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CHART DU JOUR: REVPAR ACCELERATION

Takeaway: Positive momentum for H, HOT, MAR, and HST

Our math shows RevPAR accelerating December through February

 

  • December was a good month for hotels with Upper Upscale RevPAR likely up double digits
  • We expect the positive momentum to continue through Q1 with projected RevPAR up 8%, 9%, 6% and 8% in Jan, Feb, Mar, and Apr, respectively.
  • We believe consensus Q1 RevPAR expectations are for 5% YoY growth.  If we're right on RevPAR, hotel stocks could continue to move higher

 

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HOUSING: Jump Start The Market

An explosive jump in housing starts was revealed today as US builders broke ground on more homes in December than in November as builders began construction of houses and apartments at a seasonally adjusted annual rate of 954,000. 

 

Additionally, US homebuilder confidence reached a seven-year high; the NAHB/Wells Fargo Housing Market index was at 47 this month, the highest level since April 2006. The recent tailwinds in housing, such as yesterday's surge in mortgage applications, coincide with our Q1 2013 Global Macro Theme of #HousingsHammer. With plenty of positive data lifting housing, it’s clear that the best is yet to come.

 

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Top Of The Morning

Client Talking Points

The Low Down

1466-1478 is our risk range for the S&P 500 today. There is plenty of opportunity here to make some sales and take some profits. Buying tops isn’t cool, because that’s when you get smoked and get a margin call from your broker. It’s important to manage the risk and the range of your trades because despite what the Federal Reserve is capable of, the market doesn’t just go up and to the right all the time. Our S&P Sector Model isn’t "perfectly bullish" as it has been recently and combined with yesterday’s close (the Russell 2000 didn’t make another new all-time high), it’s important to realize that the market can get nervous and dive lower. Proceed with caution out there today. 

VIX Tricks

The VIX has been getting hammered nearly every day over the past few weeks as the stock market rose towards infinity and beyond (Sorry, Buzz). We’ll be keeping an eye on it since the VIX signaled immediate-term TRADE oversold at 13.16. When the VIX is at levels this low, there's plenty of risk for a move to the downside in equities.

Asset Allocation

CASH 52% US EQUITIES 15%
INTL EQUITIES 15% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 18%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

ADM

ADM has significantly lagged the overall market in 2012 over concerns that weakness in the company’s bioproducts (ethanol) and merchandise and handling segment will persist. Ethanol margins suffered from higher corn costs, as well as weak domestic demand and low capacity utilization across the industry. Merchandising and handling results were at the mercy of a smaller U.S. corn harvest. Both segments could be in a position to rebound as we move into 2013 and a new crop goes into the ground. With corn prices remaining at elevated levels, the incentive to plant corn certainly exists, and we expect that we will see corn planted fencepost to fencepost.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

“Mantei T'eo will be confessing to Oprah in less than a month ...” -@nickragone2

QUOTE OF THE DAY

“Victory goes to the player who makes the next-to-last mistake.” -Grigorievitch Tartakower

STAT OF THE DAY

Jobless claims drop to five-year low: Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000.


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.

THE M3: NEW RESIDENTIAL SALES; SMOKING FINES; FEWER GAMING TABLES; S'PORE NEW MRT LINES

The Macau Metro Monitor, January 17, 2013

 

 

FOUNTAINSIDE'S NEW PHASE UP FOR SALE macaubusiness.com

In 2Q13, another phase of Fountainside's residential units will go up for sale.  The developer Macau Property Opportunities Fund expects that the 42 units will be complete by March.  20 of the units have already been sold and the remaining 18 flats and 4 villas are expected to fetch an average US$800 (MOP 6,400) and US$1,400 per square foot, respectively. 

 

ALMOST 9,000 FINED FOR SMOKING IN PUBLIC AREAS macaubusiness.com

A total of 8,913 people have been fined for breaking the city's smoking ban since January 1st. 

 

FEWER GAMING TABLES IN Q4, SLIGHT REVENUE INCREASE macaudailytimes.com

According to the DICJ, at 5,485, there were 12 fewer tables in 4Q than in 3Q. The number slots decreased by 444 to a total of 16,585 units. Despite sequential drop in number of tables and slots, gross gaming revenues grew 0.8% QoQ. 

 

S'PORE TO HAVE TWO NEW MRT LINES BY 2030 channelasia.com

Following a review of the Land Transport Master Plan by the Land Transport Authority (LTA), it was announced that Singapore will have 2 new MRT lines and extend the 3 existing lines.  The new lines are Cross Island Line (CRL) and Jurong Region Line (JRL), both of which are expected to be completed by 2030. The extension of the 3 existing lines is expected to be completed by 2025.


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – January 17, 2013

 

As we look at today's setup for the S&P 500, the range is 12 points or 0.45% downside to 1466 and 0.36% upside to 1478.                                                                                                                               

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

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EQUITY SENTIMENT:


THE HEDGEYE DAILY OUTLOOK - 10


CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 1.60 from 1.58
  • VIX  closed at 13.42 1 day percent change of -0.96%
  • RUT – after making a series of all-time highs (higher-highs), the Russell2000 finally flashed a negative divergence into yesterday’s close (closing down -0.33% w/ the Nasdaq up); not a bearish signal on the margin unless confirmed today, so watch that.

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30am: Housing Starts, Dec., est. 890k (prior 861k)
  • 8:30am: Housing Starts, M/m,  Dec., est. 3.3% (prior -3%)
  • 8:30am: Building Permits, Dec., est. 905k (prior 900k)
  • 8:30am: Init Jobless Claims, Jan. 12, est. 368k (prior 371k)
  • 9:45am: Bloomberg Consumer Comfort, Jan. 13 (prior -34.4)
  • 10am: Freddie Mac 30-yr mortgage
  • 10am: Philadelphia Fed., Jan., est. 6.0 (prior 4.6)
  • 10:30am: EIA natural gas storage change
  • 11am: Fed to purchase $2.75b-$3.5b in 2020-2022 sector
  • 11am: U.S. Treasury to announce plans for 10Y TIPS auction
  • 12:05pm: Fed’s Lockhart speaks, Bloomberg Global Mkts Summit

GOVERNMENT:

    • Senate not in session
    • SEC Commissioner Gallagher at U.S. Chamber of Commerce
    • Bloomberg Global Markets Summit, w/speakers Atlanta Federal Reserve President Dennis Lockhart, Paul Wolfowitz of the American Enterprise Institute, 8am
    • CFPB holds hearing on mortgage-svcing underwriting rule
    • FDA decisions:
      • NuPathe’s migraine patch
      • Decision date for Santarus, Cosmo ulcerative colitis drug
    • Dept. of Veterans Affairs may award five-year, $5b technology contract; Lockheed Martin, HP, have shown interest

WHAT TO WATCH

  • Boeing’s Dreamliner planes grounded by U.S.
    • Japan Airlines to cancel all Boeing 787 flights Jan. 19-25; Air India, Latam Airlines will also ground its Dreamliners
    • GS Yuasa may take months to complete 787 battery probe
  • Citigroup, BofA among banks releasing earnings this AM
  • Silver Lake close to lining up ~$15b in funds for Dell LBO
  • HP approached by investment bankers about selling assets
  • Rio Tinto CEO steps down, co. taking ~$14b of writedowns
  • JPMorgan said to settle claim with Whale trader’s supervisor
  • AB InBev unwilling to sell Modelo plant for merger approval
  • Goldman Sachs issued $6b of bonds in lender’s largest offering
  • EBay sales beat ests. as Donahoe pushes mobile commerce
  • Trauson says Stryker offers to buy outstanding shrs at HK$7.5 each
  • Wilbur Ross still plans to have IPO of Intl Automotive Components Group; declined to say when
  • Deutsche Bank profited as derivative hid Monte Paschi losses
  • Advanced Micro Devices ex-employees sued over trade secrets
  • GM to invest $1.5b in North America factories this year
  • Sun Life, Khazanah Nasional Berhad to buy CIMB Aviva for $596m
  • Accordia plans to sell ~10 properties to finance shr-buyback
  • Hollywood studios sued over royalties from home video sales

EARNINGS:

    • Huntington Bancshares (HBAN) 5:55am, $0.17
    • BB&T (BBT) 6am, $0.71
    • UnitedHealth Group (UNH) 6am, $1.20
    • PNC Financial Services Group (PNC) 6:30am, $1.48
    • Fifth Third Bank (FITB) 6:30am, $0.41
    • BlackRock (BLK) 6:30am, $3.73
    • Bank of America (BAC) 7am, $0.20
    • Fastenal (FAST) 7am, $0.33
    • Netscout Systems (NTCT) 7:30am, $0.35
    • Citigroup (C) 8am, $0.96
    • Amphenol (APH) 8am, $0.90
    • Intel (INTC) 4:01pm, $0.45
    • Associated Banc-corp (ASBC) 4:01pm, $0.26
    • American Express (AXP) 4:01pm, NA
    • People’s United Financial (PBCT) 4:02pm, $0.19
    • Wintrust Financial (WTFC) 4:04pm, $0.59
    • Capital One Financial (COF) 4:05pm, $1.59
    • Matthews International (MATW) 4:10pm, $0.42
    • Xilinx (XLNX) 4:20pm, $0.37

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • WTI Oil Rises to Four-Month High to Cut Brent Discount to $15
  • JPMorgan Tops Banks for Third Year as Loans Retreat: Commodities
  • Rio CEO Albanese Steps Down as $14 Billion Writedown Looms
  • Rising Crude Oil May Accelerate Growth of EU Consumer Gas Prices
  • Soybeans Drop From 3-Week High on Rising South American Supplies
  • Gold Poised to Decline in New York Before U.S. Economic Data
  • European 2014 Power Drops to Record as Near-Term Prices Decline
  • Iamgold Sees ‘Peak Gold’ Forging $2,500 Price: Corporate Canada
  • Korean Oil Buyers to Halt North Sea Price Slide: Energy Markets
  • Trough in China PMI, Electricity Output Aids Metals: Bull Case
  • Lukoil, Iraq Agree to Cut Output Target at West Qurna-2 Field
  • Cocoa Butter Stabilizes in Europe as Grinders Boost Processing
  • Palm Oil Declines as India Changes Calculation of Import Taxes
  • Merkel Offshore Wind-Power Dream Stalls as Vow Turns to Bluster
  • Copper Rises on Speculation Chinese Economic Growth Strengthened

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CURRENCIES


YEN – 2-days up, tapped immediate-term TRADE resistance (24hrs ago), then straight back down here today (-0.87%); we re-shorted the bounce and went through why in our Global Macro Themes presentation titled #QuadrillYen this wk; let us know if you want that slide deck. Interesting that Nikkei didn’t go up on Yen down overnight.

 

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EUROPEAN MARKETS


DAX – starting to make a series of lower-highs and also leads losers in European majors this morning – Euro up +0.5% to $1.33 starting to annoy some European exporters; this is the Currency War.

 

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ASIAN MARKETS

 

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MIDDLE EAST


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The Hedgeye Macro Team

 

 

 



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