It’s been a decidedly downward move for stocks lately.
This note was originally published October 10, 2014 at 13:16 in Gaming
In this exclusive interview Todd Jordan gives his insights from Macau.
Gaming, Lodging and Leisure sector head Todd Jordan and senior analyst David Benz walk through their three-pronged negative thesis on Macau gaming (VIP slowdown as a result of a corruption crackdown, mass deceleration and mass margin contraction) and the threat of further shrinking mass margins.
Note: Using the z-score in the tables below as a coefficient of variation for standard error helps us flag the relative market positioning of the commodities in the CRB Index. It is not intended as a predictive signal for the reversion to trailing twelve month historical averages. For week-end price data, please refer to “Commodities: Weekly Quant” published at the end of the previous week. Feel free to ping us for additional color.
1. CFTC Net Futures and Options Positioning CRB Index: The Commodities Futures Trading Commission (CFTC) releases “Commitments of Traders Reports” at 3:30 p.m. Eastern Time on Friday. The release usually includes data from the previous Tuesday (Net Positions as of Tuesday Close), and includes the net positions of “non-commercial” futures and options participants. A “Non-Commercial” market participant is defined as a “speculator.” We observe the weekly marginal changes in the overall positioning of “non-commercial” futures and options positions to assess the directionally-biased capitulation risk among those with large, speculative positions.
The Sugar, Cotton, and Soybeans markets experienced the most BULLISH relative positioning change in the CRB week-over-week
The Orange Juice, Heating Oil, and Cocoa markets experienced the most BEARISH relative positioning change in the CRB week-over-week
2. Spot – Second Month Basis Differential: Measures the market expectation for forward looking prices in the near-term.
3. Spot – 1 Year Basis Differential: Measures the market expectation for forward-looking prices between spot and the respective contract expiring 1-year later.
4. Open Interest: Aggregate open interest measures the amount of opened positions in all actively traded futures contract months. Open interest can be thought of as “naked” or “directionally-biased” contracts as opposed to hedgers scalping and providing liquidity. Most of the open interest is created from large speculators or participants who are either: 1) Producers/sellers of the physical commodity hedging their cash market exposure or 2) Large speculators who are directionally-biased on price.
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.
Takeaway: JCP needed a 'rock star' CEO. Ellison is not that (at least in perception). We think this gives more ammo to the bear debate.
Today’s announcement from JCP does not make us more or less inclined to own the stock here, but as much as we walked away more positive from the analyst meeting last week, this announcement probably gives more for the bears to chew on than the bulls. Here’s why…
In the end, after being extremely vocal about getting Ullman out of his seat early on, we’ve actually grown to respect the fact that he repaired a devastated balance sheet, and set the company on a trajectory of earning money by 2017 – something we think is absolutely achievable (in fact, we think break-even by 2016 is achievable). Still tough to find valuation support in that regard. But Ullman has probably done a better job than most others could. If Ullman/Ellison hits that plan, the stock is likely headed higher. We’ll need to hear more about the transition plan before we have any real conviction on the name. For now, we’re on the sidelines.
10/06/14 Monday Mashup: PBPB, MCD and More
10/10/14 Estimates Are Heading Higher
Tuesday, October 14th
Thursday, October 16th
Black Box reported the strongest monthly same-store sales and traffic data in September since 1Q12.
Monday, October 6th
Tuesday, October 7th
Wednesday, October 8th
Thursday, October 7th
Friday, October 8th
The XLY (-3.6%) underperformed the SPX (-3.1%) last week. Both quick-service and casual dining stocks, in aggregate, outperformed the SPX.
From a quantitative setup, the sector remains bearish on an intermediate-term TREND duration.
Call with questions.
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