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  • While Mainland China visitation is the most important visitor segment and has been above expectations in 2014, Hong Kong visitors represents 23% of the total  (2nd largest) and declined for the 11th straight month.  

  • Year-to-date, total and Mainland visitation rose 8% and 14%, respectively, while HK visitation shrunk by 6%.

  • There is a rumor the dead-boat gaming cruises out of the ports in HK may be playing a role as they are particularly attractive for locals looking for a quick gambling trip without going through the Macau ferry and immigration congestion. 

  • One concern could be if China’s macro issues bleed into Mainland visitation to Macau, HK may not be there to pick up the slack. 


Life and Light

This note was originally published at 8am on March 11, 2014 for Hedgeye subscribers.

“The life and light of a nation are inseparable.”

-James A. Garfield


That’s the opening quote to a fantastic US #history book I cracked open this past weekend: Destiny of The RepublicA Tale of Madness, Medicine, and the Murder of a US President, by Candice Millard of Kansas City, Missouri.


After serving only 200 days as President of the United States (MAR-SEP of 1881), Garfield was shot by a whacko loser by the name of Charles Guiteau. Not unlike many of us, Garfield never thought of himself as part of a “class.” While he was raised poor, he empowered himself with the light of self-education. He was one of the smartest Presidents America has ever had.


Being “smart” isn’t a big differentiator in this profession. On paper, I don’t really know anyone who is dumb. But thinking that an un-elected-central-planning-bureau can smooth our economic lives and provide us with a pre-18th century enlightenment is. While hope is not a risk management process, that’s all I have left that America’s currency finds her footing.


Back to the Global Macro Grind


As I alluded to in yesterday’s Early Look, 1870-1913 was one of the best economic periods in American history for a reason. The US understood the value of owning what was becoming the world’s reserve currency. There was no Federal Reserve to devalue it.


Life and Light - 567


Fast forward 100 years, and we have ourselves quite a scene to observe in global macro markets every day. Places like Argentina (who had the same standard of living as the US in 1920), missed having Presidential periods of sustained real (inflation adjusted) economic growth like 1983-1989 (Reagan) and 1993-1999 (Clinton) where the value of America’s currency rose with interest rates.


Our Global Macro Theme of 1H13 of #StrongDollar + #RatesRising is gone now. And, on many levels, that’s just a sad thing. It provided for what George Gilder recently coined as “information surprise” in the US economy. It was the life and light that the current @FederalReserve isn’t allowed to understand.


In case you are thinking about moving to another country, here’s what’s headline news around the world this morning:


1. New Zealand’s Prime Minister, John Key, is calling for a new country flag to represent the “end of the colonial era”

2. Swedish Consumers are enjoying #StrongCurrency Tax Cuts (Consumer Prices, CPI, -0.2% y/y for FEB)

3. UK Industrial Production #GrowthAccelerating to +2.9% y/y as the British Pound tests fresh 3yr highs


In other words, there is plenty of life and light in this world. You just have to stop navel-gazing politically in the US and realize that countries are racing against America as she always has against them.


But why do these headlines matter? What do these countries currently have in common?


1. NEW ZEALAND’s #StrongCurrency Policy (the Kiwi) has generated some of the strongest real GDP growth rates in the non-EM world. Consumer Confidence (which tracks the strength of a country’s currency) is testing all-time highs.

2. SWEDEN, while still recovering from its loss to the Canadian hockey team in the Gold medal game @Sochi, continues to reap the rewards of having a currency that can’t be devalued by some Japanese bureaucrat

3. UNITED KINGDOM continues to remind all those who followed in the footsteps of a raging Keynesian policy to devalue the Pound that real-inflation-adjusted economic-growth in the UK has accelerated alongside the purchasing power of its people


Don’t worry, all is not yet lost. But the US stock market’s volume could be. At the all-time highs in the SP500, volume has been as dead as a doornail. In both monetary policy and in market interest (CNBC ratings at all-time lows), the US is starting to emulate Japan. The land of the rising sun and “forward rate guidance” (Japan) saw its stock market volume hit 5 month lows last night too.


What if the life and the light were to just leave? And I mean literally. What if enough of us get what’s going on to simply not show up as the last lemming to buy the all-time bubble high from someone else who doesn’t call the all-time high price bubbly? What if all there is left is the last short seller covering his shorts high after shorting the January lows?


What if?


If, if, then statements aren’t new to evolution. Neither were they new (yesterday) to a part of this world (Latin America) that has tried, tried, and tried again to devalue its currencies as the best path to political power and prosperity.


Argentina, Brazil, Chile (Equities) were all down -1.2-1.6% yesterday as hedge funds continue to race to get net longer of a US stock market they got way too short of only a month ago (-80,000 net short futures/options contracts in Index +E-mini).


Latin American Equities (MSCI Index) are down almost -10% YTD as its people deal with unsustainable debt levels, deficit spending, and failed Policies To Inflate their way out of it via currency devaluation. The purchasing power and currency of The People are inseparable.


Our immediate-term Global Macro Risk Ranges are now as follows (Top 12 Daily Trading Ranges is a separate subscription product):


SPX 1864-1891

Bovespa 44566-47451

USD 79.38-80.11

Pound 1.66-1.68

Brent 106.93-110.61

Gold 1321-1355


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Life and Light - Chart of the Day


Life and Light - Virtual Portfolio

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real edge in real-time

This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.


TODAY’S S&P 500 SET-UP – March 25, 2014

As we look at today's setup for the S&P 500, the range is 38 points or 0.94% downside to 1840 and 1.11% upside to 1878.                       










THE HEDGEYE DAILY OUTLOOK - 10                                                                                                                                                                  



  • YIELD CURVE: 2.30 from 2.30
  • VIX closed at 15.09 1 day percent change of 0.60%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:45am  ICSC weekly retail sales
  • 8:55am: Redbook weekly retail sales
  • 9am: House Price Index m/m, Jan., est. 0.6% (prior 0.8%)
  • 9am: S&P/Case Shiller Home Price report
  • 20 City m/m, Jan., est. 0.60% (prior 0.76%)
  • 10am: Consumer Confidence, March, est. 78.5 (prior 78.1)
  • 10am: Richmond Fed Manufacturing, March, est. 4 (prior -6)
  • 10am: New Home Sales, Feb., est. 445k (prior 468k)
  • 4pm: Fed’s Lockhart speaks in Atlanta
  • 4:30pm: API weekly oil inventories
  • 7pm: Fed’s Plosser speaks in New York


    • President Obama holds press conference in Netherlands while attending Nuclear Security Summit
    • House Foreign Affairs Cmte will take up H.R. 4278, which offers support to Ukraine, codifies sanctions against Russian and Ukrainian individuals deemed corrupt, responsible for crisis
    • Supreme Court may issue opinions, hears religious exemption arguments for cos. re: Obamacare contraceptive mandate
    • 8am: Peter Visclosky, D-Ind., U.S. Steel CEO Mario Longhi at Congressional Steel Caucus state of steel industry hearing
    • FY2015 budget hearings/panels:
    • 10am: Senate Foreign Relations Cmte: Sec. of State John Kerry
    • 10am: House Armed Svcs Cmte: Army Sec. John McHugh, Chief of Staff Raymond Odierno
    • 10am House Approps panel: Navy Sec. Ray Mabus, Chief of Naval Ops Jonathan Greenert, Marine Corps Commandant James Amos
    • 1:30pm: House Appropriations panel: Interior Sec. Sally Jewell
    • 2pm: House Appropriations panel: Federal Communications Commission Chairman Tom Wheeler and Commissioner Ajit Pai
    • 10am: Lithuanian Energy Minister Jaroslav Neverovic expected to request at Senate Energy Cmte hearing to speed opening of LNG exports from U.S. to NATO members
    • 1:30pm: House Energy and Commerce subcmte on energy and power to hold hearing on H.R. 6, designed to speed natural gas exports to WTO countries
    • U.S. Election Wrap: Nate Silver Says GOP May Take Senate


  • Russia excluded from G-8 as leaders warn of more sanctions
  • Senate Republicans seek to void IMF money in Ukraine aid package
  • Candy Crush maker King Digital seeks $533m in IPO
  • German business confidence falls for first time in 5 months
  • Sanofi said to join bidders for Merck’s consumer-health unit
  • GM recall accused of missing Cobalts with faulty switch
  • GM CEO to testify before Congressional panel on recall
  • Senate, House cmtes examine intl energy trade, LNG exports
  • Vivendi is said to seek improved SFR bid from Drahi’s Altice
  • Lawmakers said to agree on ending NSA phone-records program
  • SEC probing bond dealings by banks in loan securities: WSJ
  • Google Glass products coming from Ray-Ban, Oakley Maker
  • Box files to raise $250m in cloud-storage shr sale
  • Brazil’s credit rating cut to BBB- by S&P on sluggish growth


    • Carnival (CCL) 9:15am, ($0.08) - Preview
    • Five Below (FIVE) 4:01pm, $0.45
    • G-III Apparel (GIII) 7am, $0.49
    • HD Supply Holdings (HDS) 6am, ($0.03)
    • Legacy Oil + Gas (LEG CN) post-mkt, C$0.02
    • McCormick (MKC) 6:30am, $0.58
    • Neogen (NEOG) 8:45am, $0.18
    • PVH (PVH) 4:02pm, $1.42
    • Steelcase (SCS) 4:01pm, $0.17
    • Walgreen (WAG) 7:30am, $0.93 - Preview


  • Gold Rebounds From One-Month Low as Ukraine Concern Spurs Demand
  • WTI Reaches $100 Before U.S. Crude Stockpile Data; Brent Steady
  • Meat Eaters Gulp Record Costs Before Grilling Peak: Commodities
  • Iraq Buys $1.56 Billion of Gold for Biggest Purchase in 3 Years
  • Anglo American Halts Bronces Copper Mine Amid Protests in Chile
  • Miners Face Congo Conflict History Seeking Tin Without Warlords
  • Soybeans Extend Advance as U.S. Inventories Seen at 10-Year Low
  • Coffee Gains in London as Vietnam Slowing Sales; Cocoa Declines
  • Ex-Noble Trader Banga Moves Into Coal Calling Market Bottom
  • Crimea Spat Pushes Russian Energy to China, Away From Europe
  • Punishing Putin Fuels an Energy-Export Drive in U.S. Congress
  • Brazil Drought Rewards Coffee Hoarders Selling at Two-Year Highs
  • Booming U.S. NGL Exports Idled With Houston Channel Closed
  • China’s Gold Imports From Hong Kong Increase on Import Quotas

























The Hedgeye Macro Team














POLL OF THE DAY RECAP: Is Mother Nature to Blame?

Blame it on the weather” seems to have quickly become the consensus mantra to explain away the recent lackluster performance of many companies. Just last week, Fed chief Janet Yellen joined the chorus saying that harsh winter weather may have had a negative impact on recent economic data.


We wanted to know how people outside the Fed and Old Wall assessed the situation in our Poll of the Day. So we asked: Is the weather to blame for the lackluster performance of companies or is it an excuse?


At the time of this post, 67.5% of respondents picked EXCUSE with 32.5% chose WEATHER.


One voters who wasn’t buying the  weather EXCUSE asked “Come on. Did the dog eat your homework, too?”


Another commenter said, “No one ever cites good weather as the reason for accelerating sales growth and expanding operating margins. CEOs/CFOs take all the credit during good times and are quick to defer to extenuating circumstances during bad times. A shame really...”


Over in the “Blame Mother Nature” camp, Hedgeye Managing Director Moshe Silver said WEATHER was to blame arguing, “People's perceptions about weather patterns have changed. After Katrina and Sandy, people fear that the "storm of the century" will be more like the storm of the week. The internet is full of reports of solar activity unlike anything earth has experienced for 1,000 years and how it creates extreme weather conditions. Real or not, it's got people spooked; changing consumption patterns are to be expected. This is just the beginning.”


One voter who blamed  WEATHER wrote, “Because I wasn't even able to get to work; forget about a shopping mall or even Home Depot for a shovel.”


Another blame the WEATHER voter added, “Look, the U.S. economy isn't exactly firing on all cylinders. I get it. But to suggest that the weather hasn't played a significant role in curbing consumer spending strains credulity. Have you been outside lately?”


One thing is for sure, it will take more than a few months of frosty temperatures to truly know if weather was the culprit for this period of slow growth. 


Video | $LULU: Turning the Corner?



Hedgeye Retail sector head Brian McGough explains why he is turning positive on the margin on Lululemon.


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 80.46%
  • SHORT SIGNALS 78.35%