The Macau Metro Monitor, January 15, 2013




Chief Executive Fernando Chui Sai On said that while the the government is strictly enforcing the partial smoking ban in casinos they are still fine-tuning some of the rules.  The partial smoking ban that took effect on January 1, allows casinos to have smoking areas in up to 50% of the gaming floor area. The rules do not set up a minimum ratio for the number of slots and tables to be included in smoking and non-smoking area. 



According to the Statistics and Consensus Service, visitor arrivals on package tours grew 8.6% YoY to 854,000 in November. Below are the statistics by origin:

  • Mainland (643,000): +9.4%
  • Taiwan (60,000): +26.4%
  • South Korea (44,000): +59.6%
  • HK (28,000): -25.2%


In 2012 customs officers in Guangdong province cracked down on 9,741 'shuike' smuggling cases involving MOP1.72BN, which included 11 smuggling gangs.  'Shuike' refers to people who visit HK and Macau at least once daily to smuggle goods (electronics, milk powder, food, etc) from the two cities into the mainland. According to Luo On, an official of the Guangdong provincial government, “The growing number of shuike smugglers has affected the normal operation of checkpoints in Shenzhen and Zhuhai.” 



MBS and RWS were each fined by the CRA (Casino Regulatory Authority of Singapore).  RWS was fined S$230,000 for the breach of social safeguard requirements during the period between November 1, 2011 and April 30, 2012. RWS also faced 3 fines on 3 additional breaches during the same timeframe: S$40,000 for failure to properly enforce valid entry levies on Singaporean citizens and permanent residents, S$40,000 for failure to prevent entry of 3 excluded persons, and S$20,000 for the admission of two minors. 


MBS fined for breaching 3 social safeguards: S$35,000 for failure to properly enforce valid entry levies on Singaporean citizens and permanent residents, S$80,000 for failure to prevent entry of 6 excluded persons, and S$15,000 for the admission of a minor into its casino. 

Government Habits

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”



American, European, and Japanese governments have a habit – it’s called tax-payer funded spending. In order to finance this habit, they A) tax you and B) issue debt. Try part B) at home - levering yourself up to pay your political bills typically doesn’t end well.


I know. I know. ‘This time is different’, ‘print the damn coin’, ‘America voted for this’ – blah, blah, blah. This is what Big Government Interventionists of the 21st century repeatedly do. Obama, sadly, is no different than Bush on this score. They both needed to perpetuate a class struggle in order to sell it to their respective Keynesian economic constituencies.


My quibble isn’t political; politics are now about economics. The French have been arguing about this since at least the early 19th century. As one of the 1st economic historians, Adolphe Blanqui, wrote in 1837: “In all the revolutions, there have been but two parties confronting each other; that of the people who wish to live by their own labor, and that of those who would live by the labor of others.”


Back To The Global Macro Grind


No matter what your politics, you do have to make real-time decisions out there. What else are you supposed to do when politicians are changing the rules of the game on the fly? For the last decade, one of the main risks to growth has been government.


The outgoing Timmy Geithner says the timing of the #DebtCeiling D-Day is “mid-February.” At the latest, my research team has it in early March (coincidentally, March 1st is also when sequester kicks in). Now that it’s mid-January, that means this game of risk is on.


A game? Sadly, yes - a high-stakes game of political chess (they are playing with your money) that will likely require you to do up your chinstrap. Buying stocks in mid-January is hardly as easy as it was buying them in mid-November. Everything in markets has a time and price.


How is risk priced today versus 2-months ago (November 15th)?

  1. November 15th, the SP500 closed at 1353 = 8% LOWER
  2. November 15th, the Russell2000 closed at 769 = 13% LOWER
  3. November 15th, the US Equity Volatility (VIX) closed at 17.99 = 33% HIGHER

Back then (seems like forever ago you could have been long, no?):

  1. Global Growth was going from slowing to stabilizing  
  2. Fiscal Cliff Fear was all over consensus media
  3. The NHL was still on strike

Those were some pretty tough times! And today what?

  1. Global Growth has stabilized
  2. Oil is starting to break-out again
  3. Japan and the US are competing with who can “stimulate” the most with debt

And on and on and on the cycle of Big Government Interventionist policy goes….


But this should surprise no one at this point. This is what Keynesian Policy makers repeatedly do:


A)     They Shorten Economic Cycles

B)      They Amplify Market Volatility


Can you imagine what The Rest of Us will do if the #PoliticalClass just top ticked another market move at an all-time high in the Russell2000? What will The People do if their money manager jammed them into equities at the top of the “fund flows” news cycle?


On a cheerier note, Global Growth hasn’t slowed (yet) and by the looks of Lennar’s (LEN) backlog numbers this morning, our bullish call on US Housing remains intact. Risk never stops moving – it moves both ways.


We’ll corner all angles of this real-time risk debate on our Q1 2013 Global Macro Themes call today at 1PM (email if you’d like to join). Our Q113 Themes are:


1.       #GrowthStabilizing

2.       #HousingsHammer

3.       #QuadrillYen


The first two themes won’t sound new to any of you who read what we write every day. Our process is dynamic – as market prices, economic data, and risk management signals change, we try to. It’s never easy – but neither is excellence.


Our immediate-term Risk Ranges for Gold, Oil (Brent), Corn, US Dollar, EUR/USD, USD/YEN, UST 10yr Yield, and the SP500 are now $1 (covered our GLD short yesterday during the Obama speech), $110.32-112.82 (bullish breakout in Oil), $7.08-7.26 (shorted CORN yesterday), $79.29-79.98, $1.31-1.34, $87.43-89.41 (Yen oversold yesterday), 1.84-1.94%, and 1, respectively.


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Government Habits - Chart of the Day


Government Habits - Virtual Portfolio

Attention Students...

Get The Macro Show and the Early Look now for only $29.95/month – a savings of 57% – with the Hedgeye Student Discount! In addition to those daily macro insights, you'll receive exclusive content tailor-made to augment what you learn in the classroom. Must be a current college or university student to qualify.

What Keith's Reading

Note: Each morning, we will present up to five headlines that Hedgeye CEO Keith McCullough is reading. Please let us know what you think about the feature. Thank you.


-Wal-Mart Plans to Hire Any Veteran Who Wants a Job


-Japan to Sell Debt Worth 7.8 Trillion Yen to Pay for Stimulus


-Geithner Says Debt Limit Steps May Run Out by Mid-February


-Private Equity Flees Clean Energy as Investment Falls


-Morgan Stanley Said to Pare Asia Investment Bank Jobs by 15%


Today we shorted the Consumer Discretionary SPDR ETF (XLY) at $49.06 a share at 3:27 PM EDT in our Real-Time Alerts. Obama's presser today was US Dollar bearish. Dollar Down, Up Oil is not the recipe for US Consumption Growth Stabilizing. That would be what we call a tax. We'll cover on red when the time is right.


TRADE OF THE DAY: XLY - image001

JCP: The Ackman Short

We have long considered investor Bill Ackman’s investment in JCPenney (JCP) a bad trade to say the least. Going against Ackman and shorting JCP is a trade worth considering, but not at these levels. Currently, JCP is the only retailer that has a Sentiment Score below 10 (on a scale of 100). This extremely bearish sentiment is all the more reason why you shouldn’t short JCP when it’s in the teens - it’s a bullish signal.  But those who want to get long JCP are really putting their faith in CEO Ron Johnson flawlessly executing on his 2013 game plan. That’s a Hail Mary if we ever saw one. 



JCP: The Ackman Short - JCP1



The complete transformation of JCP stores is going to take some time and in turn, the company will likely miss near-term targets in favor of long-term results that work. Make no mistake about it: Johnson is in this for the long haul, especially with his stock warrants being worthless while the stock is below $29 a share. While it seems easy to short JCP, you won’t want to do it with the stock trading in the high-teens unless you're making 'the bankruptcy call'. That might come to fruition, but not in 2013. 


JCP: The Ackman Short - JCP3

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.