THE MACAU METRO MONITOR, DECEMBER 20, 2013
SJM CASINO STARTS TRIALING SMOKING ROOMS Macau Daily Times
SJM Director, Angela Leong said that SJM has already set up a smoking room in the Casino Crystal Palace. “We are constantly looking to the future and have thus started trialing [a smoking room]. We will have to continue with the test over a longer period of time to see if it will help improve results of air quality tests in the main area.” She promised that they will continue to install smoking rooms in their other casinos.
Meanwhile, the Director has revealed that there will be a wide range of facilities in the future Jai Alai casino. “We will not focus on merely offering a casino. We will have a shopping mall, some art-related elements, as well as spaces to engage Macau’s food culture. We hope that some of Macau’s distinct culinary culture can be added to the venture and that some small and medium level businesses can move into Jai Alai to bring in some more characteristics of Macau…We will also include some traditional gambling elements”, said Leong. She hinted that since this project is not gaming oriented, it will not be that closely associated with the Casino Oceanus that is located next-door."
TODAY’S S&P 500 SET-UP – December 20, 2013
As we look at today's setup for the S&P 500, the range is 29 points or 0.97% downside to 1792 and 0.63% upside to 1821.
CREDIT/ECONOMIC MARKET LOOK:
MACRO DATA POINTS (Bloomberg Estimates):
WHAT TO WATCH:
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
The Hedgeye Macro Team
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This note was originally published at 8am on December 06, 2013 for Hedgeye subscribers.
“All progress comes from the creative minority.”
So, US GDP Growth goes from 0.14% (at this time last year) to 3.6% in Q3 of this year, and all I hear consensus whine about are “inventories.” I wonder if that slope of US #GrowthAccelerating’s line had anything to do with the long-end of the yield curve being up +127 basis points (or Gold crashing) year-over-year…
Newsflash: businesses build inventories when confidence is rising. These are called coincident indicators. Both the US Dollar and US interest rates peaked in Q3 – so did US consumer and business confidence. So the I (Investment) in C+ I + G = GDP, went up.
Would the 2013 growth bears have preferred Investment to go down (and G (government) spending to go up instead)? Who knows. And who actually cares what they think anyway? For them, it’s all rear-view. Mr. Macro Market looks forward.
Back to the Global Macro Grind…
Now that Bond Yields ripped to a lower-high (vs the SEP 2013 high) on a lagging economic indicator (that was a Q3 GDP report; it’s the end of Q4), and the stock market had another little meth withdrawal on that (“taper-talk” drives them batty), what’s next?
So, would a bad jobs report be good for stocks (and bad for bonds)? Would another good jobs report be bad for stocks (and good for bonds)? Inquiring “lower-class folks” who don’t get to play at the insider Fed Whale tables want to know…
We mince no words calling this a centrally-planned-casino at this point. And since some of us are pretty darn good at buying bubbles, we feel lucky when stocks and bonds hit the high and low-ends of our risk ranges. It’s all about playing the probabilities, baby!
That’s why, after 5 consecutive no-volume down days for the US stock market (a correction in the SP500 of -1.2%), we bought-the-damn-bubble #BTDB (again) yesterday, taking our Cash position (asset allocation model) down to 38% (started the wk at 58%).
Where do we think US Growth goes from here?
That might be the easiest question to answer since we said US growth would go UP (from 0.14%) 1-year ago.
What could happen if we’re right about that?
As most of you know, I’m not a forensic-US-stock-market-multiple-analyst. In fact, I think picking an “earnings number” for the SP500, then licking your finger on what multiple to slap on that is one of the more laughable things I hear people say with a straight face.
I’m more of a market history, math, and behavioral mutt myself. And history tells you that the US stock market:
In other words, US economic STAGFLATION periods (1970s, 2010-2012, etc.) saw the SP500 trade at 7-12x earnings and #StrongDollar (deflating the inflation) periods of US real-consumption GROWTH accelerating saw multiples trade anywhere from 17-35x earnings.
Therefore, in my own little mind, provided that I think I know where the slopes of the 2 lines (GROWTH and INFLATION) are going in the next 3-6 months, I can start to prepare the sails of change in my positioning. In Macro, mental flexibility is forward progress.
Our immediate-term Risk Ranges (with TREND bullish or bearish) are now:
UST 10yr Yield 2.77-2.88%
Happy b-day to my brother Ryan and best of luck out there today,
Takeaway: We're going against the grain on this print - we thought it was a let down. Sales miss, inventory high, costs up. Futures the only positive.
Conclusion: We liked this Nike quarter about as much as we like week-old sushi. Yeah, the quarter definitely had some redeeming qualities, like a solid 13% futures growth rate, a beat on the gross margin line, and really encouraging signs out of Western Europe. But the reality is that the company put up a less than impressive 8% top line growth rate, and managed to translate that into a whopping 4% EPS growth rate. It missed our estimate, and we were hardly aggressive in our assumptions. Maybe we're being a little hard on Nike, as it has earned its spot as the dominant brand in this space, but the reality is that the company has put together such a fantastic string of results for so long (and has the multiple to match), and putting up a mere 4% growth rate is so….Adidas. If Nike wants to maintain its standing as one of the preeminent global companies and brands, its going to have to push the envelope a bit more going forward. We wouldn't be buying it here, and might go the other way if it bounces.
Here are some key standouts in the quarter:
I can already see it...a dozen people are going to ping me tomorrow and say "aren't you being a little tough on the company" (and I welcome those conversations by the way) My answer? "Yes, I am being tough." But a company as great as Nike needs to lead financially as much as it leads with product and in sports. It warrants greater scrutiny, not less -- because it can (and should) handle it.
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