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The M3: BLOOMBERRY MGMT CHANGE; CROWN SRI LANKA; LUXURY SALES; HENGQIN LAND; S'PORE UNEMPLOYMENT

THE MACAU METRO MONITOR, SEPTEMBER 13, 2013


 

BLOOMBERRY RESORTS CHANGING CASINO MANAGEMENT BusinessWorldOnline.com

Bloomberry Resorts has terminated its management contract with Global Gaming Philippines LLC (GGAM), alleging a material breach of contract.  According to the disclosure statement, Bloomberry states "GGAM has not spent any material time in attending to the management of Solaire and has failed to perform its obligations and deliverables under the MSA (management service agreement)...However, many members of existing management team are very capable and will continue to manage Solaire effectively without GGAM and its representative."  Bloomberry is now looking to replace Solaire COO Michael French with an "experienced casino hotel executive."  GGAM denied Bloomberry's allegations and stated the termination of the management agreement was a breach of contract. 

 

SRI LANKA APPROVES PACKER'S CROWN CASINO DEAL macaubusiness.com

Lake Leisure Holdings, a joint venture by Crown Ltd and Rank Entertainment Holdings Pvt Ltd., received approval from Sri Lanka's government to develop a two-tower resort for US$350MM.

 

MACAU, HK OFFSET SLOWER RICHEMONT SALES IN CHINA macaubusiness.com

Swiss luxury goods maker Richemont SA reported the annual growth in sales in the Asia-Pacific region slowed to 4% in the first five months of this year from 12% a year earlier. Reduced sales reflected a slowdown in the mainland but was offset by growth in Macau and Hong Kong.

 

REAL ESTATE INVESTORS PLOT BIG RETURNS ON HENGQIN macaubusiness.com

Gemdale Corp has begun selling phase II of a low-density development on Hengqin at "The Doorway" starting at MOP1,037 a square foot.

 

UNEMPLOYMENT REMAINS LOW IN SINGAPORE channelasianews.com

The unemployment remained low, at 2.1% in June 2013, up slightly from 1.9% in March 2013.

 



Got Summers?

Client Talking Points

GOLD

Per the Japanese press, Larry Summers is in. The US Dollar and #RatesRising both like it. Gold? It hates it. The Great 2013 Gold Crash continues. It's down -22% year-to-date as it moves toward our immediate-term TRADE oversold line of $1307 (within a bearish intermediate-term TREND). Meanwhile, Silver’s losses? They are 2.5x Gold’s this morning, but that’s been the story all year. Gold’s best buddy was Ben Bernanke. Bottom line? #ItsAllOver

OIL

Despite the Russians moving some of their eye-candy into the Mediterranean, Brent is down -0.5% this morning. Our immediate-term TRADE momentum line of resistance on my radar is $114.67. The TAIL risk support is still very much in play down at $108.59. So clearly Barack Obama has some communication tooling to do.

UST 10YR

Witness the well-deserved higher-lows and higher-highs as yesterday’s US Jobless Claims print trumpeted the best in 7 years on a seasonally adjusted basis. Incidentally, it was the best in 13 years on a non-seasonally adjusted basis. But alas, partisan people will keep whining about this, and that, and the next thing. Guess what? That is a very bullish thing (but bearish for Gold and Bonds).

Asset Allocation

CASH 32% US EQUITIES 22%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 26%

Top Long Ideas

Company Ticker Sector Duration
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.

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.

TROW

Financials sector senior analyst Jonathan Casteleyn continues to carry T. Rowe Price as his highest-conviction long call, based on the long-range reallocation out of bonds with investors continuing to move into stocks.  T Rowe is one of the fastest growing equity asset managers and has consistently had the best performing stock funds over the past ten years.

Three for the Road

TWEET OF THE DAY

TREASURIES: 10yr steady on Larry Summers (he's hawkish for intererest rates) = 2.92% #RatesRIsing

@KeithMcCullough

QUOTE OF THE DAY

In my mind, I'm always the best. If I walk out on the court and I think the next person is better, I've already lost. -Venus Williams

STAT OF THE DAY

According to a recent study, the US is home to about one in every three ultra-high net worth individuals — those with $30 million or more in total assets. At last count, 65,000 U.S. residents possess more than $9 trillion.



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 80.64%
  • SHORT SIGNALS 78.57%

CHART OF THE DAY: Economic Weapons of Mass Destruction

 

CHART OF THE DAY: Economic Weapons of Mass Destruction - 10Y vs NSA


Economic Weapons of Mass Destruction

“There lived a certain man in Russia long ago,
He was big and strong, in his eyes a flaming glow,
Most people looked at him with terror and with fear,
But to Moscow chicks he was such a lovely dear.”

-Boney M

 

Over the course of history, Russia has certainly been known for its strong leaders.  The Boney M song, “Rasputin”, from which the verse above was taken, is about one of the most enigmatic of Russia’s leaders: Grigori Rasputin.

 

Rasputin was a Russian mystic that lived from 1869 – 1916.  He became an advisor to the Romanovs, the reigning royal family in Russia at the time, after being asked to try and heal their son Alexei, who suffered from hemophilia.  Probably more by the stroke of luck than any knowledge of medicine, Rasputin was successful in healing Alexei and became a key advisor and intimate to the Czar’s family, especially his wife Alexandra Feodoronva.

 

From 1906 – 1914, many Russian politicians and journalists used Rasputin’s influence over the Romanovs to discredit them.  His influence only accelerated with the advent of World War I when the Czarina took over domestic policy, with Rasputin as her key advisor. 

 

Eventually, Rasputin’s influence created contempt amongst the Czar political allies and rivals.  Ultimately, a group of conspirators led by the Czar’s first cousin Grand Duke Dmitri Pavlovich, murdered Rasputin.  Rasputin had the last laugh as he wrote to Czar Nicholas shortly before his death that if he were killed by government officials, the entire imperial family would be killed by the Russian people.

 

Rasputin’s prophecy came true a short 15 months later when the Czar, his wife and all their children were murdered by assassins during the Russian Revolution.  Directly and indirectly, Rasputin has been pointed to as a key catalyst for the fall of the Romanovs.

 

Certainly, the current situation in Syria does not have direct parallels to the Russian Revolution, but to be seen to be under the influence of a Russian, especially the Botox laden Putin, will not be a positive turn of events for President Obama.  In part, Obama backed himself into a corner by deciding to go to Congress to get approval to use military force in Syria, even as he acknowledged he didn’t legally need Congressional approval.

 

When it became clear that Congress wasn’t going to support the action, the door was left open for the Russians to propose a more “commercial” solution.  Of course now President Obama has lost all leverage and, as a friend of mine who runs a major investment bank said, has been completely re-traded.  So much so that President Assad is now making demands on the United States (via Russian TV of course)!  As the state-owned Syrian newspaper put it bluntly in a headline on Thursday, “Moscow and Damascus have pulled the rug out from under the feet of Obama.”

 

Given the turn of events, it is no surprise then that President Obama’s approval rating has plummeted close to all-time lows.  Currently, on the Real Clear politics poll aggregate, 7.6% more people disapprove then approve of Obama.   As it relates to foreign policy, 17.6% more Americans disapprove of the job he is doing.  It seems the President has become a lame duck quicker than most second term Presidents.

 

My colleague Keith McCullough proposed a unique idea yesterday to James Pethokoukis at the American Enterprise Institute yesterday, which was to turn Larry Summers loose on the Russians.  As Keith said in the interview:

 

“We really need to embrace the weapon that we have as a country, which is the most powerful weapon that we’ve had for a very long period of time, which is, of course, the currency of the people, and that currency has basically been de-botched and devalued ’til the cows come home. We need to start to stand up for these things and that’ll help us stand up against guys like Vladimir Putin. Bring in, probably, a guy like Larry Summers to deliver the message because you do need somebody to stand up with a backbone and actually say it in a really forceful way, which, at a bare minimum, that’s what Larry Summers can do. $65 oil would be fantastic for the American people and it would be absolutely pulverizing to Putin’s power.”

 

As we’ve been writing for a while, a strong dollar equals a strong America.  If the rumors from the Japanese press this morning are even remotely true and Larry Summers is destined to be the next Chairman of the Federal Reserve then it is very bullish for the U.S. dollar and bearish for commodities.  The action this morning, with gold down, oil down and the U.S. dollar up, is likely only the beginning of the sustained move we will see if Chairman Summers becomes more than prophesy.

 

Of course, there is economic data at play here as well.  On that note, jobless claims came in at the lowest absolute number since 2000 at 228,000 yesterday.  Year-over-year improvement on this data series moves to -23.8% versus -13.2% last week and the rolling 4-week average is -14.5%.

 

In the Chart of the Day, we show what this improving data series means for interest rates as we chart the 10-year yield versus the 4-week rolling initial claims.  As you can see from the chart, there is a very tight correlation between the labor market improving and interest rates going up.

 

The combination of a continued improvement in the U.S. labor market and increasing chatter of the likelihood that Larry Summers takes over the Federal Reserve will combine to be an economic weapon of mass destruction for bonds, gold, oil and the Russians alike.

 

Our immediate-term Risk Ranges are now as follows:

 

UST 10yr Yield 2.86-3.03% (bullish)

SPX 1 (bullish)

Nikkei 14117-14638 (bullish)

USD 81.39-81.93 (bullish)

Brent 110.54-113.91 (bullish)

Gold 1 (bearish)

 

Enjoy your weekend.

 

Daryl G. Jones

Director of Research

 

Economic Weapons of Mass Destruction - 10Y vs NSA

 

Economic Weapons of Mass Destruction - Virtual Portfolio


September 13, 2013

September 13, 2013 - dtr

 

BULLISH TRENDS

September 13, 2013 - 10yr

September 13, 2013 - spx

September 13, 2013 - dax

September 13, 2013 - nik

September 13, 2013 - dxy

September 13, 2013 - euro

September 13, 2013 - oil

September 13, 2013 - natgas

 

BEARISH TRENDS

September 13, 2013 - VIX

September 13, 2013 - yen
September 13, 2013 - gold

September 13, 2013 - copper


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