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THE M3: SO COMMENTS ON JAN; JOCKEY CLUB CASINO; SOLAIRE

THE MACAU METRO MONITOR, FEBRUARY 11, 2014

 

 

SO 'NOT WORRIED' ABOUT 7% JAN GROWTH Macau News

“There were a lot of people but business is not as good,” So said of SJM's revenue in January.  So said that the slowed-down growth was “nothing to worry about” as there was no drop in the amount of gaming chips bought by customers, pointing out that casinos look at the win percentage to determine their revenue.  Last month's slowed-down growth rate, So said, was nothing to worry about as he believed it won’t be a trend.

 

JOCKEY CLUB AWAITS APPROVAL TO REOPEN CASINO Macau Daily Times 

Macau Jockey Club (MJC) is planning to reopen its casino following a ten-year absence.  Jockey Club CEO Thomas Li Chu Kwan confirmed that the casino is now being redecorated and will be reopened as soon as government approval arrives.  There is currently no timetable for the casino’s reopening, and neither are there specific numbers on gambling tables and slot machines to be set up.

 

BLOOMBERRY RAISES US$253 MLN TO EXPAND SOLAIRE Macau Business

Bloomberry Resorts Corp has raised privately US$253.4 million (MOP2.03 billion) to expand its Solaire Resort and Casino in Manila’s Entertainment City.  The casino-resort operator had sold corporate notes to BDO Unibank Inc, China Banking Corp, Robinsons Bank Corp and United Coconut Planters Bank, among others.  The Phase 1-A expansion of Solaire will include 200 more slot machines and 65 gaming tables, a 300-room hotel, mixed-use space, a 1,800-seat theatre and a nightclub.


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – February 11, 2014


As we look at today's setup for the S&P 500, the range is 80 points or 3.66% downside to 1734 and 0.79% upside to 1814.                                                

                                                                               

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: 2.37 from 2.36
  • VIX  closed at 15.26 1 day percent change of -0.20%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:30am: NFIB Sm. Biz Optimism, Jan., est. 93.5 (prior 93.9)
  • 7:45am/8:55am: ICSC/Redbook weekly retail sales
  • 9am: Fed’s Plosser speaks in Del.
  • 10am: JOLTs Job Openings, Dec. (prior 4.001m)
  • 10am: Wholesale Inventories m/m, Dec., est. 0.5% (pr 0.5%)
  • 10am: Fed’s Yellen testifies to House Fin. Services Cmte
  • 4:30pm: API weekly oil inventories
  • 8pm: Fed’s Lacker speaks at Stanford University
  • 8pm: Fed’s Fisher speaks in Dallas

GOVERNMENT:

    • 9am: Obama and Hollande hold state arrival ceremony, 9am; State dinner begins 8:30pm
    • 10:15am House Ways and Means Committee marks up H.R. 3865 which would delay IRS rules on 501(c)(4) organizations
    • 10:30am Senate Budget Cmte hears from CBO Director Douglas Elmendorf on economic outlook through 2024
    • House Republicans plan Feb. 12 vote to boost debt limit until March 2015, restore cost-of-living raises for military retirees

WHAT TO WATCH:

  • Fed’s Yellen testifies to House Financial Services Cmte
  • KKR to close two funds targeting individual investors
  • Obamacare delayed until 2016 for businesses w/ <100 workers
  • Ackman sells General Growth shrs to exit holding in mall owner
  • Barclays to cut up to 12,000 jobs as 4Q profit falls
  • L’Oreal to pay $8.2b to buy back 8% of its stock from Nestle
  • Blankfein says EMs in better position than during 1998 crisis
  • SEC majority wants to review exchanges’ oversight status
  • GM’s China sales rise 12% to record in January on Buick demand
  • General Motors to invest 1.5b Zloty in Polish plant: Dziennik
  • Porsche to exceed 200,000 in deliveries in 2015 on Macan
  • Wall St. vets may be removed from arbitration panels: Reuters
  • North Carolina agency may delay own deal with Duke Energy: AP
  • Virgin America said to pick Barclays, Deutsche for IPO: FT
  • Glencore Xstrata’s 4Q copper output increases 32%
  • China auditors plan to file appeal of 6-month U.S. ban

AM EARNS:

    • CAE (CAE CN) 8:22am, C$0.18
    • CVS Caremark (CVS) 7am, $1.11 - Preview
    • Dean Foods Co (DF) 7:01am, $0.18
    • Entergy (ETR) 7am, $0.83
    • HCP (HCP) 8am, $0.56
    • Health Net/CA (HNT) 8:15am, $0.29
    • Henry Schein (HSIC) 7am, $1.40
    • Huntsman (HUN) 6am, $0.37
    • Ingersoll-Rand PLC (IR) 7am, $0.61
    • IntercontinentalExchange Group (ICE) 7:30am, $1.95
    • LPL Financial Holdings (LPLA) 6:05am, $0.59
    • Marsh & McLennan Cos (MMC) 7am, $0.56
    • Mosaic (MOS) 7am, $0.43
    • National Retail Properties (NNN) 8:30am, $0.28
    • Omnicom Group (OMC) 7am, $1.14 -
    • PG&E (PCG) 9:02am, $0.42
    • Regeneron Pharmaceuticals (REGN) 6:30am, $2.09 - Preview
    • Reynolds American (RAI) 6:58am, $0.80 - Preview
    • Sprint (S) 7am, ($0.36)
    • Zoetis (ZTS) 7am, $0.34

PM EARNS:

    • Arch Capital Group (ACGL) 4:01pm, $0.96
    • Brookfield Residential Properties (BRP CN) 4:09am, C$0.84
    • CNO Financial Group (CNO) 4:03pm, $0.29
    • Conversant (CNVR) 4:02pm, $0.57
    • Covanta Holding (CVA) 4:01pm, $0.22
    • DaVita HealthCare Partners (DVA) 4:01pm, $0.98
    • Energen (EGN) 4:30pm, $0.82
    • FireEye (FEYE) 4:05pm, ($0.37)
    • Fossil Group (FOSL) 4:01pm, $2.43
    • Packaging of America (PKG) 5pm, $0.89
    • PHH (PHH) 4:03pm, $0.08
    • Sangamo Biosciences (SGMO) 4pm, ($0.11)
    • Seattle Genetics (SGEN) 4:05pm, ($0.24) - Preview
    • Service International (SCI) 4:05pm, $0.24
    • Trimble Navigation (TRMB) 4:05pm, $0.37
    • TripAdvisor (TRIP) 4pm, $0.21
    • Western Union Co (WU) 4:01pm, $0.32
    • Willis Group Holdings PLC (WSH) 4:41pm, $0.49

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Natural Gas Rebounds From Three-Week Low on U.S. Winter Storm
  • Gold Advances to Highest Price Since November as Dollar Weakens
  • Rhodium Bust Ending as Car Sales Fuel Mine Deficit: Commodities
  • Sugar Traders Split as Brazil Dryness Weighed Against Surpluses
  • Aluminum Trades Near a One-Week High Before Yellen Testimony
  • Rebar Touches 17-Month Low as Inventory Gains After Holiday
  • Soybeans Extend Losses After USDA Raises Global Supply Outlook
  • China Eyes Poultry Consolidation as Bird Flu Cuts Consumption
  • Wheat Crop Seen Third-Biggest by Australia on Western Supply
  • California Wildfires Erupt Early in Risk to Homes and Vineyards
  • Transnet Fights BHP to Win Coal Port Access for Black Miners
  • Strong Chinese Steel Demand May Fail to Absorb Iron Ore Glut
  • Chinese Coal Firms’ Debt Concerns Sink Shares: Chart of the Day
  • WTI Trades Near Six-Week High as U.S. Fuel Supplies Seen Falling

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

 

 

 

 

 

 

 

 

 

 

 

 

 


February 11, 2014

February 11, 2014 - Slide1 

BULLISH TRENDS

February 11, 2014 - Slide2

February 11, 2014 - Slide3

February 11, 2014 - Slide4

February 11, 2014 - Slide5

February 11, 2014 - Slide6

February 11, 2014 - Slide7

February 11, 2014 - Slide8

 

BEARISH TRENDS

February 11, 2014 - Slide9

February 11, 2014 - Slide10

February 11, 2014 - Slide11
February 11, 2014 - Slide12

 


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MORE GOOD NUMBERS OUT OF MACAU

Chinese New Year (CNY) is off to a great start for the Macau casinos following a softer than expected January (hold issues in Jan?).  Daily table revenues averaged $1.464 billion, up 78% over comparable period last year.  The more appropriate comp is 3rd week of February last year when table revs averaged HK$1.107 billion – so peak CNY is up about 32%.  We should see one more week of fairly strong revenues related to the CNY celebration before the seasonal slowdown.  All in, we continue to project February YoY growth of around 20%, which could prove conservative.

 

For market shares, LVS is crushing it this month with MTD market share well ahead of trend as is Galaxy.  Those market share gains are coming at the expense of SJM, MGM, and MPEL.  While variances from normal hold are no doubt causing most of the share volatility this early in the month, we expect LVS primarily and Wynn secondarily, to be volume share gainers, with LVS showing the longer tail.  Indeed, the anecdotal feedback from the ground suggests terrific volumes at the LVS Cotai properties.

 

MORE GOOD NUMBERS OUT OF MACAU - M1

 

MORE GOOD NUMBERS OUT OF MACAU - M2


Silent Apprehension

This note was originally published at 8am on January 28, 2014 for Hedgeye subscribers.

“Wall St. was a street of vanished hopes, or curiously silent apprehension, and a sort of paralyzed hypnosis.”

-New York Times

 

Imagine that was the header for @NYT on the eve of America’s central economic planner in chief’s State of The Union. Newsflash: it’s not. That was the front page of the New York Times on the day after the 1929 US stock market crash.

 

John Coates cites the aforementioned headline in chapter 1 (The Biology of a Market Bubble) of The Hour Between Dog and Wolf and goes on to remind us that “research on body-brain feedback, even within physiology and neuroscience, is relatively new.” (pg 28).

 

So how are you feeling this morning? While you know that hope is not a risk management process, apprehension and paralysis are all part of the game. While it’s hard to sell`em on green and buy`em on red, fading your emotional state is often the precise action to take.

 

Back to the Global Macro Grind

 

I don’t know about you, but in the heat of the decision making moment I fade how I feel about markets a lot. Through 15 years of trial and error, I’ve learned to increasingly rely on multi-factor, multi-duration, risk management signals amidst the research noise.

 

Since I don’t have a dog (or wolf) in the fight in marketing a perma bullish or bearish position, I use the TRADE versus the TREND in order to tone down my testosterone. Yep, I’m a dude – keeping that under control matters!

 

To review our process lingo:

  1. TRADE is 3 weeks or less in duration
  2. TREND is 3 months or more in duration

The reason why I use “more” or “less” is because time in my model (days) varies inversely with volatility. In other words, if front-month volatility ramps +50% in a week, the number of days in my TRADE model falls, fast – and, if implied volatility (looking out on the curve) doesn’t confirm that immediate-term information surprise, I keep an above average amount of duration (time) in the TREND model.

 

That may or may not make sense to you. So to put it more simply:

  1. When both front-month and implied volatility are signaling lower-highs and lower-lows, a monkey can buy stocks
  2. When both front-month and implied volatility move from bearish to bullish TRADE and TREND, monkeys get killed

Momentum monkeys, I mean.

 

I know, I know. Every time I call someone a monkey, I trigger an emotional response. But, please, don’t be offended. I am a monkey too – I’m just one that tends to learn from the cage door being slammed on my fingers.

 

Volatility, of course, is the #1 risk factor that every major fund manager who has fallen from grace has messed up. Even the world’s best messed this up in bonds last June. Many more have already messed this up in Japanese and Emerging Market Equities YTD.

 

This is basically why I completely disagree with the concept of being an active “long-term investor” who doesn’t use an implied volatility risk management overlay. While it would be nice to wake up to sun and bananas at the zoo every day, reality is that every once in a while a storm rips the cages open and the tigers, who have been putting up with monkey-bull chirping for a year, are hungry.

 

Back to the actual levels, to keep this simple, let’s just focus on the inverse relationship between the SP500 and VIX:

  1. TRADE – SPX 1837 momentum support broke as 13.81 VIX resistance became immediate-term support
  2. TREND – SPX 1779 support was tested intraday yesterday (and held), but VIX 14.91 TREND is firmly intact

And here Mucker the monkey was covering oversold shorts (and buying one long, LVS) into the close as 1779 SPX held (which would be called a high-probability gamble - dealer shows a 6 in #BlackJack)… and the minute I saw Apple (AAPL) guide down, I thought it was going to be a gamble I’d pay for today (and deserve it).

 

But, the US Equity Futures are up 8-10 handles and I’ll play lucky on the open today instead. I won’t, however, confuse that with the next leg up in this market ripping to fresh all-time highs. Provided that 1837 SPX TRADE resistance and 14.91 VIX TREND support remain intact, I’ll be a seller again this morning on green (like we were in #RealTimeAlerts on the open yesterday).

 

I know that playing the game across durations isn’t for everyone. But this is what I do. And I like it. I can assure you that the longest of “long-term” investments you can ever make is starting your own company with all of your own money. And for me at least, that investment requires absorbing 24/7 risk management, apprehension, and pain – if you want the long-term to last longer, that is.

 

Our immediate-term Global Macro Risk Ranges are now (12 Big Macro Ranges are in our Daily Trading Range product):

 

SPX 1758-1822

VIX 14.91-20.41

USD 80.18-80.79

Pound 1.64-1.66 (bullish)

NatGas 4.58-5.15

Gold 1240-1272

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Silent Apprehension - Chart of the Day

 

Silent Apprehension - Virtual Portfolio



Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.65%
  • SHORT SIGNALS 78.64%
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