Gaming, Lodging & Leisure Sector Head Todd Jordan has added Las Vegas Sands Corp. (LVS) to Investing Ideas.
We will send out a full report for subscribers detailing Jordan's bullish case for the stock this week.
THE MACAU METRO MONITOR, JANUARY 28, 2014
MELCO CROWN BOOSTS INVESTMENT IN MANILA CASINO TO USD$680MM Macua Daily TImes
MPEL has raised its planned investment in City of Dreams Manila to USD680 million. CEO Lawrence Ho said yesterday, adding that the figure could rise further. “It keeps going up. Our most recent number is USD680 million because PAGCOR will allow us more (gaming) tables and we keep finding great brands,” said Ho. City of Dreams Manila will open mid-2014 and is part of the government’s Entertainment City in the reclamation area on Manila Bay, which was modeled after the Las Vegas gaming strip. City of Dreams Manila will open with 365 gaming tables, 1,680 slot machines and 1,680 electronic table games.
CHANGI AIRPORT TRAFFIC Changi Airport Group
December passenger traffic at Singapore's Changi airport rose 4.1% YoY to 5.12 million.
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TODAY’S S&P 500 SET-UP – January 28, 2014
As we look at today's setup for the S&P 500, the range is 64 points or 1.32% downside to 1758 and 2.27% upside to 1822.
CREDIT/ECONOMIC MARKET LOOK:
MACRO DATA POINTS (Bloomberg Estimates):
WHAT TO WATCH:
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
The Hedgeye Macro Team
This note was originally published at 8am on January 14, 2014 for Hedgeye subscribers.
“A vigilant and well-informed press, setting forth the truth…”
-Doris Kearns Goodwin, The Bully Pulpit
But what, precisely, is the truth? The truth is that Ray Dalio asks the same question in order to explain his investment process (minus the words ‘but’ and ‘precisely’). It’s the same question you need to be asking yourself every market day.
The 20th President of the United States, James A. Garfield, wasn’t talking about markets when he said that “the truth will set you free, but first it will make you miserable.” But for this morning, let’s lie to ourselves and pretend he did. For me at least, it’s the truth!
The truth is that for the 1st day of 2014, US stocks down (yesterday) has captured the top (most read) headline on Bloomberg.com: “SP500 Falls Most Since November Amid Valuation Concern.” Only one part of that headline story is true. The “valuation” part is just an #OldMedia editorial. Well-informed market practitioners can do better than that.
Back to the Global Macro Grind…
Fresh off a feeding of our new born baby Lucy Taylor McCullough yesterday (she’s a beauty!), I walked upstairs to my post and bought-the-damn-bubble #BTDB into the US stock market close. Whether I was right or wrong in doing so isn’t the point. #Timestamps are truth.
Before I get into the why, I’ll just rehash the step by step process in terms of what I actually did:
1. After coming into the open with my first net neutral position of 2014 (8 LONGS, 8 SHORTS), I covered shorts
2. I didn’t cover any of these shorts on “valuation” (RRGB, MCD, LINE, F); I covered them because they were oversold
3. Then I waited, watched, and finally bought SPY on my signal at 3:38PM EST at $181.60
Having made every single mistake you can make in this game in buying things too early (which is typically followed up with excuses like, “but it’s cheap”), this time I actually took my time. Getting net longer on red should be a process, not an emotional episode in your life.
At Hedgeye there are 3 big parts to how we try to probability weight where Mr. Macro Market might move next:
On the #history front, contextualizing the emotion of yesterday’s final selling moments is easy – that was only the 3rd one-day decline of over 1% for the SP500 in the last 3 months:
1. November 7th, 2013 = -1.32%
2. January 14th, 2014 = -1.26%
3. December 11th, 2013 = -1.13%
In other words, that’s why the first part of this morning’s Bloomberg headline is true. It was the biggest US stock market down day since November 7th, 2013 when the SP500 closed at 1747. If you bought SPY there, you could have sold it 101 handles higher (+6%) at the US stock market’s all-time closing high of 1848 on December 31, 2012. #truth
#History reminds us that past performance doesn’t predict future results. I have no illusions about that. Neither should you. So let’s dig into some of the math (levels, correlations, etc.) that got me to hit that SPY buy button yesterday:
1. PRICE: the SP500’s immediate-term TRADE oversold line of support = 1817 with TREND support well below that at 1771
2. VOLUME: my composite volume signal was in line with my TREND based average yesterday; nothing to freak out about
3. VOLATILITY: front-month VIX was obviously up on the day, but still well below @Hedgeye TREND resistance of 14.91
So that’s that. The #history and #math parts had nothing to do with “valuation” obviously.
How about the #behavioral side of the decision to buy SPY? I think about that in 2-big parts, levels and catalysts:
1. LEVELS: for a year now, performance chasers have been selling red and buying green; fade that consensus on the signal
2. CATALYSTS: A) Japanese Yen was signaling overbought and B) JPM was signaling immediate-term TRADE oversold
These are, of course, very immediate-term catalysts. But when making buy or sell decisions, what else would you use? Whether people admit it or not, without a tested and tried, real-time, decision making process, they’ll use emotion instead of high probability signal levels and catalysts - or at least I used to.
on A) and B):
A) The Global Macro Correlation Risk that is the YEN vs Nikkei relationship is crystal clear (Yen Down = Nikkei Up)
B) JP Morgan (JPM) beating earnings in this environment (fat Yield Spread) is research edge you either had or did not
On A) the Yen is -0.6% vs USD this morning and on B), thankfully I have a great Financials analyst in Josh Steiner (who has been The Bear on NSM as of late). But even if I didn’t have Steiner, I’d have had that JPM oversold signal alongside the Yen’s overbought one. Now the manic media can run headlines that “JPM Beat, Alleviating Valuation Concerns.”
You either have research and risk management signals that you trust, or you do not. They help keep me well informed.
Our immediate-term Macro Risk Ranges are now:
Best of luck out there today,
Keith R. McCullough
Chief Executive Officer
Takeaway: Did Nike deliberately inflate the price Puma paid?
Puma to Outfit Arsenal Football Club
Takeaway from Hedgeye Retail analyst Brian McGough: Puma beat out Nike for the right to spend $50 million to put their logo on Arsenal's jersey. Nike is currently in the midst of negotiations with Manchester United, and most likely bowed out of the Arsenal talks after Puma inflated the price. Either that, or in typical Nike fashion, it knew how badly its competitor wanted the deal, so it bid up the price knowing that it would ultimately walk away.
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