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Lacalle: This Time Is Different In Greece

Renowned European economist, investor and author Daniel Lacalle joined Hedgeye’s macro team this morning in a special “Flash Call” to discuss the increasingly dire situation in Greece and market implications with our customers.


This is an excerpt from today's call.


Lacalle previously worked at PIMCO and was a portfolio manager at both Citadel and at Ecofin Global Oil & Gas Fund.  He is the author of Life In The Financial Markets and The Energy World Is Flat and a lecturer for the IE Business School and Master MEMFI at UNED University.



Takeaway: May RevPAR was disappointing in light of the Pacquiao/Mayweather fight of the century. MGM’s Q2 guidance in doubt

  • Despite record visitation, LV Strip REVPAR for May came in only at 4.2% YoY, substantially below even the most conservative estimate
  • Rock in Rio and the Mayweather/Pacquiao fight accounted for a couple of strong weekends but we’re hearing that midweek traffic was slow
  • There could have been some pressure on convention pricing as two large trade shows (American Wind Energy Association and Coverings) did not appear in May this year. Last year, they had ~32k in attendance. These two shows will not reappear in Vegas in 2015.
  • MGM had guided to AT LEAST 5%REVPAR growth for Q2 2015. It looks like the company may disappoint investors once again.


Replay Greece Flash Call: Apocalypse Now (or Not) in Greece? With special guest Daniel Lacalle

Earlier today Hedgeye Macro hosted a Flash Call (45 minutes in duration) to discuss Greece’s ongoing ‘crisis’ with special contributor Daniel Lacalle, Hedgeye’s European analyst Matt Hedrick and CEO Keith McCullough.


We highly encourage you to listen to this very engaging discussion between Daniel, Keith, and Matt (the Q&A begins at 16:21).

Audio Replay:  CLICK HERE 

Supplemental Materials:  CLICK HERE




Lacalle is a renowned European economist who previously worked at PIMCO and was a PM at Ecofin Global Oil & Gas Fund and Citadel.  He is the author of Life In The Financial Markets and The Energy World Is Flat. He is a lecturer for the IE Business School and Master MEMFI at UNED University.




  • The Greeks are highly likely (~70%) to vote ‘YES’ on this coming Sunday’s (JULY 5) referendum on the current creditor proposal.  In reality this referendum is really a gimmick (this proposal is already off the table with the Eurogroup) – it’s just a front for the ruling Syriza party to wash its hands of any blame.
  • While the specifics/details of the proposal may be far from understood by the general populous, the overwhelming majority of Greeks want to stay in the Eurozone, and Greece refuses to leave.
  •  Expect Draghi and the Eurocrats to continue to extend & pretend economic reality through QE (printing a Greece every 3 months!) and debt concessions/restructuring that resembles Draghi’s “we’ll do whatever it takes” rhetoric.
  • Lacalle suggested the Grexit uncertainty is analogous to Hotel California. “You can check out anytime you want but you can never leave.” This is a political decision, not a financial one.
  • ECB wants to limit contagion on the political level. While financially there is very little contagion to  Spain, Italy, France, etc. there’s the risk that Syriza sets an example to other fringe parties across these states that the ECB and Eurocrats – this what they want to squash.
  • All of the solutions presented by governments and approved by the Troika don’t tackle improving business and job creation. Rather, they simply increase taxes without addressing wasteful government spending.
  • Yes the ECB will provide opportunities (through QE), but investors need to be aware that pricing of risk is too fixated on what the ECB can vs cannot do – it can print money, but it cannot print growth!
  • Key Catalysts:  Greek maturities in August; elections in Spain in November (whether Podemos party gets stronger or weaker?)
  • This time is in fact different in the sense that there are ruling radical parties (like Syriza) that are a real threat to the political climate of the Eurozone. 
  • Don’t Expect Resolve to the Greek ‘Crisis’.  Expect a Greek recession in the near term and the political/fiscal risk loop to continue for years…
  • Devaluation of the EUR/USD is here to stay.  But Lacalle reminds that the Eurozone countries largely export to one another, so by improving their current account positions, the euro will strengthen, so there a limit to the downside.  

Replay Greece Flash Call:  Apocalypse Now (or Not) in Greece? With special guest Daniel Lacalle - 1. SOS  

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The "Game of Chicken" In Greece Is Over


In this brief excerpt from today's edition of The Macro Show, Hedgeye's European analyst Matt Hedrick says that while the Greeks may want to remain in the Eurozone, the powers-that-be (Angela Merkel et al) are running out of patience.


Subscribe to The Macro Show today for access to this and all other episodes. 


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We are adding MCD to the Hedgeye Best Ideas list as a LONG.  As I said last week, 2015 will be the last time MCD will trade below $100 on an average price basis!


We will be hosting a McDonald’s Blackbook call on Wednesday, July 8th at 11am ET.


After nearly four years of being bearish on MCD, it’s now time to reverse course.  We are confident that MCD is not a structurally broken company.  Importantly, there are a number of initiatives in place that will ultimately reverse the fortunes of the company. 


Yes, fixing McDonald’s operationally will take time, but the seeds have been planted.  From the work I have done, by 2016 it will be clear that MCD is well on its way to reasserting itself as the dominate company that it is. 


McDonald’s CEO, Steve Easterbrook, is reshaping the company from the inside out and the financial impact of these actions are about to be clear.  Returning MCD to sustainable growth is centered on structural changes to the operating model and a recommitment to regaining the trust and loyalty of customers.


These changes are taking place in Oak Brook and at the local level.  Within McDonald’s local management and franchisees working together to improve the McDonald’s experience.  The new experience is consistent with what made the company great in the first place.


While financial engineering is part of the new foundation, its limitations are obvious so understanding how an operationally led turnaround will unfold is critical to make a longer-term commitment to being LONG MCD.


The LONG MCD BLACKBOOK will focus on:

  • How the new operating structure of the company is breathing new ENERGY into the company including improved profitability
  • The primary cause for the market share losses in the USA over the past three years and how the company is fixing it
  • The timeline for the turn in sentiment and performance  
  • Updated financials


Call details and materials to be provided next week.



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