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THE M3: GREEK MYTHOLOGY; UNEMPLOYMENT

THE MACAU METRO MONITOR, DECEMBER 30, 2013

 

 

GREEK MYTHOLOGY CASINO UNAFFECTED BY HOTEL SEIZURE Macau Business

The seizure of the New Century Hotel and Casino has not affected the Greek Mythology Casino, according to one of the casino’s shareholders.  Junket investor Amax International Holdings Ltd told the Hong Kong Stock Exchange that the hotel and the casino were separate.  Amax says the casino is a tenant of the hotel. It has an equity interest in the casino’s operations.

 

EMPLOYMENT SURVEY FOR SEPTEMBER-NOVEMBER 2013 DSEC

Unemployment rate (1.9%) for September-November 2013 held stable from August-October.  Employment in the Gaming sector increased by 2.9% to 85,000.

 


December 30, 2013

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BULLISH TRENDS

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BEARISH TRENDS

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December 30, 2013 - Slide13


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – December 30, 2013


As we look at today's setup for the S&P 500, the range is 42 points or 1.33% downside to 1817 and 0.96% upside to 1859.                

                                                                                                               

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: 2.62 from 2.61
  • VIX closed at 12.46 1 day percent change of 1.05%

MACRO DATA POINTS (Bloomberg Estimates):

  • 10am: U.S. Pending Home Sales M/m, Nov., est. 1% (pr -0.6%)
  • 10:30am: Dallas Fed Manufacturing Dec. (prior 1.9)
  • 3pm:  New York Fed releases Jan. Treasury purchase schedule
  • U.S. Rates Weekly Agenda
  • FX Weekly agenda

GOVERNMENT:

    • House, Senate not in session
    • Kerry sets plans to travel to Mideast on New Year’s Day
    • Extended jobless benefits ran out Dec. 28 for 1.3m people
    • China’s cash-for-votes scandal highlights graft challenge

WHAT TO WATCH:

  • Crocs CEO to retire as Blackstone takes $200m Stake
  • Obamacare enrollments reach 1.1m with surge in Dec.
  • Ford brand widens U.S. sales lead over Toyota
  • Sanofi multiple sclerosis drug fails to win FDA approval
  • Australia iron-ore exports curbed; ports close before storm
  • Mondelez to sell Snackwell’s stake to private-equity firm: WSJ
  • CFTC’s Gensler says regulators reached “right balance” on rules
  • Hyundai Motor replaces U.S. chief to revitalize 2014 sales
  • UBS unit among China brokers facing penalties for Dec. 20 trades
  • China local debt rises to $2.95 trillion amid economic risks
  • Chesapeake Energy paying to move gas it doesn’t have: WSJ
  • Merck working on plans to reshape R&D, WSJ reports

EARNINGS:

    • Cal-Maine Foods (CALM) 6:30am,  $1.30

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • WTI Trades Above $100 for Second Day as Oil Stockpiles Decline
  • Gold Declines on Way to Worst Year Since 1981 as Silver Drops
  • Copper Traders Bullish as Hedge Funds Bet on Gains: Commodities
  • World’s Biggest Iron-Ore Port Is Shut as Cyclone Nears Australia
  • Coffee Climbs in New York on Index Reweighting; Cotton Advances
  • Aluminum Reaches Eight-Week High as U.S. Rebound Spurs Buying
  • Corn Drops to One-Week Low as Rain Eases Argentine Crop Stress
  • Rubber Falls to Post Annual Decline as China Inventory Climbs
  • Rebar in Shanghai Drops to Two-Month Low as Inventory Climbs
  • Most-Accurate Oil Forecasters See Second Year of Losses: Energy
  • Natural Gas Gains on Forecast for Cold Start to New Year in U.S.
  • Sesa Sterlite Restarts Iron-Ore Mines, Easing Supplies in India
  • Natural Gas Consumption Likely Sluggish Into 2014: Bear Case
  • Cotton Prices Seen Declining as China Poised to End Stockpiling

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

 

 

 

 

 

 

 

 

 

 

 

 

 


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Professional Reading

This note was originally published at 8am on December 16, 2013 for Hedgeye subscribers.

“I look forward with the greatest pleasure to the use of my books at night at home.”

-William Taft

 

That’s a quote from Doris Kearns Goodwin’s The Bully Pulpit (pg 108) where she establishes one of the similarities that Presidents Teddy Roosevelt and William Taft shared from the very beginning. They both loved to read.

 

On the idea of Professional Reading as a leadership and risk management tool, one of my good friends, Rory Green, sent me a note this weekend highlighting the thoughts of retired US Marine Corps General, James Mattis.

 

The problem with being too busy to read is that you learn by experience, i.e. the hard way. By reading, you learn through others’ experiences, generally a better way to do business; especially in our line of work where the consequences of incompetence are so final for young men.” #Truth

 

Back to the Global Macro Grind

 

A small but critical portion of my Professional Reading includes staying on top of consensus. Two of the most important sources of #OldWall Street and #KeynesianEconomics consensus are:

  1.  Barron’s
  2.  The Economist

That’s not to say that every once in a while these publications don’t crush it with a forward looking idea (like Barron’s highlighting our bearish work on McDonald’s (MCD) or MLPs Linn Energy and Kinder Morgan!). It’s just to say these are places where you’ll find consensus.

 

So what is consensus right now on the two most important drivers of our Global Macro Model – Growth and Inflation?

  1. US GROWTH: cover of Barron’s “Outlook 2014” this weekend = “Bullish On 2014
  2. INFLATION: mid-November cover of The Economist = “The Perils of Falling Inflation

And while we’ve been the US growth bulls (and inflation bears) for the last year, our model rolls into 2014 with the following views:

  1. US #GrowthSlowing from its Q313 highs (GDP to be reported on Friday around +3.6%)
  2. #InflationAccelerating from its Q413 lows (bottoming in OCTOBER at 1.0% y/y CPI)

On US growth, Darius Dale published a full research note to our Institutional subscribers on Thursday titled “#GrowthSlowing, Lots of Charts.” If you’d like a copy of that note and what’s embedded in our model’s expectations just ping Sales@Hedgeye.com. One of the baseline assumptions in our model is that inflation slows real (inflation adjusted) growth.

 

Q: What’s the leading indicator for inflation?

A: Central planners devaluing the purchasing power of The People via its currency

 

And, not to be confused with US #GrowthAccelerating (like it is in Germany this morning with a PMI of 54.2 for DEC vs 52.7 NOV = #StrongEuro), what’s been happening in the USA for DEC to-date is #InflationAccelerating:

  1. US Dollar = DOWN (for 5 weeks in a row ahead of the Fed not tapering as it should have)
  2. Commodities = UP (CRB Commodities Index = +0.4% last wk and +1.7% for DEC to-date)
  3. US Stocks = DOWN (SP500 = -1.6% last wk and -1.7% for DEC to-date)

I know, I know. What’s jamming the American people with a little food (coffee prices +8% last week) and gas (natural gas +6% last week) inflation ahead of the holidays if everyone @FederalReserve is taking car service to work and living large at holiday cocktailers?

 

Well, in our model it matters. It especially matters on the margin when:

  1. GROWTH’s slope is topping and
  2. INFLATION’s slope is bottoming

Perversely, a Fed no-taper for DEC will only perpetuate this. The US Dollar is down another -0.25% this morning as it tries to front-run the Fed’s conflicted and compromised political decision to not taper when it should have been tapering since September.

 

But, for now, asset inflation (especially commodities) loves that. So don’t worry about inflation slowing growth in 2014, because no one in the Barron’s survey other than Jeff Knight (buy-sider from Columbia Management) thinks it will either.

 

According to Barron’s, “Wall Street’s top strategists” (which include Morgan Stanley’s Adam Parker who had a 1434 SP500 “target” for 2013 at this time last year; the mean “target” was 1531)… “see a sense of normalcy returning to the financial markets next year.”

 

So we’ll roll with a call for accelerating volatility in the New Year too.

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr yield 2.78-2.92%

SPX 1767-1791

VIX 14.21-16.35

USD 79.65-80.46

Brent 108.61-110.44

NatGas 4.21-4.51

 

Best of luck out there this week,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Professional Reading - Chart of the Day

 

Professional Reading - Virtual Portfolio


INVESTING IDEAS - LEVELS

Takeaway: Here are Hedgeye CEO Keith McCullough's refreshed levels for our high-conviction stock ideas.

INVESTING IDEAS - LEVELS - gabba 

Trade :: Trend :: Tail Process - These are three durations over which we analyze investment ideas and themes. Hedgeye has created a process as a way of characterizing our investment ideas and their risk profiles, to fit the investing strategies and preferences of our subscribers.

  • "Trade" is a duration of 3 weeks or less
  • "Trend" is a duration of 3 months or more
  • "Tail" is a duration of 3 years or less

Anything longer than 3 years is unpredictable


THE WEEK AHEAD

The Economic Data calendar for the week of the 30th of December through the 3rd of January is full of critical releases and events.  Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.

 

THE WEEK AHEAD - week

 


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.

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