“You have to earn your followers at the outset of your company… and you must value them every day.”
-John Hamm (in Unusually Excellent)
So I was tweeting yesterday and one of my followers tweeted that I’d just tweeted my 100,000th tweet. Fully loaded, with using the word tweet 6x in this opening paragraph of today’s rant, that’s a lot of tweeting.
One of the main reasons why I have so many bloody tweets is that I do this thing called The #TweetShow. For those of you who have a day job, you probably don’t have time to watch it – but I’ll fire it up every day that I can at 3PM EST and tweet the US market close. I tweet once every 1-1.5 minutes. *Full Disclosure: Twitter has shut down my account, multiple times, for excessive throttling.
Throttling? Not to be confused with trading, high-frequency-tweeting the close is a new idea. From a positioning perspective, it’s my way of telling you what I think and when during the most important decision making hour of my day. It’s not for everyone (that’s why I do it). And I can’t say why so many people follow it, but I can say thank you to whoever tunes in.
Back to the Global Macro Grind…
From a financial media perspective, the alternative to listening to some tunes and watching my team and I of 30 analysts grind through tickers is listening to people who have never played the game tell you everything they know about it on TV.
As a disruptor in a profession in dire need of evolution, I definitely come up with my fair share of dumb ideas. But #TweetShow is not one of them. It’s turned into a much better feedback loop than anything I ever had running my hedge fund. You’d be amazed what crowd-sourcing a real-time stream of comments about all your positions does. I value the crowd’s feedback, every day.
Three years ago I called Twitter “The New Tape.” And the point I was trying to make there was that 10-15 years ago (when I was learning this game), I’d watch the tape (tickers, news, bid/ask, etc.) as I was making decisions. Now I watch my custom tweet-stream. From a #behavioral perspective, the contra-indicators (tweeters) I follow are as critical as the news-flow itself.
One of my contra-indicators for the last 3-4 years has been Nouriel Roubini. While I’m sure he is a rock-star and all, I can’t for the life of me understand why he is tweeting me pics of himself with his shirt undone to mid-chest with a bunch of failed economists from #Davos this morning.
I have an academic channel on Twitter (it’s a contra-stream) than includes:
- Nouriel Roubini
- Mohamed El-Erian
- David Blanchflower
… and many more.
But instead of journos drooling over the idea of having them endow us with their non-market-practitioner intellect, let’s just look at these 3 characters for who they have become since the “great depression” freak-out thing, or whatever they are calling it now.
- Roubini just went bullish on growth (after growth shocked he and mostly every economist @Davos to the upside last year)
- El-Erian just left working with Gross (after he got the “new normal” thing of 1-1.5% growth and long bonds forever = #wrong)
- Blanchflower just tweeted something else that I don’t understand
Blanch is a beauty. He fits my contra-stream profile perfectly. He’s the professor of Keynesian economics @Dartmouth who swore (2-3 yrs ago) that austerity (read, fiscal conservatism and a stronger currency) would spell the end of economies and life itself in the UK.
In other news…
- UK unemployment drops to a 4.5 yr low (biggest drop since 1997) of 7.1% versus 7.4% last
- UK Services and Manufacturing PMI readings are tracking at 15-18 year highs
- UK’s currency (British Pound) is up another +0.4% to $1.65 vs USD this morning
Now, maybe our economic model is for dummies, but it’s better than theirs. As a refresher, here’s how our GIP (Growth, Inflation, Policy) model works:
- POLICY: on the margin, fiscal conservatism and less monetary stimuli strengthen a country’s currency
- INFLATION: it’s local (priced in local currency) and it falls when purchasing power (currency) strengthens
- GROWTH: real (inflation adjusted) consumption growth (and confidence) are perpetuated by #StrongCurrency
In other words, instead of an elegant sounding linear academic theory, our process is more like Mucker’s PIG than anything else. We start with POLICY, then move onto making INFLATION and GROWTH calls from there.
The other big thing about respect being earned on Twitter (instead of allocated to guys who made a bear market call we made 6 years ago, and haven’t made the right call since), is that there is an obviousness to consensus.
Last year our call was the #DeflatingTheInflation via #StrongDollar = US #GrowthAccelerating. Now our call is for US #InflationAccelerating and consumption #GrowthSlowing. And I’m smiling because no one on my contra-stream tweeted that yet.
Our immediate-term Risk Ranges are now as follows (our top 12 macro ranges are in our Daily Trading Ranges product):
Shanghai Comp 1
Natural Gas 4.28-4.55
Best of luck out there today,
Keith R. McCullough
Chief Executive Officer
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.
TODAY’S S&P 500 SET-UP – January 22, 2014
As we look at today's setup for the S&P 500, the range is 29 points or 0.97% downside to 1826 and 0.61% upside to 1855.
CREDIT/ECONOMIC MARKET LOOK:
- YIELD CURVE: 2.46 from 2.45
- VIX closed at 12.87 1 day percent change of 3.46%
MACRO DATA POINTS (Bloomberg Estimates):
- 7am: MBA Mortgage Applications, Jan. 17 (prior 11.9%)
- 7:45am/8:55am: ICSC/Redbook weekly sales
- 4:30pm: API weekly oil inventories
- House, Senate not in session
- FCC begins first major airwaves auction since 2008, selling licenses nationwide for frequencies suited for use by smartphones, tablets; Dish Network has pledged to bid at least $1.56b to ensure sale’s success
- 12:30pm: NASA teleconference on agency’s Earth science activities planned for 2014
WHAT TO WATCH:
- BlackBerry to sell most of Canadian real estate to raise cash
- ABB says profit reduced by $260m in power systems charges
- Discovery seeks sports rights with control of Eurosport
- Amazon said to seek content rights to start Internet TV service
- Floating notes debut in US as more cash chases fewer securities
- Banks seen taking on European debt amid lingering problems: NYT
- Gross heir-apparent El-Erian quits as Pimco fights redemptions
- Bitcoin no bargain for investors with 47% bearish in poll
- Nokia investors call for rewards as Microsoft proceeds loom
- Dow Jones said to dismiss CEO Fenwick amid slow demand for DJX
- BHP quarterly iron ore production narrowly misses forecast
- Bank of Japan sticks to record easing as inflation picks up
- China money rate drops as PBOC cash injections spur stocks gain
- World Economic Forum meeting in Davos coverage
- Abbott Laboratories (ABT) 7:44am, $0.58 - Preview
- Allegheny Technologies (ATI) 7am, $(0.21)
- Amphenol (APH) 8am, $0.98
- Brinker Intl (EAT) 7:45am, $0.58 - Preview
- Coach (COH) 7am, $1.11 - Preview
- Freeport-McMoRan (FCX) 8am, $0.80 - Preview
- General Dynamics (GD) 7am, $1.75 - Preview
- Motorola Solutions (MSI) 7am, $1.62
- Northern Trust (NTRS) 7:30am, $0.75 - Preview
- Parker Hannifin (PH) 7:30am, $1.25 - Preview
- St Jude Medical (STJ) 7:30am, $0.99 - Preview
- TE Connectivity (TEL) 6am, $0.77
- Textron (TXT) 6:30am, $0.59
- United Technologies (UTX) 6:59am, $1.53 - Preview
- US Bancorp (USB) 7am, $0.75 - Preview
- Norfolk Southern (NSC) 8am, $1.51 - Preview
- BancorpSouth (BXS) 4:01pm, $0.28
- Crown Castle Intl (CCI) 4:01pm, $0.16
- East West Bancorp (EWBC) 5:02pm, $0.55
- eBay (EBAY) 4:15pm, $0.80 - Preview
- Jacobs Engineering (JEC) 8:28pm, $0.74
- Netflix (NFLX) 4:05pm, $0.66 - Preview
- Noble (NE) 5pm, $0.81
- Polycom (PLCM) 4:05pm, $0.15
- PTC (PTC) 5:02pm, $0.44
- Raymond James Financial (RJF) 4:16pm, $0.73
- SanDisk (SNDK) 4:05pm, $1.57
- Stryker (SYK) 4pm, $1.22 - Preview
- Susquehanna Bancshares (SUSQ) 4:30pm, $0.21
- Teradyne (TER) 5:01pm, $0.04
- Umpqua Holdings (UMPQ) 4:05pm, $0.24
- United Rentals (URI) 4:15pm, $1.48
- Varian Medical Systems (VAR) 4:02pm, $0.91
- Western Digital (WDC) 4:15pm, $2.08
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
- Uranium Poised for Bull Market as Japan Reviews Reactors: Energy
- Nickel Seen Stalling by Morgan Stanley as Goldman Eyes Rally
- Whistle-Blower in Coal Rally Heralds Colombia Shift: Commodities
- WTI Crude Rises a Third Day on Forecast Distillate Supplies Fell
- Copper Declines on Speculation Chinese Holidays to Curb Demand
- Wheat Gains on Speculation Cold Temperatures May Hurt U.S. Crop
- Rubber Futures Drop to Five-Month Low on China Demand Concerns
- Abenomics Accelerates Gold Sales in Japan as Inflation Hedge
- Rebar Rebounds From 16-Week Low Amid Improved China Money Supply
- India Seen Failing to Meet Sugar Export Plans: Chart of the Day
- Australian Cattle Prices Extend Decline to Lowest Since 2009
- Coal India Faces $4 Billion Rent Claim for State’s Mine Land
- Gazprom, Statoil Gas May Replace Shell-Exxon Supplies in Europe
- Gold Target Cut by Morgan Stanley Seeing ‘More Pain to Come’
The Hedgeye Macro Team
THE MACAU METRO MONITOR, JANUARY 22, 2014
HOLIDAY ROOMS COST MORE THAN JAPAN, LAS VEGAS Macau Business Daily
Average hotel room prices in Macau are HK$4,000 or US$516 per night for this year’s Lunar New Year period – higher than a five-star hotel room rate in Japan over the same period. The average nightly five-star rate for Macau in 2013 was 1,732 patacas – 138% cheaper – according to the Macau Hotel Association.
Around 270 million Chinese people – about a fifth of the mainland population – are eligible under China’s Individual Visit Scheme to come to Macau. The city presently has only about 22,000 hotel rooms. The issue was even mentioned last week by Li Gang, the central government’s new chief representative in Macau. “There are currently about 22,000 hotel rooms in Macau only, but in Las Vegas they have six times the hotel rooms than we have to serve an annual visitor number of 36 million,” Li stated.
TAM AUTHORIZED TO EXTEND LOTTERY MONOPOLY Macau Business Daily
Sociedade de Lotarias Wing Hing Lda is likely to have its monopoly right to run a Chinese lottery in Macau extended until December 31, 2014. The city’s Official Gazette yesterday said that Chief Executive Fernando Chui Sai On had delegated Francis Tam Pak Yuen, Secretary for Economy and Finance, to grant the extension, and “amend the concession contract”.
Annual revenue for the lottery, known locally as Pa Ka Pio or Pacapio, has been around six million patacas (US$751,00) since 2007. The Official Gazette listed SJM Holdings’ directors Angela Leong On Kei and Louis Ng Chi Sing in June 2011 as directors of Wing Hing. Wing Hing pays the government 23% of its revenue, plus 5% to the Macao Foundation.
This note was originally published at 8am on January 08, 2014 for Hedgeye subscribers.
“For man to truly understand himself, he must travel beyond the clouds”
When I saw my first Space Shuttle launch as a child, I knew I wanted to be an astronaut.
After I made my first real money selling PayPal/eBay stock, I bought a ticket on Virgin Galactic to go to space aboard SpaceShipTwo. I later bought a second seat on Space Expedition Corporation’s Lynx. As I became more involved in the Newspace community I began speaking at conferences and universities around the world – the topic being “The Potential for & Impact of Commercial Space & Space Tourism”.
Today, alongside my research and engineering team @Hedgeye, I am co-founding Firefly – a ground-based, small satellite launch company, with one of Hedgeye’s greatest supporters and fans, PJ King, as well as propulsion engineer extraordinaire, Tom Markusic.
With a Ph.D. from Princeton in Mechanical & Aerospace Engineering, Tom has conducted research on deep space propulsion systems and since 2006 has held senior leadership positions inside virtually every leader in the Newspace Industry: Elon Musk’s SpaceX, Jeff Bezos’ Blue Origin and Richard Branson’s Virgin Galactic. Tom is Firefly’s CEO and from what I have seen, he will be a fantastic entrepreneur and business executive.
Lowering the cost of small satellite launches to Low Earth and Sun Synchronous Orbits will revolutionize broadband data delivery and earth observation missions. What used to cost hundreds of millions of dollars, is rapidly becoming available in the single digit millions.
While the leaders in the nascent and rapidly developing small sat industry (companies such as PlanetIQ, Skybox, Planet Labs, and numerous others) have raised VC funds well in excess of $100M in the last 1-2 years, there exists virtually no dedicated launcher capacity for these ventures to deliver their payloads to orbit.
With Hedgeye’s help, Firefly will change this.
We have rapidly received our seed funding commitments and are already in discussions with investors looking towards our Series A funding. Since our website launched and word of mouth has spread through the industry, we have been overwhelmed with resumes. We have established our headquarters in Austin, TX and research and development operations in Hawthorne, CA.
What we are setting out to do will be enormously challenging. It is difficult to make exact projections about schedule until we get further along in development, but the team has set itself a goal: To be in orbit in about three years.
Hedgeye has and will continue to support Firefly on a number of fronts: Josh Steiner (today he runs our Financials vertical but in the past he analyzed satellite operators) has worked with us on market sizing.
Jay Van Sciver, who leads Hedgeye’s Industrials team, has worked on valuation analysis for some of the private New Space players. Hedgeye will lend assistance in a variety of operational areas, ranging from finance and accounting to HR, facilities and IT.
We are not in the business of complaining about the 2008 crisis. We are in the business of cutting edge research, intellectual growth, and product innovation. So, I just wanted to take a few minutes this morning to thank you for your business – it’s helping us travel beyond the clouds.
Alongside our TREND duration view (bullish or bearish in brackets), our immediate-term Risk Ranges are now:
SPX 1824-1850 (bullish)
VIX 11.85-13.75 (bearish)
Pound 1.63-1.65 (bullish)
Natural Gas 4.20-4.51 (bullish)
Brent Oil 105.25-109.39 (bearish)
Gold 1186-1245 (bearish)
Onward and upward,
President, Hedgeye Risk Management
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