THE MACAU METRO MONITOR, AUGUST 27, 2013
MONTHLY BREAKDOWN OF PASSENGER MOVEMENTS Changi Airport
Singapore's Changi Airport reported a 4% rise YoY in passenger movement in July 2013.
LOSS-MAKING JOCKEY CLUB CLOSES FOUR BETTING CENTRES Macau Business
The Macau Jockey Club will close four of its seven off-course betting centres next month. The club did not offer a reason but the Gaming Inspection and Coordination Bureau told the newspaper: “The Macau Jockey Club has responded to the needs of the community by removing several off-course betting stations away from the residential areas.” The bureau denied it had ordered the closures.
ELEVEN HOTELS UNDER CONSTRUCTION, 27 MORE PLANNED Macau Business
Eleven hotels in Macau were under construction at the end of 2Q 2013, the Lands, Public Works and Transport Bureau says. The bureau says another 27 hotel projects are pending approval from the government. The 11 hotels under construction will add another 6,200 rooms to the city’s inventory. Three of those hotels being built in Cotai will add the bulk of the rooms, some 5,326 rooms. The 27 hotels at the planning phase would add another 16,700 rooms.
MACAU EMPLOYMENT SURVEY FOR MAY-JULY 2013 DSEC
More people were looking for work during the Summer Holiday, causing the unemployment rate for May-July 2013 to increase slightly by 0.1% from April-June, at 1.9%. Total labor force was 366,000 in May-July 2013 and the labor force participation rate stood at 72.6%. Total employment reached 359,000, up by 1,900 from the previous period. Analyzed by industry, employment in the Construction sector posed a marked increase of 1,500.
TODAY’S S&P 500 SET-UP – August 27, 2013
As we look at today's setup for the S&P 500, the range is 27 points or 0.83% downside to 1643 and 0.80% upside to 1670.
CREDIT/ECONOMIC MARKET LOOK:
MACRO DATA POINTS (Bloomberg Estimates):
WHAT TO WATCH:
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
The Hedgeye Macro Team
Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.
“What they lacked was a science of disorder and randomness.”
Gilder could have been writing about adults making life decisions inasmuch as he was alluding to both Keynesian and Hayekian policy makers who still don’t get the core chaos theory concept of non-linearity. If you don’t know what I am talking about, have kids.
Both life and market risks are grounded in uncertainty. You can take whatever precautions you want; you can be as proactively prepared as you think you can be – but it’s always the surprise of new information that drives decision making.
You cannot learn how to embrace uncertainty in a textbook. You have to learn this game by playing it. Since disorder and randomness typify markets, your risk management process should attempt to absorb that dynamism.
Back to the Global Macro Grind…
Three big macro things have really changed in the last 3 months:
That sounds a little disorderly, no?
If you are bullish on “growth” doesn’t your local pie chart “diversification” manufacturer have you buying “Emerging Markets”? Or are they re-positioning that bad asset allocation decision to you now as something that looks “cheap.” #ThesisDrift
In Hedgeye-Jedi speak, “cheap” gets cheaper when:
A) Country Inflation (or costs in the case of a company) Accelerates
B) Real (inflation adjusted) Growth Slows
Back-test it with Apple (AAPL) and you’ll get my point. It doesn’t matter how “good” a company is if it’s about to see:
A) Revenue Growth Slow (versus peak)
B) Margins Compress (versus peak)
When you get A + B, you get multiple compression.
Conversely, in our proprietary GIP Model (Growth, Inflation, Policy), when a country:
A) Sees Growth go from slowing to stabilizing to accelerating … and
B) Is the recipient of inflation slowing via currency appreciation…
You get equity market multiple expansion. Look at the chart of any raging “growth” stock that is USA centric (SBUX, TSLA, DDD, NFLX, OPEN, SODA, etc.) and you’ll get what I mean.
Simple, right? Even a hockey player can do it.
Yes, in hindsight, most things macro are easier to see looking backwards. It’s in observing the chaotic system of colliding global macro market trends (where Growth and Inflation patterns develop) that you get an edge. It’s a grind.
Let’s go back to explaining why the aforementioned point #3 (#AsianContagion) has come to be. What’s happening this morning was as obvious in June as it is today:
As a country’s currency gets crushed, #InflationAccelerates and #GrowthSlows – then you get:
Sure, it may seem disorderly and random that Asian “growth” markets can dislocate from US domestic growth stocks. It may appear random to the Macro Tourist who doesn’t stare at the matrix of currency and correlation risk like we do all day too.
But the other big point about disorder and randomness embedded in chaos theory is that there is a deep simplicity to it all, in hindsight.
Our immediate-term Risk Ranges are now as follows (we have 12 Big Macro risk ranges in our Daily Trading Range product now too):
UST 10yr Yield 2.71-2.93%
Best of luck out there today,
Keith R. McCullough
Chief Executive Officer
Consensus has been telling you over and over again that our top Q3 Macro Theme #RatesRising is going to kill the US stock market for about 9 months now. Well, it's certainly killing bonds, Emerging Markets, and slow-growth, high yielding, stocks maybe, but not US growth stocks.
That style factor is why the Nasdaq and Russell 2000 outperformed the Dow again last week. It's 2.82% on the 10-year now with no resistance to 2.95%. This Hedgeye Q3 Macro Theme remains firmly intact.
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