Macro Tourists

“As they have come, so shall they go.”



In one of the more interesting chapters (Chapter 26: The End of The Ottomans) of Paris 1919 – Six Months That Changed The World, I found that prescient Middle Eastern history quote by Mustafa Kemal (Ataturk).


“In 1919, few foreigners had ever heard of him; four years later he had humbled Britain and France and brought into existence the new nation-state of Turkey.” (Paris 1919, page 369)


Ultimately, Ataturk’s vision for a more stable state was based on a simple belief that people are more apt to trust what they know. As confidence falls, foreigners are often the first to flee. That’s no different for most Macro Tourists investing in Emerging Markets.


Back to the Global Macro Grind


I think Kyle Bass coined the term Macro Tourist. It’s cute. I think he was alluding to people chasing Japanese Equities. It’s a clever term – it also annoys a lot of people who actually are what the term suggests.


Bass is a thoughtful guy, but since he only started investing on the buy-side in 2006, he’s hardly in a position to anoint himself the authority on all things Global Macro. So you can imagine why the prickly types like Dan Loeb felt pricked.


All personalities (including my own) aside, what Bass and Loeb are really calling attention to here is that we are all Global Macro Risk Managers now. If you believe in things like gravity, beta, and interconnectedness, that is…


The way we do Global Macro is A) as a team and B) from a math/theme perspective. At the top of every risk management morning, I’ll send the Top 3 Global Macro Risks that are trending in our model with some quant levels and thoughts.


Today’s Top 3 were China, FTSE, and Gold (I send this out at 6AM EST, every day):


1.   CHINA – down hard, then rumor, then bounce – Bernanke/Draghi type playbook for the Chinese as the entire world attempts to watch what we cannot see; Shanghai Comp closes -0.2%, #oversold, but crashing – bouncing on rhetoric doesn’t solve the long-term issues; TREND resistance = 2192


2.   FTSE – I learn the most during the bounces; this bounce in European Equities hasn’t seen 1 major index recapture any of my intermediate-term TREND lines; FTSE +0.8% to 6075, well below 6398 TREND resistance; DAX TREND line = 8014


3.   GOLD – bear market bounce of +0.14%; that’s not going to get anyone excited; neither will a 10yr UST Yield of 2.5% and a US Dollar recapturing $81.21 TREND support. Gold is turning into a good proxy for deflation – deflating Bernanke Bubbles, that is


I do this to help our Institutional clients contextualize immediate-term market moves within intermediate-term TRENDs. Consider them headlights. Some clients trade futures on them. Some provide immediate feedback/thoughts. Some probably just #delete.


Tourist or Global Macro pro, the market doesn’t care what you are. Mr. Market is going to correlate and frustrate; and he is usually working on a way to impose the most amount of pain, on the most amount of people, at the most inopportune time. #consensus


That’s why we Embrace Uncertainty each and every Global Macro morning. After the market issues its signals, it’s a lot easier to make risk adjusted decisions within a multi-factor, multi-duration, framework than it is to space out and watch consensus TV.


Global Macro TRENDs matter, because they tend to trend. Here are 3 new ones trending now:

  1. US Equity Volatility (VIX) is bullish TREND for the 1st time since October 2012 (new TREND support = 18.98)
  2. US Equity (SP500) intermediate-term TREND support of 1592 is broken
  3. Japan’s #WeimarNikkei has snapped her intermediate-term TREND line of 13,619

Will US Equities recover TREND support? Will front-month volatility break down through 18.98 VIX again? Will she stay or will she go? Oh, and what will be the catalyst? In the US, both Durable Goods and New Home Sales “expectations” look a tad high this morning.


Gold, Treasuries, and Emerging Markets blowing up aren’t the new TRENDs @Hedgeye to worry about. These are the ones that we proactively positioned you for. The real pin action is in signaling the new stuff.


Since we hockey players aren’t that bright to begin with, what we do is hire football players. My left-tackle is Darius Dale, and he and I tend to keep it pretty simple. We try our best to front-run shifts in the slope of growth and inflation lines.


Here’s what I mean by that:

  1. Local inflation is rising in some countries (Japan, Venezuela, etc.) whose currency is being debauched
  2. Gold and Emerging Market Debt are deflating via #StrongDollar and #RisingRates

In other words, some of the older Global Macro TRENDs are bumping into the new ones now. Correlation Risk is starting to whip around and volatility is starting to breakout. Macro Tourist or not, this makes getting the day-to-day tougher out there. So our advice this morning is still what it’s been for the last 3-4 weeks. Sell on strength.


Our immediate-term TRADE Risk Ranges are now (TREND bullish or bearish in brackets):


UST 10yr Yield 2.31-2.61% (bullish)

SPX 1 (bearish)

Nikkei 12,408-13,619 (bearish)

VIX 17.98-20.97 (bullish)

USD 82.19-82.98 (bullish)

Yen 96.05-97.91 (bearish)

Oil (Brent) 100.02-103.64 (bearish)

Gold 1 (bearish)


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Macro Tourists - Chart of the Day


Macro Tourists - Virtual Portfolio

June 25, 2013

June 25, 2013 - DTR



June 25, 2013 - 10yr

June 25, 2013 - VIX

June 25, 2013 - dxy

June 25, 2013 - euro



June 25, 2013 - spx

June 25, 2013 - dax

June 25, 2013 - nik

June 25, 2013 - yen

June 25, 2013 - oil

June 25, 2013 - natgas

June 25, 2013 - gold

June 25, 2013 - copper


Vegas will likely post a double-digit gain in May gaming revenues.



Owing to an easy comparison and solid airport traffic, we estimate Strip gaming revenues may have climbed 14-18% YoY.  Of course, we are assuming normal hold for slots and tables.  Last May, the Strip held high on slots and low on tables. 


In addition to the easy table hold comparison, slot volumes were surprisingly low in May of 2012, down 6.7%.  Baccarat drop was also low, down 22% last year.  We expect to see that volumes were strong YoY in May, benefiting from those easy comparisons. 


Nevertheless, we would expect the Street to view the Vegas numbers favorably when they are released by the Nevada Gaming Commission in a couple of weeks.  Improving LV results over the near-term and the strong Macau performance of MGM Macau has us liking MGM on the long side of a trade.  Longer-term, we remained concerned with the demographics of fewer slot players domestically and the headwind that trend should provide.


Here are our projections for May on the Las Vegas Strip:



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.

Trade of the Day: NSM

Takeaway: We sold Nationstar (NSM) at 2:55 PM at $36.65.

We bought NSM near the low of the day at 11:46 AM ($35.52) so that we can risk manage this idea proactively. Selling it for a 3% gain. We'll be back on the next buy signal.  Hedgeye Financial Sector Head Josh Steiner continues to be bullish on the longer-term idea, from a price.


Trade of the Day: NSM - NSM

Response to Omega's Letter to Barron's on LINN Energy

Takeaway: Here is Hedgeye's response to Omega's Letter in Barron's on LINN Energy.

This note was originally published June 24, 2013 at 14:34 in Energy

We have transcribed Leon Cooperman’s letter to Barron’s (published 6/22/13) with respect to his views on LINN Energy.  We believe that there are several misleading statements and omissions of key information in the letter, and we offer our comments for the benefit of Mr. Cooperman and all others involved and interested.


CLICK HERE to link to the transcribed letter with our comments.


Response to Omega's Letter to Barron's on LINN Energy - oil9


Kevin Kaiser

Senior Energy Analyst


Response to Omega's Letter in Barron's on LINN Energy

We have transcribed Leon Cooperman’s letter to Barron’s (published 6/22/13) with respect to his views on LINN Energy.  We believe that there are several misleading statements and omissions of key information in the letter, and we offer our comments for the benefit of Mr. Cooperman and all others involved and interested.


CLICK HERE to link to the transcribed letter with our comments.


Kevin Kaiser

Senior Analyst


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.