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THE M3: MACAU CONNECTIONS; CPI

THE MACAU METRO MONITOR, OCTOBER 21, 2013

 

 

WYNN DEFENDS MACAU CASINO AT US LICENCE HEARINGS Macau Business

Two casino operators have faced questions from Massachusetts regulators about their operations in Macau at hearings for casino licences.  There were candid exchanges between Massachusetts Gaming Commission officials and executives of Wynn Resorts Ltd.  Commissioner Gayle Cameron told Wynn Resorts chairman Steve Wynn there was illegal activity in all casinos, including the company’s casino here.  “Macau is a legitimate place. They’re not gangsters or bums, they’re businessmen,” Wynn said.

 

MGM Resorts International says its chances of getting a licence will not be affected by ties to Pansy Ho Chiu King.

 

CONSUMER PRICE INDEX FOR SEPTEMBER 2013 DSEC

Macau CPI for September 2013 increased by 6.12% YoY or 0.77% MoM.


October 21, 2013

October 21, 2013 - dtr

 

BULLISH TRENDS

October 21, 2013 - 10yr

October 21, 2013 - spx

October 21, 2013 - dax

October 21, 2013 - SHCOMP

October 21, 2013 - euro

October 21, 2013 - pound

October 21, 2013 - oil

October 21, 2013 - natgas

 

BEARISH TRENDS

October 21, 2013 - VIX

October 21, 2013 - dxy
October 21, 2013 - yen

October 21, 2013 - gold

October 21, 2013 - copper



investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

The Scarcest Commodity

“Ideas are incapable of confinement or exclusive appropriation.”

-Thomas Jefferson

 

One of the biggest push-backs I’ve been getting from both US stock market bulls and bears throughout the 2nd half of 2013 is one and the same – “I can’t buy that up here – I missed the move.” And my response continues to be that Mr. Market doesn’t care about what you did or did not miss. The market’s price is both dynamic and non-linear. As Jesse Pinkman would say, ‘it’s evolution, yo.’

 

Pinkman is not Jefferson. The aforementioned quote comes from a great book on the evolution of entropy economics that I’m still reviewing: George Gilder’s Knowledge And Power. If you are a growth investor (and/or you just want to be long growth as a Style Factor right now), read Chapter 10: “Romer’s Recipes and Their Limits” (Paul, not that raging Keynesian, Christina Romer).

 

“Still, change keeps coming, fueled by technology, as Romer’s 1990 paper reminded the economics fraternity. As productivity grows, technology keeps freeing people. And this … really is, in some sense, the scarcest commodity: the power of the human intellect.” (Knowledge and Power, page 96)

 

Back to the Global Macro Grind

 

BREAKING: the Global Macro call of 2013 is basically baked into the cake. You were either long growth, or you were not. With the Russell 2000 closing at another all-time high on Friday (1114 = +31.2% YTD), long virtually anything growth has absolutely pulverized the #EOW (end of the world) “new normal” thing (Gold, Bonds, Utilities, etc.).  

 

In terms of 2013 US Equity Market Style Factors, here’s how awesome growth, as a style, looks at the all-time highs:

  1. LOW YIELD (i.e. growthier stocks) = +35.2% YTD (vs High Yield Div stocks +14.9%)
  2. TOP 25% EPS GROWTH (Top Quartile of SP500) = +34.1% YTD (vs Bottom 25% = +20.8%)
  3. TOP 25% SALES GROWTH (Top Quartile) = +31.4% YTD
  4. HIGH BETA = +30.5% YTD
  5. HIGH SHORT INTEREST = +28.1% YTD

#awesome

 

To be clear, growth (as an investing style) can be very frustrating to A) embrace and B) capitalize upon. I think the reasons for that are bountiful (it’s called a cycle), but here are three big ones:

  1. STYLE: Growth Investing hasn’t worked like this since the 1990s – and few were positioned for an early 1990s style US recovery
  2. CYA: many equity investors are still fighting the last war of getting smoked in 2008 – consensus is long yielding income, not growth
  3. MULTIPLE EXPANSION: expensive gets more expensive on the way up

That last one is really tough for people to swallow, primarily because there are just so many people managing money these days. How many people do you know short stocks because they’re “expensive”?

 

I’d argue that part of Carl Icahn’s resurgence as an activist has a lot to do with being mucho long Style Factors 4 and 5 (HIGH BETA + HIGH SHORT INTEREST). With what was working locked into his sights, all he needed was Bill Ackman pumping those factors live @CNBC.

 

How many investors break the market down by Style Factors?

 

I’d say a lot fewer than you might think. And, to a degree, this makes Institutional Investing a lot like Moneyball was before Billy Beane did Moneyball. In the end, a chubby 1st baseman with a high on base % beats a pretty boy “highly concentrated” activist long ball hitter.

 

So what if my writing this note top-ticks growth vs. slow growth for 2013?

  1. That could very well happen – the performance divergences between growth and slow growth styles is at its YTD high
  2. That could very well not happen – if you started short selling growth in 1995 or 1996, let me know how that went by 1999

This is why the 1994 Global Macro Market metaphor (bond market blew up) really matters to me. As you can see in the Chart of The Day:

  1. Utilities (XLU) = -17.4% in 1994, 0.2% in 1996, -12.8% in 1999
  2. Tech (XLK) = +19.1% in 1994, +43.3% in 1996, +78.4% in 1999

How many investors are positioned for 2013 being 1993? How about 1995?

 

I don’t know if this is the top of growth investing. If it is, it ends with the Twitter IPO. But I do know that The Scarcest Commodity out there right now is being a raging growth bull. And that’s all I have to say about that.

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 2.58-2.69%

DAX 8

SPX 1

VIX 11.55-15.19
USD 79.21-80.28

Gold 1

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

The Scarcest Commodity - Chart of the Day

 

The Scarcest Commodity - Virtual Portfolio


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – October 21, 2013


As we look at today's setup for the S&P 500, the range is 59 points or 2.49% downside to 1701 and 0.89% upside to 1760.                        

                                                                                                       

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: 2.28 from 2.27
  • VIX closed at 13.04 1 day percent change of -3.26%

MACRO DATA POINTS (Bloomberg Estimates):

 

ECONOMY:

  • 10am: Existing home sales, Sept., est. 5.30m (prior 5.48m)
  • 11am: Fed to purchase $3b-$4b notes in 2019-2020 sector
  • 11:30am: U.S. to sell $35b 3M, $30b 6M bills
  • 4pm: USDA crop-condition reports

GOVERNMENT:

    • Deadline for comments to Fed, FDIC, Office of the Comptroller of the Currency on rule to amend leverage-ratio standards for U.S. bank-holding companies
    • 9:20am: CFPB Director Richard Cordray will discuss agency’s latest regulatory initiatives at ABA convention in New Orleans
    • 11am: NABE holds conference call briefing to discuss survey on business conditions

WHAT TO WATCH:

  • JPMorgan said to reach $13b U.S. mortgage-bond settlement
  • AT&T to sell, lease 9,700 towers to Crown Castle for $4.85b
  • FHFA said to seek at least $6b from BoFA for MBS sales
  • Office Depot, OfficeMax to get FTC merger approval: WSJ
  • Sinclair skirting FCC rules on station ownership, WSJ says
  • Apple to debut new iPad tmw as tablet mkt becomes crowded
  • NYSE cancels mistaken options trades on DJIA, S&P 500 on Fri.
  • Eli Lilly to maintain R&D spending as competitors cut: WSJ
  • Netflix poised to report passing HBO in paid U.S. subscribers
  • Caesars drops Gansevoort name from Vegas project post-probe
  • Almost 500k apply for Obamacare; team to help fix website
  • “Gravity” leads N.A. box office for 3rd time with $31m
  • China urges economic policy implementation to spur rebound

AM EARNS:

    • AO Smith (AOS) 7am, $0.43
    • Gannett (GCI) 8:24am, $0.41
    • Halliburton (HAL) 7:03am, $0.82 - Preview
    • Hasbro (HAS) 6:30am, $1.28 - Preview
    • Lennox Intl (LII) 8am, $1.27
    • Manpowergroup (MAN) 7:30am, $1.08
    • McDonald’s (MCD) 7:58am, $1.51 - Preview
    • Sonic Automotive (SAH) 7:30am, $0.50
    • VF Corp (VFC) 7am, $3.78 – Preview

   PM EARNS:

    • American Campus Communities (ACC) 4:01pm, $0.42
    • BancorpSouth (BXS) 4:01pm, $0.27
    • Brookfield Canada Office Properties (BOX-U CN) 5pm, $0.42
    • Discover Financial Services (DFS) 4:05pm, $1.21
    • Helix Energy Solutions Group (HLX) 6pm, $0.29
    • Hexcel (HXL) 4:05pm, $0.46
    • Idex (IEX) 4:45pm, $0.74
    • Illumina (ILMN) 4:05pm, $0.40 - Preview
    • Netflix (NFLX) 4:04pm, $0.47 - Preview
    • Sonic (SONC) 4:01pm, $0.30
    • Texas Instruments (TXN) 4:30pm, $0.53 - Preview
    • VMWare (VMW) 4:01pm, $0.82 - Preview
    • WR Berkley (WRB) 4:01pm, $0.74
    • Zions Bancorporation (ZION) 4:10pm, $0.42

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • WTI Crude Falls to $100 for First Time Since July on Supplies
  • Nickel Glut Extends to Fourth Year on China Supply: Commodities
  • Wheat Climbs to Highest in Four Months on Argentina Crop Damage
  • Gold Holds Near Highest in a Week as Investors Weigh Stimulus
  • Copper Swings Between Gains and Drops as Chinese Imports Jump
  • Alcoa Says LME Warehouse Plan To Cut Waits Should Be Suspended
  • Raw Sugar Erases Decline for Year, Extending Gains After Rally
  • Cotton Output in India Seen at Record as Rains Boost Crop Yields
  • Money Managers Were Net Long on Cocoa in London 65,234 Contracts
  • Zimbabwe Needs $5.3 Billion Investment for Platinum Expansion
  • Shale Overload to Spur U.S.-China Fuel Trade: Energy Markets
  • Rebar Ends Near Three-Month Low on Slower China Investment
  • Rosneft, Exxon Face Unrivaled Challenges in Russian Arctic Basin
  • Rubber Snaps Three-Day Losing Streak as Weaker Yen Boosts Appeal

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

 

 

 

 

 

 

 

 

 

 

 

 

 


In The News: Hedgeye's Howard Penney

Takeaway: Hedgeye analysts have a habit of making news. Here's a handful of recent headlines involving Restaurants Sector Head Howard Penney.

Editor's note: Hedgeye Restaurants Sector Head Howard Penney has been gathering quite a bit of attention lately on a number of prescient market calls and observations including a bold, ahead-of-the-curve call on Darden Restaurants. Here's a handful of recent stories featuring the veteran analyst.

In The News: Hedgeye's Howard Penney  - news1

 

In The News: Hedgeye's Howard Penney  - wsj

At McDonald's, Salads Just Don't Sell

McDonald's is "focused on trying to be all things to all people, whether it's catering to health-minded people with oatmeal or to Millennials with snack wraps. They've gone so far afield from their core menu that they're not really resonating with anyone," says Howard Penney, managing director at Hedgeye Risk Management, an independent investment research firm.

"McDonald's is never going to be perceived as healthy, so for them to spend too much time on healthy items doesn't make a lot of sense to me," Mr. Penney said.

 

Continue reading at the Wall Street Journal.

 

In The News: Hedgeye's Howard Penney  - todd

Goldman to advise Darden on activist proposal

Barington Capital is an activist investment firm that takes big stakes in companies and usually works behind the scenes with management to make operational changes to improve performance. The firm occasionally makes its efforts public, sometimes when disagreements undermine planned changes.

 

"They are likely not seeing eye to eye," said Howard Penney, restaurants sector head at research firm Hedgeye.

 

"The CEO of Darden has built the company this way, and he will likely contend that it should stay that way," Penney added. "If Goldman is asked by Darden to come upwith an opinion, they will likely not agree with Barington's position."

 

Continue reading at USA Today.

 

In The News: Hedgeye's Howard Penney  - oz

Darden must make major changes, analysts say

Barington doesn't own enough of Darden to force change, analysts say, but it could bring persistent pressure. And Hedgeye Risk Management analyst Howard Penney predicted Darden could attract another activist investor. "There will be someone who will be louder and bigger," he said.

 

Continue reading at Orlando Sentinel.

 

In The News: Hedgeye's Howard Penney  - adage

Starbucks Concocts Plans for Fizzy Drinks; Is Sodastream in Its Sights?

Some analysts see the availability of Fizzio at-home as a few years off, given carbonated drinks are only being tested in select markets. The Fizzio trademark may be an early move "to cover their bases," said Hedgeye Managing Director Howard Penney, adding that Starbucks typically tests concepts at its stores, then rolls them out nationally before considering sales in external retail outlets or as machines.

 

Continue reading at Advertising Age.


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