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McCullough: Gold Showing A "Clean-Cut Buy Signal" | $GLD


During the Q&A portion from today's Morning Macro Call, Hedgeye CEO Keith McCullough explains why Gold is flashing a “Buy” signal in his proprietary model, and why tonight's State of the Union Address is essentially a non-event from a market perspective.

Is The Worst Yet to Come In Russia? Top Russia Authority to Discuss

Hedgeye’s Macro Team is pleased to continue our special “Behind the Curtain” conference call series to discuss Russia’s Crash with Russia authority Anders Åslund on Tuesday, January 27th at 11:00am EST.


Åslund is one of the world’s foremost experts on Russia and the Peterson Institute authority on economic policy of Russia, Ukraine, and Eastern Europe.


Åslund is currently calling for Russia’s GDP to plunge -10% this year on sanctions, falling oil prices, and poor structural economic policy.


Similar to our previous speaker, former U.S. Ambassador to Russia Michael McFaul, Åslund brings on the ground experience across multiple Russian regimes to offer broader context on Putin’s Russia.


Specifically, Åslund served as an economic adviser to Russian President Boris Yeltsin in 1991-94 and to Ukrainian President Leonid Kuchma in 1994-97, followed by key economic advisory positions to the Baltic states and Kyrgyzstan.


Åslund will provide 30 minutes of prepared remarks, followed by open Q&A moderated by Hedgeye’s analyst Matt Hedrick.


Is The Worst Yet to Come In Russia? Top Russia Authority to Discuss  - HE M putin2



  • Forecasted view of the Russian economic environment
  • Assessment of the decline of the Russian Ruble and 2015 outlook
  • How falling energy prices will impact the Russian government and budget specifically
  • Discussion of the current and forecasted state of sanctions against Russia and assessment of their impact
  • Russia’s involvement in Ukraine:  War or Resolve?



  • Toll Free Number:  
  • Direct Dial Number:  
  • Conference Code: 275897#

Ping for more information.





Anders Åslund has been a senior fellow at the Peterson Institute since 2006. He is also an adjunct professor at Georgetown University. He examines the economic policy of Russia, Ukraine, and Eastern Europe, as well as focuses on the broader implications of economic transition. He worked at the Carnegie Endowment for International Peace from 1994 to 2005, first as a senior associate and then from 2003 as director of the Russian and Eurasian Program. He also worked at the Brookings Institution and the Kennan Institute for Advanced Russian Studies. He earned his doctorate from Oxford University.


Åslund served as an economic adviser to the governments of Russia in 1991–94 and Ukraine in 1994–97. He was a professor at the Stockholm School of Economics and the founding director of the Stockholm Institute of East European Economics. He has worked as a Swedish diplomat in Kuwait, Poland, Geneva, and Moscow. He is a member of the Russian Academy of Natural Sciences and an honorary professor of the Kyrgyz National University. He is chairman of the Advisory Council of the Center for Social and Economic Research (CASE), Warsaw, and of the Scientific Council of the Bank of Finland Institute for Economies in Transition (BOFIT).


He is author or coauthor of 13 books, including How Capitalism Was Built: The Transformation of Central and Eastern Europe, Russia, the Caucasus and Central Asia (Cambridge University Press, 2007 and 2013), The United States Should Establish Permanent Normal Trade Relations with Russia (2012), How Latvia Came through the Financial Crisis (2011), The Last Shall Be the First: The East European Financial Crisis (2010), The Russia Balance Sheet (2009),How Ukraine Became a Market Economy and Democracy (2009), Russia's Capitalist Revolution: Why Market Reform Succeeded and Democracy Failed (2007), Building Capitalism: The Transformation of the Former Soviet Bloc (Cambridge University Press, 2002), How Russia Became a Market Economy (Brookings, 1995), Gorbachev's Struggle for Economic Reform, 2d ed. (Cornell University Press, 1991), and Private Enterprise in Eastern Europe (Macmillan, 1985). He is also editor or coeditor of 16 books, including The Great Rebirth: Lessons from the Victory of Capitalism over Communism (2014), Russia after the Global Economic Crisis (2010), Challenges of Globalization: Macroeconomic Imbalances and Development Models (2008), Europe after Enlargement (Cambridge University Press, 2007), and Revolution in Orange(Carnegie Endowment, 2006).

HAIN: Do You Know What You Own?

Takeaway: We’re releasing a Black Book deep dive on HAIN. Dial-in details and materials to follow.

We’re holding a conference call this Thursday, January 22, at 1pm EST to update our short thesis on HAIN.


The call will focus on updated financial performance — which includes slowing trends, compressing margins, and deteriorating returns – since our initial short call. 


We’ll also take a detailed look at the UK business, which we believe is merely a conventional food business rather than an organic one – and should be valued as such.  We’ll hit on several other key points throughout the presentation, all of which indicate the company is severely misunderstood and mispriced.


Our sum-of-the-parts analysis suggests substantial downside.

LEISURE LETTER (01/20/2015)



  • Jan 29:  PENN 4Q CC
  • Feb 2: Cod Manila Grand Opening
  • Feb 3:  GLPI 4Q CC


David Group - closing 3 VIP rooms (Four Seasons, L'Arc, and MGM Macau). The closures allow the company to expand abroad  The three rooms will close on January 31 while the others will continue to operate as usual. In 1Q 2015, David Group will open VIP operations in Manila (Philippines), Da Nang (Vietnam), and Jeju (South Korea) respectively.” 

Takeaway:  David Group will continue to wind down their business in Macau but they are not pulling out.  The operators can use those leftover tables in their new properties.


Resorts World Manila - Phase 3 of Resorts World Manila, owned by Travellers International, will have additional gaming space. There will also be additional hotel capacity in Phases 2 and 3. A total of PHP6 billion (US$134.4 million) of the PHP16.8 billion net proceeds raised by Travellers International in an initial public offering in 2013 had been spent or earmarked for extensions to the Resorts World Manila casino resort as of December 31. A further PHP259.8 million from the IPO proceeds has been set aside for general corporate purposes, added the filing.

Article HERE


MAR - opened more than 46k rooms in 2014. For 2015, company expects more than 1 million rooms open or under development.

Takeaway: MAR's 2014-2017 goals included opening 200-235k new rooms. 2014 new room growth was a slow start but that should pick up in 2015. 


NCLH - Norwegian Getaway will be used as a floating hotel in 2016 in Rio de Janeiro, Brazil 

Article HERE


RCL Royal Caribbean Cruises Ltd. (RCCL) will launch a new Internet-based reservations system for retailers in March called Espresso, its first complete upgrade since it introduced CruiseMatch in 1990. It will be used by all of the RCCL brands, including Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Espresso enables agents to compare up to four potential bookings at one time. Espresso will be optimized for mobile phones and tablets, which is important to home agents visiting clients, said Vicki Freed, Royal Caribbean’s senior vice president of sales.

Article HERE


SilverSea -  SilverSea has launched ‘ultra-inclusive' pricing for all Mediterranean cruises this year. For new bookings made on or after 15 January 2015, fares will now include WiFi and shore excursions.

Article HERE

Takeaway: Could 2015 be the year of the add-ons? Many cruise lines are offering them, even luxury ones.


Gaming tax  Secretary for Economy and Finance Lionel Leong Vai Tac said Sunday that the results of the government’s mid-term review on the gaming industry this year would determine if it’s necessary to adjust the gaming tax upon the renewal of the city’s gaming concessions.

Takeaway:  We don't think a gaming tax hike is likely but it does add another thing to worry about.


Gaming task force Macau government announced on Monday the establishment of an interdepartmental task force on the gaming industry. The main goal is to address the issue of potential job layoffs in the sector.  The government however stressed that up to Monday, it had only received one case of workers being laid off by a junket operator.  So far in January, the gaming regulator had received one request from a junket operator to have its licence cancelled. 

Takeaway:  It would be political suicide for any concessionaire to lay off workers. Meanwhile, the junket community may continue to shrink.


S'pore self-barring – Singapore’s National Council on Problem Gaming (NCPG) is to study the feasibility of allowing whole groups of people to apply to be barred from the city’s gaming resorts under the city-state’s casino self-exclusion program.  The groups under consideration are local (i.e., non-foreign) workers and self-identified members of religious groups.


As of end-2014, the number of casino self-exclusions stood at almost 191,000, up by 6.3% QoQ, according to data from NCPG.  Over 90% of casino self-exclusions involved foreigners, according to the council.  

Article HERE


2 new SK casinos – South Korea said it will approve two more casino resorts and the building of around 5,000 new hotel rooms this year, hoping to boost tourism investment by around 3.5 trillion won (S$4.3 billion). The government would choose operators to invest around 1 trillion won each in two integrated resorts with foreigner-only casinos by the 2H 2014 - part of a three-year plan to boost the economy.

Article HERE 


Vietnam approved a $4 billion resort on Phu Quoc Island that would include a casino with 2,000 slot machines and 200-400 roulette tables. In addition, the resort would have conference centers and an international five-star hotel with 3,000 rooms.

Takeaway: A win for the suppliers


Wisconsin Hard Rock – According to WISN-TV, Gov. Scott Walker is close to reaching an agreement with the Menominee Indians to build their $800 million Hard Rock casino in Kenosha. Walker said the "biggest stumbling block" is trying to reach a deal that would not result in the state having to refund $100 million in potential lost revenue to the Potawatomi Tribe if the Kenosha Casino moves forward.

Article HERE 

Takeaway: This would be bad news for the Chicago-area casinos.


China Q4 GDP - 7.4% growth vs consensus of 7.2%


Hedgeye Macro Team remains negative Europe, their bottom-up, qualitative analysis (Growth/Inflation/Policy framework) indicates that the Eurozone is setting up to enter the ugly Quad4 in Q4 (equating to growth decelerates and inflation decelerates) = Europe Slowing.

Takeaway:  European pricing has been a tailwind for CCL and RCL but a negative pivot here looks increasingly likely in 2015.

Keith's Macro Notebook 1/20: Euro | Gold | S&P 500


Hedgeye CEO Keith McCullough shares the top three things in his macro notebook this morning.


Takeaway: In today's edition of the Macro Playbook, we analyze the recent breakout in cross-asset volatility through the lens of TACRM.


Long Ideas/Overweight Recommendations

  1. iShares U.S. Home Construction ETF (ITB)
  2. Consumer Staples Select Sector SPDR Fund (XLP)
  3. Health Care Select Sector SPDR Fund (XLV)
  4. PowerShares DB U.S. Dollar Index Bullish Fund (UUP)
  5. iShares 20+ Year Treasury Bond ETF (TLT)
  1. LONG BENCH: Vanguard REIT ETF (VNQ), Utilities Select Sector SPDR Fund (XLU), Vanguard Extended Duration Treasury ETF (EDV)

Short Ideas/Underweight Recommendations

  1. iShares TIPS Bond ETF (TIP)
  2. CurrencyShares Japanese Yen Trust (FXY)
  3. iShares MSCI Emerging Markets ETF (EEM)
  4. Industrial Select Sector SPDR Fund (XLI)
  5. SPDR Barclays High Yield Bond ETF (JNK)
  1. SHORT BENCH: SPDR Oil & Gas Exploration & Production ETF (XOP), CurrencyShares Euro Trust (FXE), WisdomTree Emerging Currency Fund (CEW)



Checking In With TACRM: With the recent bout of cross-asset volatility – e.g. the VIX increased +19.4% WoW to close up +9.1% YTD – we’re sure many investors are incrementally confused about the macro environment. Fortuitously for our subscribers, we have built effective quantitative tools to help investors contextualize what’s happening, why it’s happening and how to take advantage of it in one’s portfolio.


One of those tools is our Tactical Asset Class Rotation Model (TACRM), which is designed to systematically measure momentum across a variety of asset classes in order to transform those signals into actionable investment themes. TACRM does this by generating a normalized view of price momentum for every liquid market in the world. That momentum score is derived from a multi-factor, multi-duration approach, which we have termed a “Volatility-Adjusted Multi-Duration Momentum Indicator” reading, or “VAMDMI” for short.


Recall that this VAMDMI metric is simply the arithmetic mean of three independent z-scores of volume-weighted average price data, in which the three sample sizes (i.e. short-term, intermediate-term and long-term) accordion inversely to the trend in global financial market volatility. The metric is designed to standardize recorded momentum across securities and asset classes with variant betas, effectively normalizing the degree to which marginal investors might have a propensity to buy or sell a given market.


That is definitely a mouthful. What isn’t a mouthful is the analytical color TACRM provides investors. Below, we frame up the current state of macro markets through TACRM’s various analytical lenses, flagging what we deem to be noteworthy (i.e. investable) signals.


At the primary asset class level:


  • Only DM Equities has a bullish “INCREASE Exposure” signal. On a cumulative one-week forward basis since the start of 2008, the MSCI World Index has returned +32.4% when TACRM is generating the aforementioned signal for DM Equities. That compares to a buy-and-hold return of +5.9% over that same time frame.
  • Cash – which is comprised simply of volatility (VXX) and U.S. dollars (UUP) – continues to have the largest Passive Trend Follower Asset Allocation at 36%, which is in the 100th percentile of readings on a TTM basis and in the 95th percentile of readings since the start of 2008. Its “DECREASE Exposure” signal implies one (or both) of these markets will continue to experience a second derivate slowing of VWAP momentum over the intermediate term. A pullback in volatility would obviously auger well for the signal discussed in the previous bullet.
  • Fixed Income & Yield Chasing currently has a “DECREASE Exposure” signal which it has maintained since late-September due to the ongoing break down in foreign-currency denominated debt, domestic high yield debt, curve steepeners and MLPs – which were all in line with our #Quad4 theme.
  • The strength in the other secondary asset classes that make up the Fixed Income & Yield Chasing primary asset class – i.e. Treasuries, munis, Utilities and REITs – is becoming so pervasive that we’d expect it to the push the entire asset class back into “INCREASE Exposure” territory in the coming weeks. Specifically, 47% of the 30 ETFs that comprise this asset class have a VAMDMI reading greater than +1x, which implies a clear trend of positive VWAP momentum across multiple durations.
  • That being said, we don’t need to see an “INCREASE Exposure” signal to be bullish on the appropriate pockets of this (or any other) asset class and we remain bullish on Treasuries (TLT, EDV), munis (MUB), Utilities (XLU) and REITs (VNQ) as outlined above in our thematic investment conclusions.












At the secondary asset class level:


  • We consistently analyze extreme VAMDMI readings to determine if there is a trend developing “underneath the hood” that may be front-running a broader phase transition at the primary asset class level. On this metric, #Quad4 continues to get incrementally priced into global financial markets. Of the top-20 VAMDMI readings, only three of the exposures – i.e. Philippines (EPHE), Indian small-caps (SMIN) and Gold (GLD) – are not consistent outperformers during historical periods of #Quad4. Only one of the bottom-20 VAMDMI readings – i.e. Finland (EFNL) – is not a consistent underperformer during historical periods of #Quad4.
  • In an attempt to take advantage of changing sector and style factor leadership, we consistently analyze extreme VAMDMI readings within the U.S. equity market as well, often looking for a pattern of leadership and/or laggardship that rhymes with one of our GIP Model quadrants. On this metric, #Quad4 continues to dominate as well.
  • Specifically, across the 47 sectors and style factors we track in the domestic equity market, #Quad4 outperformers account for 8 of the highest 10 VAMDMI readings: REITs (VNQ), Utilities (XLU), Healthcare (IHE, IBB, XLV IHI), Consumer Staples (XLP) and mega caps (USMV). Additionally, #Quad4 underperformers account for 9 of the lowest 10 VAMDMI readings: Financials (KRE, IAI, KIE, XLF), Energy (XLE, AMLP, IEZ, XOP) and Basic Materials (XLB).
  • All told, our patience in sticking with our #Quad4 trade continues to pay off amid incessant calls to adopt a more offensive asset allocation strategy heading into a likely #Quad1 setup in 1Q15. It’s a great long/short market for discretionary macro investors that possess a repeatable process to take advantage of!
  • Lastly, TACRM is generating a “BUY” signal for both Gold (GLD) and Silver (SLV). As we highlighted in last Friday’s Macro Playbook, we haven’t yet found a fundamental reason to like the precious metals complex, but we’re happy to make one up because that’s what the market is telling us to do. Gold is resoundingly bullish on our price/volume/volatility quantitative factoring as well, meaning we are looking to buy the metal on pullbacks – irrespective of our view on the U.S. dollar, which may change as the rate of change in the domestic labor market negatively inflects. Stay tuned.








Net-net-net-net-net, with the exception of the breakout in the precious metals, nothing has really changed. That being said, however, the precious metals complex is definitely the most important thing to watch, on the margin, as it relates to its signaling capability regarding G-3 monetary policy, which itself continues to be the primary driver of dispersion among asset class returns.


Please click on the following link to review the various explanations associated with the aforementioned analyses; the model is refreshed daily to the extent you find the aforementioned signals helpful. Send us an email if you’d like to dig in further. Best of luck out there this week!


***CLICK HERE to download the full TACRM presentation.***



Global #Deflation: Amidst a backdrop of secular stagnation across developed economies, we continue to think cyclical forces (namely #StrongDollar driven commodity price deflation) will drag down reported inflation readings globally over the intermediate term. That is likely to weigh heavily upon long-term interest rates in the developed world, underpinning our bullish outlook for U.S. Treasury bonds.


EARLY LOOK: Climbing the Wall (1/16)


#Quad414: After DEC and Q4 (2014) data slows, in Q1 of 2015 we think growth in the US is likely to accelerate from 4Q, aided by base effects and a broad-based pickup in real discretionary income. We do not, however, think such a pickup is sustainable, as we foresee another #Quad4 setup for the 2nd quarter. Risk managing these turns at the sector and style factor level will be the key to generating alpha in the U.S. equity market in 1H15.


The Hedgeye Macro Playbook (1/16)


Long #Housing?: The collective impact of rising rates, severe weather, waning investor interest, decelerating HPI, and tighter credit capsized housing in 2014.  2015 is setting up as the obverse with demand improving, the credit box opening and 2nd derivative price and volume trends beginning to inflect positively against progressively easier comps. We'll review the current dynamics and discuss whether the stage is set for a transition from under to outperformance for the complex.


HOUSING: Purchase Demand | Post-Holiday Deluge (1/14)


Best of luck out there,




Darius Dale

Associate: Macro Team


About the Hedgeye Macro Playbook

The Hedgeye Macro Playbook aspires to present investors with the robust quantitative signals, well-researched investment themes and actionable ETF recommendations required to dynamically allocate assets and front-run regime changes across global financial markets. The securities highlighted above represent our top ten investment recommendations based on our active macro themes, which themselves stem from our proprietary four-quadrant Growth/Inflation/Policy (GIP) framework. The securities are ranked according to our calculus of the immediate-term risk/reward of going long or short at the prior closing price, which itself is based on our proprietary analysis of price, volume and volatility trends. Effectively, it is a dynamic ranking of the order in which we’d buy or sell the securities today – keeping in mind that we have equal conviction in each security from an intermediate-term absolute return perspective. 

the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.