July 7, 2015

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We will host a conference call TODAY, Tuesday, July 7th at 11am ET to discuss the latest Macau data, our outlook on the market and the stocks and the presentation of a new, original research topic.



LVS, WYNN, MGM, MPEL, 0027.HK, 1128.HK, 1928.HK, 2282.HK, 6883.HK, and 0880.HK.




  • Details behind June’s disappointing performance 
  • Discussion of Base Mass trends including an analysis of table minimum bets
  • The “true” performance of the Mass segment after adjustment for smoking ban related table reclassifications
  • Revised 2015 monthly market projections
  • Q2 earnings preview:  Hedgeye company EBITDA estimates vs the Street (LVS, WYNN, MGM, MPEL, and Galaxy Entertainment) 
  • How has Galaxy Phase 2 impacted the market, the other concessionaires, and what should we expect going forward? 



Attendance on this call is limited. Ping  for more information

Cartoon of the Day: Boom! (Or Is That Bust?)

Cartoon of the Day: Boom! (Or Is That Bust?) - Greece cartoon 07.06.2015

"After introducing single-shot Hedgeye Cartoons in the last year," Hedgeye CEO Keith McCullough wrote in today's morning market note, "we may have to resort to full-form illustrative children’s books in order to explain this Greek debt drama."


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 80.43%
  • SHORT SIGNALS 78.34%

Referendums Have (Deflationary) Consequences

The Euro is down on the “NO” news out of Greece and the risk range here is widening again to $1.09-1.13. That should be respected as it’s:


A) A leading indicator for rising volatility in Foreign currencies and Commodities and

B) An explicit #deflation risk on signal (think inflation expectations of things like Oil and low-quality peripheral debt).


Referendums Have (Deflationary) Consequences  - z GREECE 07.06.15 chart


On a related note, WTI Oil is getting smashed for a -4.8% loss this morning. (That’s after a -6.7% drop last week.) It’s down -44% year-over-year.


The #StrongDollarDeflation risk remains for most things levered to inflation expectations (including junk debt) – this is why big beta to “reflation” is in drawdown mode again.


***Finally, if you haven’t read it already… Make sure to check out this special contributor insight on the Gong Show in Greece from our good friend Daniel Lacalle. He knows this story inside out.

Retail Callouts (7/6): Gnarly SIGMAs, Employment Callout

Takeaway: Bad 2H inventory setup for retailers comes just in time for higher wage and shipping costs.

SIGMA Update - Bad 2H inventory setup just in time for higher wage and shipping costs

We sent out our updated SIGMA book for about 100 companies on Thursday. We picked out a few of the gnarlier looking charts. Most them are department stores -- or companies with no square footage growth. We're not playing favorites. They simply looked the worst.  Regardless, there's one thing that is undeniable...these retailers are heavier on inventory heading into 2H than they'd probably like. With wage pressure building beginning in August (courtesy of Wal-Mart, McDonalds, etc...) and higher costs (freight) headed into holiday, we still think we're going to see a sharp deceleration in EPS growth for US Retail.


Retail Callouts (7/6): Gnarly SIGMAs, Employment Callout - 7 6 chart1B


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Notable Employment Callout

This is from one of Keith McCullough's notes to clients last night.


With Greece, it’ll be convenient for the Bullish Growth (rates up) camp to forget Friday’s jobs report. But this cycle data doesn’t cease to exist. Instead of writing more words, you can follow the cycle (in rate of change terms) using Crayola. I still say the US labor cycle peaked in FEB 2015.


Don’t forget that NFP peaks, on average, 3 months AFTER the economic cycle (GDP) has peaked. The US employment cycle peaked, right on time.

Retail Callouts (7/6): Gnarly SIGMAs, Employment Callout - 7 6 chart10






NKE - World Cup: Nike adds a third star to United States uniform



Ashley Furniture HomeStore to Open Multiple Canadian Locations



PYPL - PayPal on hunt for takeovers after eBay split



BRIEF-Puma and Kering Eyewear sign partnership agreement for optical frames and sunglasses



SHLD - Sears Holding Corporation Announces Expiration And Over-Subscription Of Seritage Growth Properties Rights Offering



Tory Burch Sets Paris Flagship



BLKIA - Bain, Sycamore Circle Belk Inc.



Joe’s Receives Forbearance From Creditors


YELP: Can't Find a Buyer

Takeaway: YELP can't find a buyer, but is still shopping. We doubt it will find one, especially after its 2Q15 earnings release.


  1. CAN'T FIND A BUYER: Last Friday, news broke that YELP's CEO/co-founder isn't looking to sell anymore, but YELP may have interest if an acquirer could help leverage its reviewers toward e-commerce.  Translation: YELP couldn't find a buyer, so it's pitching ways to promote its user base in order to drum up interest among potential acquirers.  YELP is still very much for sale, but we still don't believe it will find a buyer.  Broken Business Model + High Price = Tough Sell; especially if YELP disappoints again on its next print as we expect.
  2. 2Q15 PRINT WILL BE A DISASTER: We all thought that it was odd that management chose to maintain full-year revenue guidance after missing 1Q results and guiding light for 2Q15.  We suspect the reason why was because YELP was shopping itself, and it's much easier to do so when chalking up its recent weakness as temporary.  That is going to come back to bite them on this print.  YELP will need a massive acceleration in new account growth to hit consensus Local Advertising estimates, particularly in 2H15.  We're expecting YELP to miss 2Q Local Advertising estimates, guide light for 3Q15, and cut 2015 guidance. 
  3. THIS ISN'T TEMPORARY: YELP's model is predicated on hiring enough new sales reps in order to drive new account growth in excess of its rampant attrition, which is the overwhelming majority of its customers annually.  The issue is that its TAM isn't large enough to support its model.  That has manifested into a persistent decline in salesforce productivity, which is now devolving into a mounting exodus of its sales reps (see note below).  That last point means that its model is unraveling, and this story is going to get much uglier than we initially expected.  


See our most recent note below for supporting detail.  Let us know if you have any questions, or would like to discuss further.


Hesham Shaaban, CFA




YELP: The New Major Red Flag (1Q15)

04/30/15 08:53 AM EDT

[click here]

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