The Macau Metro Monitor, December 5, 2012




According to the director of the Maritime Administration, Susana Wong Soi Man, the expansion works of the Outer Harbour Ferry Terminal will start in mid-2013.  The government is now preparing the public tender.  In addition, she said that the Taipa Ferry Terminal would be fully operational in the first half of 2014, including a direct link to the Macau airport.


Buying The Love

“Buying love is as stupid as loving money.”



Off the ice, I’m a sometimes cuddly Thunder Bay bear. And since it’s the holiday season, I decided to spread some of the holiday cheer and went shopping yesterday. I love buying things on sale, so I bought some US Consumer stocks. Why some people only buy these things when they are green is still beyond me.


Clearly, buying the love here requires a suspension of disbelief. I get that. But I am also getting used to getting that. For most of 2012, the economy has not been the stock market. On global #GrowthSlowing, the bond market has been closer to the truth.


But what is the truth? That’s a question that people have been asking since Pythagoras did circa 530BC. I’m sure Christopher Columbus found some not so true truisms when he landed on the shores of Hispanolia today in 1492 too. We’re always learning something.


Back to the Global Macro Grind


The truth is that it helps to know when someone is lying to you. For example, look at the fine folks of the Political Class in Greece. Today, the Greeks got the nod as the “most corrupt” country in the European Union. Nice. Must do more bailouts.


In other love-oriented news this morning, it turns out that France’s sperm count just dropped by 32%. Now, if you are a single French male getting taxed at 75%, that’s a problem. The good news is that this isn’t new news. The French study cited by BBC News Europe this morning goes back to 1989. Centrally planned life was not cited as causal.


On a more serious note, why would you love buying US Consumer stocks here? The reason for that is as simple as it has always been in our Global Macro Economic model – deflating the Bernanke’s Bubble (commodities) is a real-time tax cut.


I know, I know – the whole Marxist tax demagoguery thing is still a factor out there. And I’m certainly not trying to downplay the confidence interval you’ll need to have in the bottom-up research that will get you to buy something on sale (74% of companies issuing guidance so far in Q412 have guided lower ) - but tickle me with something that isn’t French this morning and humor me.


The immediate-term risk management setup for US Consumer Stocks is as follows:

  1. SP500 held its immediate-term TRADE support line of 1404 yesterday
  2. Consumer Discretionary (XLY) held its immediate-term TRADE line of $46.49
  3. Consumer Staples (XLP) held its immediate-term TRADE line of $35.28

From an intermediate-term TREND perspective, the Commodity Deflation setup looks equally bullish:

  1. CRB Commodities Index Inflation remains in a Bearish Formation (bearish TRADE, TREND, and TAIL)
  2. Brent and WTI Crude Oil prices remain in Bearish Formations as well ($111.58 and $92.20 TAIL resistance, respectively)
  3. Food Prices (Coffee, Corn – and don’t forget Wheat! “cream of wheat” –Woody Allen) are in Bearish Formations too

So, while deflation of certain asset prices may not be good for some in the Political Class, it’s really good for the Rest of Us. If they are going to tax everything and anything that isn’t locked down, we’ll take some back-pocket relief where we can find it.


What are the risks to Buying The Love in US (or Global) Consumption stocks?

  1. The Government
  2. The Government
  3. And, The Government

You see, it’s only the Government that can impose Policies To Inflate on its people. Bastiat and von Misses called it plundering. That’s what politicians do – they plunder you so that they get paid (that’s why they call your taxes, “revenues”).


Moving along…  In other globally interconnected market news this morning:

  1. Chinese stocks stopped crashing (up huge overnight at +2.87% on the Shanghai Composite)
  2. Russian stocks = +1.75% today (out of crash mode as well, now only -17.5% from the March #GrowthSlowing top)
  3. Both Global Equity Volatility and Sovereign Bonds (Treasuries and German Bunds) are finally overbought

When bonds and volatility are immediate-term TRADE overbought, it’s easier to fall in love with stocks (for a day) too.


Our Risk Ranges (support and resistance) for Gold, Oil (Brent), Copper, US Dollar, EUR/USD, UST 10yr Yield, and the SP500 are now $1, $109.12-110.69, $3.54-3.68, $79.52-80.32, $1.29-1.31, $1.59-1.66%, and 1, respectively.


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Buying The Love - Chart of the Day


Buying The Love - Virtual Portfolio

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.


TODAY’S S&P 500 SET-UP – December 5, 2012

As we look at today's setup for the S&P 500, the range is 15 points or 0.22% downside to 1404 and 0.85% upside to 1419.      















  • YIELD CURVE: 1.35 from 1.36

MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage Applications, Nov. 30 (prior -0.9%)
  • 8:15am: ADP Employment Change, Nov. est. 125k (prior 158k)
  • 8:30am: Nonfarm Productivity, 3Q F est. 2.8% (prior 1.9%)
  • 10am: Factory Orders, Oct. est. 0.0% (prior 4.8%)
  • 10am: ISM Non-Manf. Composite, Nov. est. 53.5 (prior 54.2)
  • 10:30am: DoE inventories
  • 11am: Fed to buy $4.25b-$5.25b debt due 2/15/36-11/15/42


    • House, Senate in session
    • President Obama addresses Business Roundtable members
    • *Financial Research Advisory Committee, unit of Treasury’s
    • Office of Financial Research, holds inaugural meeting
    • FDA to release documents on Zogenix Inc.’s Zohydro, the first single-ingredient hydrocodone product. 8am


  • Tesco poised to exit U.S. after starting Fresh & Easy review
  • Facebook to join Nasdaq 100, replacing Infosys, from Dec 12
  • Big Lots CEO Probed by SEC for Sale Before Share Decline: WSJ
  • Freeport planning 2 big acquisitions in oil & gas, FT says
  • Billionaire Green said to be in talks to sell 25% of Topshop
  • HSBC to sell $9.4b Ping An stake to Charoen Pokphand
  • Intersnack agrees to buy KP Snacks from United Biscuits
  • Senate passes $631b U.S. defense measure over veto threat
  • Pimco’s Gross recommends TIPS as yields on U.S. T-bills are lower than inflation
  • BlackRock’s Larry Fink says he won’t leave firm to take Treasury Dept. job
  • Wal-Mart being probed for breaking India FDI rules: Reuters
  • Wynn Macau changes timing for board to consider dividends
  • Boeing 787 Dreamliners must be inspected for fuel leaks: FAA
  • Repsol suing Chevron in N.Y. court over U.S. co.’s development of shale assets in Argentina


    • Brown-Forman (BF/B) 7:00am, $0.78
    • Toro Co (TTC) 8:30am, $0.01
    • Laurentian Bank of Canada (LB CN) 8:40am, C$1.34
    • Finisar (FNSR) 4:00pm, $0.14
    • Francesca’s Holdings (FRAN) 4:01pm, $0.22
    • Ascena Retail Group (ASNA) 4:02pm, $0.35
    • Vera Bradley (VRA) 4:02pm, $0.38
    • Synopsys (SNPS) 4:05pm, $0.47
    • Verint Systems (VRNT) 4:05pm, $0.59
    • SAIC (SAI) 4:05pm, $0.34
    • Men’s Wearhouse (MW) 5:00pm, $0.97


GOLD -  pain trade is down, not up – after seeing a +13% w/w ramp in spec long positions (futures/options net long contracts) last wk, Gold bulls were looking for Down Dollar to get them paid – didn’t happen on down USD yesterday, so the machines register that as something new, because it is; watching this TREND level of $1711 Gold very closely.

  • Oil Fluctuates on U.S. Inventory Increase, China Economy Boost
  • Steak Price Rising as Cattle Seen 20% Higher at JBS: Commodities
  • Bank of Korea Raises Gold Holding 20% Seeing Metal as Safe Asset
  • Standard Chartered Adds Commodity Traders on China’s Demand
  • Copper Reaches Six-Week High as China Backs Urban Development
  • Gold Rebounds From Four-Week Low as Weaker Dollar Spurs Demand
  • Cocoa Rises as Dry Weather May Hurt African Crops; Sugar Gains
  • Soybeans Advance to Three-Week High as Argentina Set for Storms
  • Rebar Gains on Speculation Chinese Policies to Stimulate Growth
  • Palm Oil Declines to Two-Month Low on Malaysian Supply Outlook
  • Water Wars Pit Thirsty Dakotas Against Barges for Missouri Flow
  • Funds’ $40 Billion Bet on Farmland Seen as a Fraction of Market
  • Former Soviet Union Has Greater Gasoline Potential Than Europe
  • Iron Ore Cargoes to China Fall 8.3% From Australia’s Main Port







GERMANY – real tricky/sticky spot for the DAX here as its closing high for SEP was 7451 on 9/21; looking for hedge funds who are short either the Euro or European stocks to capitulate/cover around here on the Equities side and/or $1.31 Euro (which is the top end of our immediate-term $1.29-1.31 risk range).




CHINA – rip roaring fun in the Shanghai Comp last night, closing up huge (+2.87%) and, importantly, takes it out of crash mode for now (down -17.5% from the March global #GrowthSlowing top); immediate-term Risk Range = 1, and we’d need to see a close > 2038 to consider buying the A-shares (down food and oil helps there too).








The Hedgeye Macro Team




Strenuous Life

This note was originally published at 8am on November 21, 2012 for Hedgeye subscribers.

“We do not admire the man of timid peace. We admire the man who embodies victorious effort.”

-Theodore Roosevelt, 1899


As a Canadian immigrant with both an American made family and firm, Thanksgiving in this country has become a very special time for me. It’s a time to pray, give thanks, and reflect.


There are very few, if any, non-Lincoln American Presidential speeches that have impacted me like Teddy Roosevelt’s speech before the Hamilton Club in Chicago in April of 1899. For those of you who have not read it – it’s called The Strenuous Life.


“In speaking to you, men of the greatest city of the West, men of State which gave to the country Lincoln and Grant, men who preeminently and distinctly embody all that is most American in the American character. I wish to preach, not the doctrine of ignoble ease, but the doctrine of the strenuous life; the life of toil and effort, of labor and strife…”


Back to the Global Macro Grind


Grinding it out in markets, daily, for the last 5 years has been strenuous. But that’s not something to whine about - that’s what I love about this game – the daily grind. As my Dad always used to tell me, “when the going gets tough – the tough get going.”


Whether by indictment, exhaustion, or extinction, one by one we are seeing major players and firms from the #OldWall leave. In many ways, that’s very good news. There are few professions in this country that need to evolve more than this one does. And for this opportunity to be playing on the front lines of change, I am very thankful.


What Americans should also be thankful for this Thanksgiving is deflating in food and oil prices. With 71% of the US economy hinged to the C (Consumption) in the C + I + G + (EX-IM) = GDP calculation, this is where the rubber needs to meet the road back to growth.


While November (and Q412 overall) has been a mess from a US stock market perspective, the US Consumer Discretionary Sector has provided a light at the end of the tunnel that is not another oncoming train. For November to-date, here’s the score on that: 

  1. SP500 (SPY) = down -1.7%
  2. Energy (XLE) = down -2.4%
  3. Consumer Discretionary (XLY) = up +0.7% 

Oil got hammered yesterday (we covered our short position on red) and, to a degree, I think that’s what stopped US stocks from closing on their lows. Strong Dollar and Down Oil is great for US Consumption expectations heading into the holiday season.


Meanwhile, in Bernanke’s speech to one of the Keynesian Clubs yesterday, he implied that he may very well be out of money printing bullets. Most people don’t believe that. And they probably shouldn’t.


But what would the country do if the man just went away? Would the American life of “toil and effort, of labor and strife” change? Or, for the 90% of us who aren’t paid (politically or implicitly) to maintain asset inflation in food/energy prices finally get some relief?


I think the answers to these very simple questions are simple. And, until we have the free-market spine to face the long standing US economic truth that the American consumption economy runs faster and more sustainably when the things we consume fall in price, our lives will remain more strenuous.


Many disagree with me on that. Many think that Bernanke’s Dollar Debauchery and reflexive, short-term, commodity and stock market inflations will magically create economic growth. But they have not. They have slowed real (inflation adjusted) growth.


On CNBC last night, a US economist by the name of Joe Lavorgna (Deutsche Bank) called my economic views “radical.” Joe seems like a nice guy, but his US Growth forecasts at the end of both 2007 and 2011 for 2008 and 2012, respectively, were radically wrong.


Being wrong is fine – it happens to me all of the time. But not learning from my mistakes would render me useless. To change, you need to evolve your process. You may fail, but people will respect you more for showing them how and why you are changing.


I am many things. I have many faults. But I am not a man of timid peace. If I fail in my assumption that a Strong Dollar will create a Stronger America, I will reluctantly, but transparently, throw in my own towel and hold myself to public account.


If I am right, I will have expected to have won. And you’ll be winning too.


“It’s hard to fail, but it is worse to have never tried to succeed.”

-Theodore Roosevelt, 1899 (The Strenuous Life)


Our immediate-term Risk Ranges for Gold, Oil (Brent), Natural Gas, US Dollar, EUR/USD, UST 10yr Yield, and the SP500 are now $1714-1737, $108.89-111.48, $3.69-3.91, $80.87-81.37, $1.26-1.28, 1.55-1.68%, and 1364-1397, respectively.


Happy Thanksgiving to you and your loved ones,



Keiith R. McCullough
Chief Executive Officer


Strenuous Life - Chart of the Day


Strenuous Life - Virtual Portfolio

Cliffs And Peaks


Hedgeye CEO Keith McCullough appeared on CNBC's Fast Money this evening to discuss the fiscal cliff and whether or not corporate earnings have peaked. Our view since March has been that global growth and earnings are slowing; the sell-side essentially took the contra view on global growth and tried to cover up by stating that earnings would be fine. It shows how the sell-side's business model is fading and how desperate Old Wall is trying to save face.


As far as the fiscal cliff goes, the likelihood of politicians in Washington working together has the same chance as the Dow hitting 30,000 by year end. 


Watch the video clip we've posted for Keith's full take on the market and the cliff.

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.