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Broken: Gold Levels, Refreshed

Takeaway: Gold failed to recapture my 1st line of resistance (1492) and remains in a Bearish Formation (bearish TRADE, TREND, and TAIL) as a result.

I’m getting a lot of client questions about Gold today. I focused on it in my Early Look note this morning, but there was nothing new there – and that’s the point. Gold is broken. And that’s not new either.

 

Across our core risk management durations, here are the Gold lines that matter to me most:

 

  1. Long-term TAIL risk line = 1681
  2. Intermediate-term TREND resistance = 1579
  3. Immediate-term TRADE resistance = 1492

 

In other words, after bouncing to another lower-high in the last few weeks, Gold failed to recapture my 1st line of resistance (1492) and remains in a Bearish Formation (bearish TRADE, TREND, and TAIL) as a result.

 

KM

 

Keith R. McCullough
Chief Executive Officer

 

Broken: Gold Levels, Refreshed - gold

 


JAPAN: Celebrate Good Times

Japan's Nikkei 225 Index moved +3.6% to the upside overnight putting its year-to-date performance at an astounding +37.4%, second only to Venezuela, which is enjoying +44% gains for the same time period. Weaker Yen, monetary policy at the Bank of Japan keeps everything in check. How high can we go?  At this rate, much higher if Japan is OK with its currency being burned.

 

JAPAN: Celebrate Good Times - NIKKEI225


MACAU: STRONG START TO MAY

This note was originally published May 06, 2013 at 15:36 in Gaming

While five days of data is not enough from which to draw many conclusions, the May holiday is off to a strong start.  Average table revenues for 5 days spanning April 30-May 4th were HK$1.2 billion, up 24% year-over-year (HK$975 million) and up 36% from last week’s HK$886 million.  In-line with our earlier projections, we expect May gross gaming revenue growth to accelerate to 16-20% or HK$29.5-30.5 billion.

 

In terms of market share, Galaxy and Wynn were big gainers.  Galaxy’s share shot up to 21.1% from 17.8% share in April while Wynn’s share rebounded to 12% from the April low of 9.2%.  MPEL gave back its massive share gains in April and dropped back to its 6M average share of 14.0%. 

 

MACAU: STRONG START TO MAY - M1

 

MACAU: STRONG START TO MAY - M2


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Gold's Demise

Gold (GLD) continues to move into full blown crash mode after testing our TRADE line of resistance at $1490/oz and failing miserably. It's back at $1445/oz now, down over -1.5% on the day. A strong US dollar and growth and consumption moving full speed ahead do not bode well for the precious metal that everyone is now reconsidering.

 

Gold's Demise - YTDGOLD


In It To Win It

Client Talking Points

Big In Japan

Japan's Nikkei 225 hit a fresh 5-year high today as Japanese stocks rip the the upside (while the Yen flirts with the downside). The Nikkei is up +3.6% in overnight trading and is up +37.4 year-to-date. Bravo! As long as your central bank is in this market to rip 'em higher and win big, investors can't lose.

Goodbye To Gold?

Say goodbye to gold, folks. Gold is down nearly -0.8% this morning as people realize that consumption is good for stocks, bad for gold. Combine that with a stronger US dollar and you'll realize that gold isn't bottoming - it's crashing. Gold failed again at our TRADE line of resistance of $1490/oz. Things get tougher for gold here, not easier.

Asset Allocation

CASH 27% US EQUITIES 20%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 6% INTL CURRENCIES 27%

Top Long Ideas

Company Ticker Sector Duration
IGT

Decent earnings visibility, stabilized market share, and aggressive share repurchases should keep a floor on the stock.  Near-term earnings, potentially big orders from Oregon and South Dakota, and news of proliferating gaming domestically could provide near term catalysts for a stock that trades at only 11x EPS.  We believe that multiple is unsustainably low – and management likely agrees given the buyback – for a company with the balance sheet and strong cash flow as IGT.  Given private equity’s interest in WMS (they lost out to SGMS) – a company similar to IGT that unlike IGT generates little free cash – we wouldn’t rule out a privatizing transaction to realize the inherent value in this company. 

WWW

WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow.  

FDX

With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view. 

Three for the Road

TWEET OF THE DAY

"#FastFact Breakfast accounts for 25% of McDonald's sales $MCD" -@BloombergTV

QUOTE OF THE DAY

"I'm worried that the universe will soon need replacing. It's not holding a charge." -Edward Chilton

STAT OF THE DAY

MBIA (MBI) stock soared +45% yesterday on news that it has reached a settlement with Bank of America related to various mortgage lawsuits stemming from the housing crisis.


THE HEDGEYE DAILY OUTLOOK

THE HEDGEYE DAILY OUTLOOK

 

TODAY’S S&P 500 SET-UP – May 7, 2013     

 

As we look at today's setup for the S&P 500, the range is 26 points or 1.39% downside to 1595 and 0.22% upside to 1621.

                                                                                               

SECTOR PERFORMANCE


THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

EQUITY SENTIMENT:


THE HEDGEYE DAILY OUTLOOK - 10A


CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 1.56 from 1.55
  • VIX  closed at 12.66 1 day percent change of -1.48%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:45am: ICSC weekly sales
  • 8:55am: Johnson/Redbook weekly sales
  • 10am: IBD/TIPP Economic Optimism, May, est 47.3 (prior 46.2)
  • 10am: JOLTs Job Openings, March (prior 3.925m)
  • 11am: Fed to purchase $1.25b-$1.75b debt in 2036-2043 sector
  • 11:30am: U.S. to sell 4W bills
  • 1pm: U.S. to sell $32b 3Y notes
  • 3pm: Consumer Credit, March, est. $16b (prior $18.139b)
  • 4:30pm: API energy inventories

GOVERNMENT:

    • President Obama meets w/ S. Korean President Park Geun-Hye
    • House, Senate in session
    • U.S. Court of Appeals for the D.C. Circuit hears arguments in Texas challenge to EPA over federal takeover of state’s carbon-emission rules, 9:30am
    • House Science, Space and Technology subcmte holds hearing on Keystone pipeline, 10am
    • Bill Clinton, Microsoft’s Bill Gates discuss America’s future at Peterson Foundation Fiscal Summit
    • Carlos Edwards, chief of security operations and engineering at the SEC, speaks at Intl Information Systems Security Certification Consortium, 11am
    • Special election for vacant House seat in S.C., race pits former Republican Gov. Mark Sanford against Democratic nominee Elizabeth Colbert Busch, sister of political satirist Stephen Colbert; Polls close 7pm
    • Pre-trial hearing for Pfc. Bradley Manning, charged w/ aiding enemy, wrongfully causing intelligence to be published on Internet, 3pm
    • Dalai Lama gives lecture on peace at Univ. of Maryland

WHAT TO WATCH

  • Swap regulators face Congressional pressure to curb Dodd-Frank
  • 12 banks sued over claims they restrained credit swap market
  • Arrowgrass said to snub Freeport bid after buying Plains stake
  • Senate passes WMT-backed bill letting states tax Web sales
  • GM wins approval to build $1.3b Cadillac plant in China
  • YouTube said to plan $1.99 subscription channels in coming wks
  • Pfizer selling Viagra at website to combat fake versions
  • Microsoft sells 100m Windows 8 licenses, preparing update
  • Pentagon awards drop 52%; U.S. automatic cuts trigger slowdown
  • PG&E should pay $2.25b for California blast, agency says
  • Hertz holders including CDR, Carlyle to sell 49.8m shrs
  • Pandora says 40-hr cap on mobile listening cuts content costs

EARNINGS:

    • Cimarex Energy (XEC) 6am, $1.06
    • Towers Watson (TW) 6am, $1.49
    • Emerson Electric (EMR) 6:30am, $0.78 - Preview
    • Nationstar Mortgage Holdings (NSM) 6:30am, $0.73
    • NRG Energy (NRG) 6:40am, ($0.29)
    • Henry Schein (HSIC) 6:51am, $1.07
    • Fossil (FOSL) 6:59am, $0.97
    • Husky Energy (HSE CN) 7am, C$0.53
    • Discovery Communications (DISCA) 7am, $0.64
    • HollyFrontier (HFC) 7am, $1.77
    • TransDigm Group (TDG) 7am, $1.73
    • Fortis Inc/Canada (FTS CN) 7am, C$0.65
    • Hospitality Properties Trust (HPT) 7am, $0.74
    • Endo Health Solutions (ENDP) 7am, $1.08
    • AECOM Technology (ACM) 7am, $0.51
    • Broadridge Financial Solutions (BR) 7am, $0.32
    • OfficeMax (OMX) 7am, $0.23
    • International Flavors & Fragrances (IFF) 7:02am, $1.13
    • DIRECTV (DTV) 7:30am, $1.09
    • Health Care REIT (HCN) 7:30am, $0.90
    • Molson Coors Brewing (TAP) 7:30am, $0.34
    • Westjet Airlines (WJA CN) 7:30am, C$0.64
    • Quicksilver Resources (KWK) 7:30am, ($0.01)
    • Ariad Pharmaceuticals (ARIA) 7:35am, ($0.37)
    • Cinemark Holdings (CNK) 7:37am, $0.24
    • CommVault Systems (CVLT) 7:40am, $0.34
    • Perrigo (PRGO) 7:45am, $1.44
    • Inergy Midstream (NRGM) 7:45am, $0.13
    • Inergy (NRGY) 7:46am, $0.05
    • Charter Communications (CHTR) 8am, ($0.46)
    • George Weston (WN CN) 8am, C$0.92
    • Ares Capital (ARCC) 8am, $0.40
    • Louisiana-Pacific (LPX) 8am, $0.45
    • FirstEnergy (FE) 8:25am, $0.69
    • Oaktree Capital Group LLC (OAK) 8:30am, $1.53
    • Isis Pharmaceuticals (ISIS) 8:30am, ($0.06)
    • Emera (EMA CN) 9:52am, $0.67
    • CI Financial (CIX CN) 11:27am, $0.36
    • Mondelez International (MDLZ) 4pm, $0.33 - Preview
    • Onyx Pharmaceuticals (ONXX) 4pm, ($0.48)
    • Plantronics (PLT) 4pm, $0.71
    • WebMD Health (WBMD) 4pm, ($0.15)
    • Williams (WMB) 4:01pm, $0.24
    • Williams Partners (WPZ) 4:01pm, $0.50
    • DaVita HealthCare Partners (DVA) 4:01pm, $1.80
    • Electronic Arts (EA) 4:01pm, $0.58 - Preview
    • DigitalGlobe (DGI) 4:01pm, ($0.46)
    • ACADIA Pharmaceuticals (ACAD) 4:01pm, ($0.08)
    • TripAdvisor (TRIP) 4:02pm, $0.47
    • Two Harbors Investment Corp (TWO) 4:02pm, $0.32
    • Zillow (Z) 4:02pm, ($0.05)
    • Whole Foods Market (WFM) 4:03pm, $0.73 - Preview
    • Live Nation Entertainment (LYV) 4:03pm, ($0.36)
    • Symantec Corp (SYMC) 4:05pm, $0.38
    • CA (CA) 4:05pm, $0.55
    • Seattle Genetics (SGEN) 4:05pm, ($0.19)
    • Gulfport Energy (GPOR) 4:05pm, $0.14
    • URS Corp (URS) 4:05pm, $1.12
    • Jazz Pharmaceuticals (JAZZ) 4:05pm, $1.29
    • SandRidge Energy (SD) 4:05pm, ($0.05)
    • ValueClick (VCLK) 4:05pm, $0.39
    • Myriad Genetics (MYGN) 4:05pm, $0.39
    • Babcock & Wilcox (BWC) 4:09pm, $0.48
    • McKesson Corp (MCK) 4:10pm, $2.31
    • Douglas Emmett (DEI) 4:13pm, $0.35
    • Walt Disney (DIS) 4:15pm, $0.77 - Preview
    • CH Robinson Worldwide (CHRW) 4:15pm, $0.69
    • American Water Works (AWK) 4:15pm, $0.32
    • Exelixis (EXEL) 4:16pm, ($0.28)
    • Oasis Petroleum (OAS) 4:30pm, $0.51
    • Regency Centers Corp (REG) 4:48pm, $0.62
    • Kinross Gold Corp (K CN) 5pm, $0.13
    • Axiall Corp (AXLL) 5pm, $1.17
    • Giant Interactive Group (GA) 5pm, $0.22
    • IAMGOLD Corp (IMG CN) 6:10pm, $0.14
    • Marathon Oil (MRO) Aft-mkt, $0.72

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Gold Purchases by China From Hong Kong Double to Record in March
  • Tin Bear Market Slump Seen Curbing Record Exports: Commodities
  • China’s Gold Consumption Jumps 26% in First Quarter Before Rout
  • WTI Crude Drops First Day in Four as U.S. Stockpiles Seen Rising
  • Wheat Rises as U.S. Winter Crop Worsens and Ukraine Remains Dry
  • Copper Advances in New York After Jump in Germany Factory Orders
  • Gold Retreats in New York on Slowing Demand; Silver Declines
  • North Sea Brent Crude Exports Drop to Five Cargoes in June
  • Money Managers Boost Net Long on London Cocoa to 42,972 Lots
  • Crude Supplies Climb From 82-Year High in Survey: Energy Markets
  • Rio Said to Pursue $5 Billion Iron-Ore Project as Glut Looms
  • Cocoa Falls as Technical Signals Turn Bearish; Raw Sugar Drops
  • Tanker Rates Rallying on Record U.S. Gasoline Cargoes: Freight
  • BullionVault Demand Gauge Jumps to 16-Month High After Bear Drop

THE HEDGEYE DAILY OUTLOOK - 5

 

CURRENCIES


THE HEDGEYE DAILY OUTLOOK - 6

 

GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 3

 

THE HEDGEYE DAILY OUTLOOK - 4

 

EUROPEAN MARKETS


THE HEDGEYE DAILY OUTLOOK - 7

 

ASIAN MARKETS


THE HEDGEYE DAILY OUTLOOK - 8

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 9

 

 

The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 


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