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THE MACAU CORRELATIONS

Macau VIP vs China credit.

 

  • In past notes we’ve discussed the statistically significant relationship between VIP Rolling Chip (RC) Volume in Macau and China’s reserve ratio requirement and discount rate which we found peaked on an 8-9 month lag.  With little change in China’s monetary policy since Q2 2012 or 2013 (loosened), the softer Macau gaming revenues cannot be blamed on the China Fed.
  • Here we’ve plotted and regressed VIP Rolling Chip volume against China Yuan loan growth.  The correlation and significance peaks at a 1 month lag (0.37 and T-stat of 2.9).
  • Could the YoY decline in loans in March explain some of the weakness in RC thus far in April?
  • Probably but minor.  The March/April multi year comparisons are more difficult than March/May.  We’re projecting 20% YoY Macau total GGR growth in May.
  • Sentiment has turned decidedly negative with VIP and credit fears running rampant. While we predicted a disappointing March/April, we’re not sure fundamentals have changed much.  Look for a May rebound to catalyze the downtrodden Macau stocks.

 

THE MACAU CORRELATIONS - China Yuan Growth v Macau VIP RC 4 16 2014 7 52 22 AM


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – April 16, 2014


As we look at today's setup for the S&P 500, the range is 50 points or 2.06% downside to 1805 and 0.65% upside to 1855.                                                      

                                                                         

SECTOR PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2A

 

EQUITY SENTIMENT:

 

THE HEDGEYE DAILY OUTLOOK - 10                                                                                                                                                                  

 

CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 2.28 from 2.26
  • VIX  closed at 15.61 1 day percent change of -3.10%

MACRO DATA POINTS (Bloomberg Estimates):

 

  • 7am: MBA Mortgage Applications, April 11 (prior -1.6%)
  • 8:30am: Housing Starts, March, est. 970k (prior 907k)
  • 8:30am: Fed’s Stein speaks on QE at Atlanta Fed conf.
  • 9:15am: Capacity m/m, March, est. 78.7% (prior 78.8%)
  • 9:15am: Industrial Production m/m, March, est. 0.5% (pr 0.6%)
  • 10:30am: DOE Energy Inventories
  • 12pm: Fed’s Lockhart speaks at Atlanta Fed conf.
  • 12:25pm: Fed’s Yellen speaks to Economic Club of New York
  • 1:25pm: Fed’s Fisher speaks in Austin, Texas
  • 2pm: Federal Reserve releases Beige Book

GOVERNMENT:                 

    • President Obama, Vice President Biden visit Leetsdale, Pa., for an event on the economy
    • House, Senate not in session     
    • 9am: Energy Sec. Ernest Moniz speaks on energy policy at Sam Nunn Policy Forum          
    • 9:30am: Reps. Rosa DeLauro, D-Conn., Louise Slaughter, D-N.Y, on conf. call hosted by Economic Strategy Institute on Obama’s trip to Asia, refusal by Congress to provide fast-track trade authority

WHAT TO WATCH:

  • Ukraine says Russian forces helping separatists amid battles
  • China urged by U.S. to allow bigger mkt role in valuing yuan
  • NYSE owner said to buy Algo Technologies to modernize exchange
  • Citic Pacific to pay $36b for assets from Chinese parent
  • Moelis raises less than planned in investment-bank IPO
  • Ford, Dodge cars in focus at New York Auto Show
  • GM CEO Barra adds team to focus on safety
  • Anadarko joins ad blitz to pre-empt Colorado fracking limits
  • Obamacare sign-up extension closes regular enrollment for 2014
  • Credit Suisse net trails est. on lower investment bank income
  • Credit Suisse said to get N.Y. subpoena in tax-evasion probe
  • Deutsche Bank said to seek sale of Cosmopolitan Vegas resort
  • China’s expansion slows as property construction falls
  • Alibaba posts profit on sales promotion ahead of IPO
  • Alibaba said to plan Hong Kong-style fee as carrot for banks
  • BHP quarterly iron ore production rises 23% to beat forecast

AM EARNS:

    • Abbott Laboratories (ABT) 7:44am, $0.36 - Preview
    • Bank of America (BAC) 7am, $0.27 - Preview
    • First Republic Bank (FRC) 7am, $0.73
    • Huntington Bancshares (HBAN) 5:55am, $0.17
    • Kansas City Southern (KSU) 8am, $0.99 - Preview
    • Metro (MRU CN) 7am, C$1.02
    • PNC Financial (PNC) 6:24am, $1.65
    • St Jude Medical (STJ) 7:30am, $0.95 - Preview
    • US Bancorp (USB) 7am, $0.73 - Preview
    • WW Grainger (GWW) 8am, $2.96

PM EARNS:

    • Adtran (ADTN) 8:15pm, $0.20
    • Albemarle (ALB) 4:03pm, $0.95
    • American Express (AXP) 4:01pm, $1.30
    • Capital One Financial (COF) 4:05pm, $1.70
    • Crown Holdings (CCK) 5:03pm, $0.51
    • East West Bancorp (EWBC) 5:02pm, $0.53
    • Google (GOOG) 4:02pm, $6.39
    • International Business Machines (IBM) 4:05pm, $2.54 -Preview
    • Kinder Morgan (KMI) 4:05pm, $0.28
    • Noble (NE) 5pm, $0.70
    • People’s United Financial (PBCT) 4:03pm, $0.20
    • Plexus (PLXS) 4pm, $0.60
    • SanDisk (SNDK) 4:05pm, $1.27
    • SLM (SLM) 4:15pm, $0.55
    • Steel Dynamics (STLD) 6pm, $0.16
    • Triangle Petroleum (TPLM) 5:58pm, $0.12
    • United Rentals (URI) 4:15pm, $0.71

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Nickel Drops Most in Nine Months as Metals Fall on China Concern
  • WTI Falls From Six-Week High With Brent on U.S. Supply Forecast
  • Profit Tastes Like Chicken in Search for Cheap Meat: Commodities
  • Palm Oil Crop at Risk Across Southeast Asia as El Nino Looms
  • Gold Falls From 3-Week High on U.S. Outlook as Palladium Drops
  • White Sugar Halts Decline Before Delivery as Coffee Also Climbs
  • Corn Declines as Planting Concerns Ease While Soybeans Advance
  • China Gold Demand Rising 25% by 2017 as Buyers Get Wealthier
  • Rio Produces Record Iron Ore Output as Global Supply Gains
  • Coal Returns to German Utilities Replacing Lost Nuclear: Energy
  • Canada’s Climate Warms to Corn as Grain Seeks Great White North
  • Pump Prices in U.S. Climb to Eight-Month High as Supplies Slide
  • Nestle Sees 2H Commodity-Cost Rise, Will Raise Prices: BI Chart
  • Gold Seen Losing 22% by Westpac’s Smirk to End Year at $1,025

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

 

 

 

 

 

 

 

 

 

 

 

 

 



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 80.32%
  • SHORT SIGNALS 78.48%

Poll of the Day Recap: Only the Beginning of #GrowthSlowing?

Takeaway: At the time of this post, an overwhelming 84% voted YES; 16% said NO.

Poll of the Day Recap: Only the Beginning of #GrowthSlowing? - 9

 

In recent months, a variety of economic data has shown that consumer spending and the economy haven’t been what you call ‘healthy.’
 

But, while one of Hedgeye’s macro themes for 2014 has been #GrowthSlowing, we wanted to hear what you had to say. So, we asked in today’s poll: Do you think economic growth in the United States is accelerating or slowing?
 

At the time of this post, an overwhelming 84% voted YES; 16% said NO.
 

(Voters sharply swung so much in one way, that we didn’t receive any comments on why people voted NO.)

 

Here’s a sampling of some of the responses we received:

  • “As a business owner dealing with across the board demographic households buying homes, purchasing groceries, and basically living…growth is definitely slowing. This is only the beginning.”
     
  • “I believe [Hedgeye’s] thesis on the impact of commodity inflation on the consumer.  A good example is natural gas. If you missed a trip to the mall because of a blizzard, you might WANT to go when the weather improves but you CAN'T because your utility bill was 3X last February.”
     
  • “This is a joke, right? A sad, silly joke, but still a joke. Growth? Where? Inflation is not growth. Main Street is being milked dry; real prices are outpacing real wages by a few hundred furlongs; the stock market is not the supermarket; questionable economic data anesthetizes the masses while Ben and Janet gorge on way too much Ben and Jerry's...Genuine growth? Pfft.”
     
  • “Just as previously articulated, March and April are nicely set up with weather adjustments and the late Easter.  May and beyond get tough comps for the real economy.”
     
  • “Lying Keynesians are always looking in the rear view mirror, and then they have to lie about it to try to cover up for the massive failure of their B.S. policies.”

And, as Hedgeye CEO Keith McCullough put it: “#InflationAccelerating slows growth. Period.”

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