Hedgeye CEO Keith McCullough shares the top three things in his macro notebook this morning.
Hedgeye CEO Keith McCullough shares the top three things in his macro notebook this morning.
Editor's note: This is an excerpt from CEO Keith McCullough's morning research. Click here for more information on how you can become a subscriber.
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We had an immediate term overbought signal yesterday in the U.S. Dollar – backing off at 99.99 (Wayne Gretzky would have been proud).
Equity markets bounced and then accelerated into the close. Big up day for the markets ... lots of counter-trend moves, plus the things that have been working were trending higher.
But don’t confuse that with the broader trend here: the U.S. Dollar remains your friend.
Immediate term upside to over 100 for USD (finally!), with an immediate term risk range is 97.46-100.31.
Oil is getting sacked in the backfield for another loss, down almost a full percent to 46.63. This is actually a big move in standard deviation terms - we have it at 3.6 standard deviations oversold which establishes a lower-high of resistance inside of 50 (49.64 to be exact).
The two important points today are that the USD has a 100 handle in its risk range and oil at the top end of its risk range is inside of 50….that’s very deflationary.
We had an immediate term overbought signal yesterday is the U.S. Dollar – backing off at 99.99 (Wayne Gretzky would have been proud). Equity markets bounced and then accelerated into the close. Big up day for the markets - lots of counter-trend moves, plus the things that have been working were trending higher - but don’t confuse that with the broader trend here: the U.S. Dollar remains your friend. Immediate term upside to over 100 for USD (finally!), with an immediate term risk range is 97.46-100.31.
Oil is getting sacked in the backfield for another loss, down almost a full percent to 46.63. This is actually a big move in standard deviation terms - we have it at 3.6 standard deviations oversold which establishes a lower-high of resistance inside of 50 (49.64 to be exact). The two important points today are that the USD has a 100 handle in its risk range and oil at the top end of its risk range is inside of 50….that’s very deflationary.
You don’t need someone at the Fed to give you inside information, you just need the risk ranges U.S. equity market volatility signaled an immediate-term overbought SELL signal on Wednesday. The current immediate term risk range for the VIX is 13.03-17.36. We would suggest you risk manage this by taking off some of your U.S. equity exposure that you put on on the down moves. Buy low. Sell high. Rinse. Repeat.
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iShares U.S. Home Construction ETF (ITB) is a great way to play our long housing call, U.S. #HousingAccelerating remains 1 of the Top 3 Global Macro Themes in the Hedgeye Institutional Themes deck right now. Not only did U.S. home prices accelerate (in rate of change terms) in the Core Logic data this week to +5.7%, but the supply/demand data has been improving throughout the last 3 months.
Penn National Gaming is the best way to play improving domestic regional gaming trends due to its superior operational management and unit growth opportunities. Catalysts include positive estimate revisions, the opening of the first Massachusetts casino in June, and industry leading earnings growth in 2015 and 2016.
Low-volatility Long Bonds (TLT) have plenty of room to run. Late-Cycle Economic Indicators are still deteriorating on a TRENDING Basis (Manufacturing, CapEX, inflation) while consumption driven numbers have improved. Inflation readings for January are #SLOWING. We saw deceleration in CPI year-over-year at +0.8% vs. +1.3% prior and month-over-month at -0.4% vs. -0.3% prior. Growth is still #SLOWING with Real GDP growth decelerating at -20 basis points to +2.5% year-over-year for Q4 2014.The GDP deflator decelerated -40 basis points to +1.2% year-over-year.
GREECE: don't tell mainstreamers, but since they claimed Greece was fixed on FEB 24, Greek stocks have crashed 15%
A thankful heart is not only the greatest virtue, but the parent of all other virtues.
A strike at a Chinese factory that makes shoes for Nike, Timberland, Kenneth Cole and other well-known brands grew on Tuesday to about 5,000 workers.
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Takeaway: HIBB - As Good As It Gets. KATE adding Singer to BOD, Big Win.
HIBB - As Good as it Gets
Quick thoughts on the HIBB Print...
For our prior note on HIBB from 3/12 CLICK HERE
KATE - KATE SPADE & COMPANY ANNOUNCES NOMINATION OF JAN SINGER FOR ELECTION TO BOARD OF DIRECTORS
Takeaway: This is a big win for KATE. Singer has one of the best resumes in the business and gets how to take a powerful brand/product and scale it across an international platform. We'd argue with anyone that KATE's share of voice is much higher than its actual share of wallet. Now the brand needs to grow into a footprint to capitalize on its wide consumer acceptance. Bernard Aronson and Kay Koplovitz (the two outgoing Directors) have been with the company for 17yrs and 23yrs respectively. They both have impressive resumes in their own right, but KATE is a much different animal than LIZ was 20 years ago. We think the company will benefit from some new blood, especially with Singer's pedigree.
ULTA - 4Q14 Earnings
ARO - 4Q14 Earnings
ZUMZ - 4Q14 Earnings
Sir Philip Green Sells BHS to Retail Acquisitions Ltd.
AMZN - Amazon Has Quietly Acquired 2lemetry To Build Out Its Internet Of Things Strategy
PLCE - Children's Place increases store closures
COLM - Columbia Awarded $3.3M for Faulty Heating Technology
Metro on the lookout for acquisitions
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TICKERS: MGM, SJM, LVS, PNK
MGM - announced staff pay rises equivalent in some cases to a percentage above the city’s rate of annual inflation for 2014.
For non-management workers at MGM Macau earning up to MOP12,000 (US$1,500) per month, the new increment is between 6%-8% of monthly salary. The casino operator said in a statement it amounted in many cases to approximately MOP700 per month per worker for those in that wage bracket.
MGM Macau workers earning more than MOP12,000 per month will receive an increment of 5% of monthly salary. All the awards are effective from March 23, the company said.
Takeaway: More wage increases for MGM China due to higher inflation.
SJM - CEO Ambrose So has denied that the casino operator is compelling employees to take unpaid leave because it has insufficient work for them to do during the gaming slump, Macao Daily reports.
The Chinese-language newspaper quotes So as telling reporters in Beijing that SJM Holdings employees are free to decline its offer of unpaid leave. But they will also not rush to recruit as vacancies occur as before as one of the ways to decrease cost.
An internal memorandum circulated among SJM Holdings employees invites them to apply for unpaid leave. So also said his company had no plans to lay off employees.
So told reporters that SJM will not file an application with the government to apply for gaming tables for their new Cotai project Lisboa Palace this year.
The application will only be submitted once the construction of the project is completed. He claimed that SJM is able to shift gaming tables from its other properties to the new project.
In addition, So revealed that the corporation has financial reserves of some MOP24 billion, claiming it does not have any financial difficulty even though the city’s gaming revenues have dropped for nine consecutive months.
Predicting that gaming revenues may still post decreases of 10-15% YoY in 2015, Mr. So stressed once more that he is optimistic about the development of the gaming industry, claiming that the opening of the Hong Kong-Zhuhai-Macau Bridge will attract more gamblers, especially from Hong Kong.
Takeaway: After recent comments from Secretary Leong, no casino operator will force unpaid leave. Operators will need to think about other cost-cutting measures.
LVS - Sands China recommended a final dividend of HK$1.00/share for 2014 year. It will be paid on July 15.
PNK - elected Chuck Atwood to Board of Directors. Atwood is currently the Lead Trustee of the board of trustees for Equity Residential (NYSE:EQR), a REIT listed on the New York Stock Exchange and member of the S&P 500. He is also a member of the board of directors of Gala Coral Group, a private U.K.-based gaming company, and ALST Casino Holdings, LLC, a private Las Vegas-based gaming and hospitality company.
Suncity- Suncity is interested in Phú Quốc, an island that is part of the southwest Vietnam province of Kiên Giang, and about 250 kilometres (155 miles) from Ho Chi Minh City. Suncity also said it was willing to invest in Bai Truong if the current investors withdraw.
STR: US hotel results for week ending 7 March:
Takeaway: US REVPAR growth have been slower recently.
AC FEB SS land GGR: -2% YoY
AC FEB I-gaming revenue: flattish at $10.4m
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.
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