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June 26, 2013

June 26, 2013 - DTR

 

BULLISH TRENDS

June 26, 2013 - 10yr

June 26, 2013 - VIX

June 26, 2013 - dxy

 

BEARISH TRENDS

June 26, 2013 - spx

June 26, 2013 - dax

June 26, 2013 - nik

June 26, 2013 - yen

June 26, 2013 - oil

June 26, 2013 - natgas

June 26, 2013 - gold

June 26, 2013 - copper


THE M3: MACAU LEGEND IPO; LVS CFO LEAVING

THE MACAU METRO MONITOR, JUNE 26 2013

 

 

MACAU LEGEND CUTS IPO SIZE BY MORE THAN HALF Macau Business

Macau Legend has cut its initial public offer shares to 934.8 million from an earlier 2.05 billion.  The company cites that current market conditions have changed.  The offer price range remains unchanged at HK$2.30 (US$0.3) to HK$2.98 each. The price determination date is now July 2. Trading is expected to start on July 5.


Macau Legend, headed by David Chow Kam Fai, was previously looking to raise up to US$786 million (MOP6.3 billion) through its IPO on the Hong Kong Stock Exchange.  Now, it could raise up to US$358 million.

 

LAS VEGAS SANDS SAYS CFO KAY LEAVING Bloomberg

Kenneth Kay will leave effective July 31.  The company didn’t give a reason. Kay will provide transition services as part of a six-month consulting agreement, the Las Vegas-based casino and resort company said in a filing yesterday.


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – June 26, 2013


As we look at today's setup for the S&P 500, the range is 54 points or 1.77% downside to 1560 and 1.64% upside to 1614.                 

                                                                                                              

SECTOR PERFORMANCE


THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

EQUITY SENTIMENT:


THE HEDGEYE DAILY OUTLOOK - 10


CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 2.16 from 2.20
  • VIX closed at 18.47 1 day percent change of -8.16%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage Applications, June 21 (prior -3.3%)
  • 8:30am: GDP Q/q, 1Q final, est. 2.4% (prior 2.4%)
  • 8:30am: Personal Consumption Expend., 1Q final, est. 3.4%
  • 8:30am: GDP Price Index, 1Q final, est. 1.1% (prior 1.1%)
  • 10am: Fed’s Fisher, Lacker testify on financial regulation to House Financial Services Committee
  • 10:30am: DOE Energy Inventories
  • 11am: Fed to buy $2.75b-$3.5b debt in 2020-2023 sector
  • 1pm: U.S. to sell $35b 5Y notes

GOVERNMENT:

    • 10am: Supreme Court will rule on Prop. 8, Calif. initiative banning same-sex marriage, and DOMA, a law denying federal benefits to legally married gay couple
    • 10am: Sen. Finance Cmte hearing on future of health care
    • 10am: House Budget Cmte hearing on energy development for economic growth, jobs
    • House Finl Svcs Cmte holds hearing on possibility of further taxpayer-funded bailouts resulting from Dodd-Frank; FDIC Vice Chairman Thomas Hoenig testifies
    • 10:30am: Senate Budget Cmte holds hearing on consequences of federal budget decisions on future generations
    • 1:30pm: House Energy and Commerce panel on energy, power holds hearing on the renewable fuel standard

WHAT TO WATCH

  • Gold hits lowest since Sept. 2010, silver lowest since Aug. 2010
  • China swaps drop a 4th day as PBOC eases cash squeeze
  • Democrat Markey wins Mass. Senate race for Kerry’s seat
  • Las Vegas Sands says Kay will leave as CFO
  • Draghi says deficit cuts in euro area should be growth friendly
  • EU resumes battle of how to impose losses at failing banks
  • Wal-Mart India head leaves 7 mos. after local CFO suspended
  • Australian PM Julia Gillard calls Labor party leadership vote
  • Marc Rich, commodities trader, died aged 78 in Switzerland
  • Stratasys plans acquisitions for 3-D printers that use metals
  • China starts investigation to ensure accuracy of eco. data
  • Square to process payment online, taking on PayPal: WSJ

EARNINGS:

    • General Mills (GIS) 6:58am, $0.54 - Preview
    • Lindsay (LNN) 7am, $1.80
    • UniFirst (UNF) 8am, $1.38
    • Monsanto (MON) 8am, $1.59 - Preview
    • AGF Management (AGF/B CN), 8am C$0.16
    • Herman Miller (MLHR) 4pm, $0.36
    • Paychex (PAYX) 4:01pm, $0.38
    • Bed Bath & Beyond (BBBY) 4:15pm, $0.93 - Preview
    • Progress Software (PRGS) 4:15pm, $0.22
    • HB Fuller (FUL) 5:25pm, $0.70

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Marc Rich, Fugitive Commodities Trader During 1980s, Dies at 78
  • Gold Bear Market Hits Hardest in South Africa Mines: Commodities
  • Australia Cuts Iron Ore Estimate as China’s Expansion Slows
  • Gold Slips to 34-Month Low as Precious Metals Slide on Fed View
  • Copper Seen Dropping on Slower Chinese Growth as Stockpiles Gain
  • Gold’s Slump Signals Fed Can’t Fuel Inflation: Chart of the Day
  • Government to Call Meeting of Malaysian Palm Planters Over Haze
  • WTI Crude Drops as U.S. Supplies Remain Near Three-Decade High
  • Rubber Declines to Lowest in Nine Months on China Demand Concern
  • Soybeans Decline on Concern USDA May Raise U.S. Acreage Estimate
  • Coal Crippled by Supply in Worst Quarter in Year: Energy Markets
  • France Says ‘Satisfied’ With Farm Ministers’ Agreement on Policy
  • Europe-to-U.S. Gasoline Arbitrage Cargoes Increase 64% in Survey
  • China’s Corn Crop Seen Rising to Record as Imports Set for High

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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Keith's Top-7 Tweets Today

Takeaway: A quick snapshot of Hedgeye CEO Keith McCullough's top tweets today.

Learn from every mistake, but wake up expecting to win the next game

@KeithMcCullough 3:59 PM

 

Keith's Top-7 Tweets Today - tweet

 

I've tried over-trading low-volume whip arounds plenty of times - its no way to live

@KeithMcCullough 3:44 PM 

 

Do what you do, let everyone else waste their day trying to be someone else

@KeithMcCullough 3:41 PM

 

$TSLA remains one of the markets new Generals; no resistance to all-time highs

@KeithMcCullough 3:30 PM

 

Where I come from, respect isn't allocated to an aristocracy of perceived wisdom - it's earned, every day

@KeithMcCullough 10:44 AM

 

We need to get rid of all these losers whining, and get on with winning - let rates rise for God's sake

@KeithMcCullough 10:14 AM

 

To be fair, this is a legacy #OldWall problem - most are pigeon holed into being bullish or bearish, in boxes

@KeithMcCullough 8:21 AM


Trade of the Day: CAKE

Takeaway: We bought The Cheesecake Factory (CAKE) at 3:11 PM at $40.86.

Hedgeye Restaurant Guru Howard Penney remains “The Bull” on The Cheesecake Factory. We got a nice pullback to TREND support here that we can start nibbling at. Let them eat CAKE.

 

Trade of the Day: CAKE - CAKE


NKE: Thursday's Print = Buy the News

Takeaway: We rarely classify NKE EPS a 'do nothing', but that's this Thursday's print. The story is intact. If the noise is loud look to buy the news.

Thursday's Print = Buy the News: Nike remains one of our favorite longs, as we think that estimates are low by 5%  next  year ($3.25)and 10% the year after ($3.75). But we don't think the 4Q print on Thursday is a 'buy ahead of the numbers' kind of event.  In fact, we'd classify it more as 'buy the news' -- whether positive or negative. We think the company will beat, but in less sexy parts of the P&L like SG&A, while at the same time it should keep the lid on guidance for next FY. Recall that it was just 13 weeks ago that NKE guided for FY14 to be 'at or above' its high-single-digit top line long-term growth forecast, and 'at the high-end' of its low-mid teens long-term EPS growth target. Since then business conditions have remained relatively stable, but they clearly have not improved.  As such one thing Nike absolutely won't do is let estimates go any higher for next year -- even if strong fundamentals suggest otherwise. They'll say what they have to in order to keep the Street grounded. Without any guidance upside, and with a lower-quality beat, we simply don't think this qualifies as a 'trade into the quarter'.  That's especially the case with short interest sitting near historic lows.  If the stock trades off on the news, then we get much more interested near-term.

 

Now we'll talk out of the other side of our mouth. It's probably a lousy short as well. Simply put, it’s an extremely high-quality leader in a Global duopoly with dominant market share, rising returns, 8% of its market cap in cash and a consensus that is underestimating the earnings power of the company 2-3 years out by 10-15%.  Oh…and by the way, they're not going to let the stock tank only days after the announced voluntary retirement of one of the most popular executives in the company's history (Denson won't be a fall guy).  Could it sell-off around a noisy quarter? Sure, especially at 18-19x next year's earnings. But it'd be an event that we'd look at to go the other way. 

 

Here are some factors to consider headed into the print…

  1. If there is any considerable variability in NKE's numbers, we think it will be on the SG&A line -- as Nike laps a 24% boost in Demand Creation spending in 4Q of last year during the build-up for the Summer Olympics, the launch of the NFL business, and the kick off of the Nike+ Fuelband campaign. We'll take EBIT upside any way we can get it, but historically investors don't pay as much for SG&A-driven upside as they do revenue/gross profit upside.
  2. We think that Nike sandbagged with its expectation for a 50bp improvement in 4Q gross margins. The reality is that with 8.5% average growth in the top line over the past two quarters combined with 4% growth in inventories, the balance sheet is as clean as its been in over two years.
  3. Japan might only account for 5% of Nike's business, but you can bet that management will call it out much like Ralph Lauren did as it relates to volatility in business conditions and FX conversion headed into its upcoming Fiscal Year. It'll help Nike keep expectations grounded.
  4. Nike will start to anniversary the addition of the NFL license to its North American business. Our estimate is that this is on its way to being a $500mm business. That's about a third of the $1.5bn in growth that Nike North America should add this year. Keep this in mind as it relates to growth in North America, which will taper as this new business scales.
  5. In this quarter last year we saw a 1,800bn sequential roll in China futures. As it anniversaries those losses, we'll see Nike gain some of that back even without making heroic assumptions about any kind of rebound in China. This will be an important factor for top line growth in the upcoming year.
  6. Similarly, it was in 4Q of last year where we saw Emerging Markets futures (fall back and) touch 10% -- a level that suggests that the Emerging Markets are not Emerging.  We've been highlighting this issue, and have seen orders tick up. Comparisons will be easier for the next three quarters (leading up to World Cup in Brazil next year).

 

Ultimately, we have evidence that the US is still healthy.  If you want to be bearish on the US, it will need to be 3-4 quarters out which is when visibility gets cloudy. But then we've got greater contribution from China and Emerging Markets, and more importantly, we get into World Cup Territory in the summer of 2014 in Brazil. Our point is that it will be pretty tough to be a big bear on Nike's top line over the next 12 months.

 


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.33%
  • SHORT SIGNALS 78.51%
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