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DECEMBER TABLE REVENUES

Through the first 9 days of December (actually 11/30-12/8), average daily table revenues grew only 2% from the comparable period last year to HK$947 million.  It’s still too early to garner any read from the numbers.  Our current full month GGR forecast for December growth is +10-16% growth.  In terms of market share, Wynn Macau is off to a good start while MGM and MPEL are lagging.  Market shares this early in the month mean very little but we will reiterate that we believe Wynn may be in the middle of a market share turnaround with its Mass marketing efforts (finally).  We also like LVS as share gainer over the year.  MGM and MPEL look like share losers to us.

 

DECEMBER TABLE REVENUES - macau1

 

DECEMBER TABLE REVENUES - macau2



December 10, 2013

December 10, 2013 - 55


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

Fed Repercussions

Client Talking Points

US DOLLAR

The Dollar is down for FIVE weeks in a row now. It is officially in a Bearish Formation as the Federal Reserve whispers sweet nothings of having a policy that is clearly not data dependent. Across the pond, both the Euro and Pound are loving this lack of US currency credibility. On the margin this is good news for European purchasing power.

OIL

Shhh. Don’t tell the Fed, but that Down Dollar? It's kick-starting that ole 2011-2012 style inverse correlation to Commodity Inflation again. Brent Oil versus US Dollar has an inverse correlation of -0.66 now on a 6 week duration. Both Brent and WTIC are up about 1% this morning after Brent held our Hedgeye TAIL risk support of $109.07/barrel. We covered our Oil short yesterday.

10YR UST YIELD

Not to be confused with data dependence, the Federal Reserve has a policy outcome that will stand, irrespective of the data. If that means a lower-high for bond yields (versus the September pre-no-taper highs), the 10-year could easily drop 20 basis points from here. We're watching 2.80% as an immediate-term momentum line.

Asset Allocation

CASH 42% US EQUITIES 10%
INTL EQUITIES 12% COMMODITIES 6%
FIXED INCOME 6% INTL CURRENCIES 24%

Top Long Ideas

Company Ticker Sector Duration
FXB

Our bullish call on the British Pound was borne out of our Q4 Macro themes call. We believe the health of a nation’s economy is reflected in its currency. We remain bullish on the regime change at the BOE, replacing Governor Mervyn King with Mark Carney. In its October meeting, the Bank of England voted unanimously (9-0) to keep rates on hold and the asset purchase program unchanged.  If we look at the GBP/USD cross, we believe the UK’s hawkish monetary and fiscal policy should appreciate the GBP, as Bernanke/Yellen continue to burn the USD via delaying the call to taper.

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.

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

GOLD: continues to make a series of higher-lows (vs June) and we remain long of it @KeithMcCullough

QUOTE OF THE DAY

"Don't count the days, make the days count." - Muhammad Ali

STAT OF THE DAY

The average cost of tuition and fees at a public, four-year institution for an in-state student is $8,093. At a private four-year university, tuition and fees are more than $30,000. (MarketWatch)



Ferocious Determination

“… self assured, guided by his own ferocious determination.”

-Doris Kearns Goodwin

 

No matter what your views are on how this epic market move ends, you have to find it within yourself to find a way to win. This has nothing to do with what you’d like your former free-markets to be; it has everything to do with risk managing what they have become.

 

The aforementioned quote is one that defined President Teddy Roosevelt’s character at a very young age. “Teedie (his nickname) held a distinct place among his siblings; the asthma that had weakened his body seemed to have inordinately sharpened his mind and sensibilities… he was always reading or writing with a most unusual power of concentration.” (The Bully Pulpit, pg 37)

 

So, in the spirit of what America’s “Strenuous Life” used to stand for, sharpen your mind this morning. Challenge yourself to learn. Evolve your investment process. And, above all else, tone down your emotional market response to whatever you may or may not have missed.

 

Back to the Global Macro Grind

 

Are you ferociously determined to beat beta? I am. And I’m not going to apologize for that. Why else would you wake up to play this game every morning unless you wanted to win?

 

After 382 points of price appreciation, the SP500 clocked yet another all-time closing high yesterday of 1808. That’s a +26.8% gain for 2013 YTD. And once again, it came on a no-taper (in December) market expectation day.

 

Whether you or I think the Fed should have tapered in September doesn’t actually matter at this stage of the game. Been there, argued about that. What matters is what decisions you make next.

 

Risk is always changing. Up until September 18th, Mr. Macro Market scored growth as the most relevant stock market risk (to the upside). Sure, some people were bullish – but consensus wasn’t positioned bullish. Here’s what worked from JAN-SEP:

  1. #StrongDollar
  2. #RatesRising (Gold and Bonds weren’t working)
  3. #GrowthAccelerating (as an Equity Style Factor)

Then, post the Fed’s unaccountable decision not to taper (as Q313 US Growth was tracking +3.6%), from mid-SEP to mid-OCT:

  1. Down Dollar
  2. Rates Falling
  3. #GrowthSlowing outperformed growth  

Then, in November, growth as an Equity Style Factor started to recover again:

  1. Rates Rose
  2. Gold fell
  3. But the US Dollar remained no bid (in spite of an ECB rate cut!)

Now, look at what we have – the return of our old un-elected friend: @FederalReserve’s Policy To Inflate:

  1. Down Dollar (for 5 straight weeks)
  2. CRB Commodities Index inflation (and Gold) arrested their YTD lows
  3. Oil prices and inflation oriented equities inflating again

Instead of debating this, look at the trivial matter that is Correlation Risk between the US Dollar and everything else (using a 6 week duration – these are inverse correlations; i.e. Down Dollar = Up X):

  1. SP500 vs USD = -0.63
  2. Brent Oil vs USD = -0.66
  3. CRB Commodities Index vs USD = -0.73
  4. Nasdaq vs USD = -0.79
  5. Natural Gas = -0.85

#Cool, eh?

 

For whom? The small percentage of us in America who understands it? Or to those who are the recipient of inflated prices at the pump and accelerating costs to heat their homes during today’s CT snowstorm?

 

Yes We Can, baby. We can re-flate Bernanke’s Bubble in commodity prices. Why not? Who cares if it slows everything that we haven’t had during this entire monetary policy experiment (sustained real-consumption growth). It’s time to buy some coal!

 

To be clear, this will end in tears. But, in the meantime, I will trade this market’s all-time highs with ferocious determination. Yes, that means that on pullbacks I will buy-the-damn-bubble #BTDB.  Then I’ll sell on green too. Keep moving out there; risk does.

 

Our immediate-term Risk Ranges are now:

 

10yr UST Yield 2.80-2.91%

SPX 1

USD 80.03-80.55

Brent 109.07-111.19

NatGas 4.04-4.26

Gold 1

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Ferocious Determination - Chart of the Day

 

Ferocious Determination - Virtual Portfolio


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