CLIENT TALKING POINTS
GOLD
You learn a lot from bounces during crashes. What we are witnessing right now in Gold is some pathetic "bounces." It is up 20 basis points this morning. It's down 28% year-to-date. Knife catchers buying in last two weeks are down over 12%. For the record, over $62B wiped from precious metals exchange-traded product holdings this year. We have been and we remain the Gold Bears.
ASIA
Japan burns its currency and still gets no inflation. Core CPI in May flat again year-over-year. Meanwhile, Japan and India both get marked up big into quarter end up +3.5% and +2.8% respectively. Shanghai Comp and Hang Seng marked up less than Japan and India. That said, all four indices remain below Hedgeye TREND lines. For the Nikkei, our immediate-term TRADE risk ranges are now 12,815 - 13,698. Yen moves back to bearish TRADE and TREND in the Hedgeye Risk Management Model.
TOP LONG IDEAS
HCA
Health Care sector head Tom Tobin has identified a number of tailwinds in the near and longer term that act as tailwinds to the hospital industry, and HCA in particular. This includes: Utilization, Maternity Trends as well as Pent-Up Demand and Acuity. The demographic shift towards more health care – driven by a gradually improving economy, improving employment trends, and accelerating new household formation and births – is a meaningful Macro factor and likely to lead to improving revenue and volume trends moving forward. Near-term market mayhem should not hamper this trend, even if it means slightly higher borrowing costs for hospitals down the road.
MPEL
Gaming, Leisure & Lodging sector head Todd Jordan says Melco International Entertainment stands to benefit from a major new European casino rollout. An MPEL controlling entity, Melco International Development, is eyeing participation in a US$1 billion gaming project in Barcelona. The new project, to be called “BCN World,” will start with a single resort with 1,100 hotel beds, a casino, and a theater. Longer term, the objective is for BCN World to have six resorts. The first property is scheduled to open for business in 2016.
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. We think that the prevailing bearish view is very backward looking and leaves out a big piece of the WWW story, which is that integration of these brands into the WWW portfolio will allow the former PLG group to achieve what it could not under its former owner (most notably – international growth, and leverage a more diverse selling infrastructure in the US). Furthermore it will grow without needing to add the capital we’d otherwise expect as a stand-alone company – especially given WWW’s consolidation from four divisions into three -- which improves asset turns and financial returns.
Asset Allocation
| CASH | 60% | US EQUITIES | 12% | |
| INTL EQUITIES | 6% | COMMODITIES | 0% | |
| FIXED INCOME | 0% | INTL CURRENCIES | 22% |
THREE FOR THE ROAD
TWEET OF THE DAY
The main call the #OldWall missed on Gold was not being Bearish Enough - have been trying to call bottoms; its crashing
QUOTE OF THE DAY
I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed. –Michael Jordan
STAT OF THE DAY
Gold has dropped 25 percent this quarter, heading for its biggest loss since at least 1920. Gold entered a bear market in April, extending the retreat from its all-time high of $1,921.15 in September 2011.