES


THE HEDGEYE DAILY OUTLOOK - 5

 

 

 

EUROPEAN MARKETS


ITALY – watch this Italian Equity market closely as it diverges negatively vs Spain this wk (Italy has to beg for their bailout later); MIB index just snapped my immediate-term TRADE line of 16,239 as it makes lower-highs vs March.

 

THE HEDGEYE DAILY OUTLOOK - 6

 

 

ASIAN MARKETS


JAPAN – what’s another 10T, amongst Keynesian friends? Currency War remains on as Japan expands money printing operations to 80 TRILLION yens; Dollar up, Yen down, Japanese stocks up +1.2% (still -10% since March).

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

 

The Hedgeye Macro Team


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

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