prev

THE M3: MANPOWER NEEDS AND WAGES SURVEY RESULTS

The Macau Metro Monitor, March 15th, 2010

 

SURVEY ON MANPOWER NEEDS AND WAGES FOR THE 4TH QUARTER 2009 DSEC

At the end of the fourth quarter of 2009,

  • Wholesale & Retail Trade had 29,211 paid employees, up 12.3% y-o-y with average earnings (excluding bonuses and allowances) for full-time employees up by 5.7% y-o-y to MOP9,090
  • Transport, Storage & Communications had 7,658 paid employees, down 2.0% y-o-y while average earnings for full-time employees increased by 1.1% y-o-y to MOP15,090
  • Security Activities had 3,749 paid employees, down 4.1% y-o-y with average earnings for full-time employees up 4.7% y-o-y to MOP7,830
  • Public Sewage & Refuse Disposal Activities had 623 paid employees, down 5.3% y-o-y while average earnings for full-time employees decreased 6.4% y-o-y to MOP10,520.

At the end of December 2009, Wholesale & Retail Trade reported 3,380 vacancies, up substantially by 95.6% y-o-y; Security Activities had 590 vacancies, a y-o-y increase of 23.9%, while the Transport, Storage & Communications sector had 284 vacancies, down by 9.3% y-o-y.


The Angry Client

“I’m not upset that you lied to me, I’m upset that from now on I can’t believe you.”

-Friedrich Nietzsche

 

With every crisis, there comes both a cost and an opportunity. One of the most obvious costs coming out of the global financial crisis is trust. Whether it be between the American people and Washington or China and Washington, it’s all one and the same. No one trusts Washington.

 

When people lie to you, you get upset. When those same people start telling you what to believe, you get angry. This morning you are seeing headlines from China’s Premier Wen Jiabao who is going after Washington for “finger pointing.” The Client is angry.

 

As he wound down his parliamentary meetings last night, Wen said, “we oppose countries pointing fingers at each other and even forcing a country to appreciate its currency” and then he focused his finger on America in saying that it needs to “take concrete steps to reassure investors” that there is “safety” in dollar based assets. Translation: put a muzzle on Chuck Schumer, and focus on fixing your own balance sheet problems.

 

For the past 18 months we have affectionately labeled China, The Client. So who is The Angry Client? Is it the conservative American saver who gets zero percent returns on their hard earned savings accounts so that the Piggy Banker Spread can get Wall Street stocks and bonuses back on track? Or is it America’s Chinese creditor? It’s both.

 

Per its Premier’s comments last night, here’s a focus list of what angers The Chinese Client:

  1. US Dollar Policy
  2. US Fiscal Policy
  3. US Trade Protectionism
  4. US Foreign Policy on Weapons Sales to Taiwan
  5. US President Obama meeting with the Dalai Lama
  6. US Corporates attempting to set Foreign Policy (Google)

Per its citizens last week, here’s a focus list showing the anger of The American Client:

  1. AFTER the SP500 ramped +3.1% in the 1st week of March, the ABC/Washington Post Consumer Confidence reading remained at minus -49 (vs. -49 in the wk prior). Just awful.
  2. AFTER the SP500 has ripped those Selling Fear in February for a +8.7% move to the upside (Feb 8th to March 12th), Friday’s University of Michigan Consumer Confidence report put in a lower-high, decelerating to 72.5 in March versus 73.6 in February.
  3. AFTER putting the rest of America on hold for his final countdown healthcare tour, President Obama’s approval rating hit a new low last week (The Rasmussen Reports daily Presidential Tracking Poll for Wednesday showed that 22% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-three percent (43%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -21. That matches the lowest Approval Index rating yet recorded for this President).

Yes, willfully blind ones of the Bubble in US Politics, you have a secular problem on your hands. It’s called trust, and it can’t be bought and paid for like your political careers. You can tell me I am lying, but the score doesn’t. Despite a 69.9% rally in the SP500 since March 9th of the 2009 said “great depression”, this is one of the most explosive global votes of no-confidence that we have ever seen. Ever, is a long time.

 

So where do we go from here? I’m not smart enough to solve for this, so I say every man for himself. We already have raised a 61% position in cash in our Asset Allocation Model. We have a 6% position in US Equities entirely allocated to Healthcare (XLV) because we don’t trust Nancy Pelosi will be successful scaring the horses with reform much longer. We are short the SP500 (SPY) after it made a lower-high on Friday, closing at 1149.

 

As opposed to the bullish conviction I started to build in the spring of last year, now I do not think that the answer on where global equity, currency, bond, and commodity markets go from here is as clear. In a new world order that doesn’t have trust, what else is there to move forward with?

 

Accepting that uncertainty drives a dynamic and interconnected global marketplace is a good place for us all to start. With that said, I can tell you with 100% certainty, that the US stock market is either going up or down from here and our collective distrust for those running this joint will remain.

 

My immediate term support and resistance lines for the SP500 are now 1135 and 1160, respectively.

 

Best of luck out there today,

KM

 

LONG ETFS

 

CAF – Morgan Stanley A Share — Now that all of the inflation data we have been calling for is on the tape, China's stock market looks like it wants to tell us the news is now baked into the expectations cake. Buying China low.

 

XLV – SPDR Healthcare — Healthcare was down again on 3/9/10 in the face of “Obamacare” inspired fear. While we fear we may be early here, it’s better than fearing fear itself.

 

UUP – PowerShares US Dollar Index Fund — We bought the USD Fund on 1/4/10 as an explicit way to represent our Q1 2010 Macro Theme that we have labeled Buck Breakout (we were bearish on the USD in ’09).

CYB - WisdomTree Dreyfus Chinese Yuan — The Yuan is a managed floating currency that trades inside a 0.5% band around the official PBOC mark versus a FX basket. Not quite pegged, not truly floating; the speculative interest in the Yuan/USD forward market has increased dramatically in recent years. We trade the ETN CYB to take exposure to this managed currency in a managed economy hoping to manage our risk as the stimulus led recovery in China dominates global trade.

TIP - iShares TIPS — The iShares etf, TIP, which is 90% invested in the inflation protected sector of the US Treasury Market currently offers a compelling yield. We believe that future inflation expectations are mispriced and that TIPS are a efficient way to own yield on an inflation protected basis.
 

SHORT ETFS

 

FXE – Currencyshares EuroWe've been saying the shorts would get squeezed to the top end of our immediate term TRADE range for the Euro at $1.37. And they have. Timing is always critical. We took our shot on 3/12/10. 

 

SPY – SPDR S&P500We moved to neutral (from bearish) on the S&P500 on the week of February 22. At 1139, for the immediate term TRADE, we’ll go back to bearish. This market is finally overbought. We shorted SPY on 3/5/10.

 

EWP – iShares SpainThe etf bounced on 3/3/10 in part from a strong day from Banco Santander, the fund’s largest holding in the Financials-heavy (43.8%) etf. We shorted Spain for a TRADE again on 3/5 as every sovereign debt risk has a time and price to be short of. We have a bearish bias on the country; massive unemployment, public and private debt leverage, and a failed housing market remain fundamental concerns.

 

IWM – iShares Russell 2000With the Russell 2000 finally overbought from an immediate term TRADE perspective on 3/1/10 and added to it on 3/2; we got the entry price that the risk manager makes a sale on strength.

 

GLD – SPDR Gold We re-shorted Gold on this dead cat bounce on 2/11/10. We remain bullish on a Buck Breakout and bearish on Gold for Q1 of 2010, as a result.

    

IEF – iShares 7-10 Year TreasuryOne of our Macro Themes for Q1 of 2010 is "Rate Run-up". Our bearish view on US Treasuries is implied.


US STRATEGY - SENTIMENT INCONSISTENCY

The S&P 500 was little changed on Friday after trading in a relatively narrow range, while volume improved 7% day over day.  On the MACRO front, last week ended with mixed signals from the February retail sales (slightly better) and the March University of Michigan Confidence data (disappointing).

 

On Friday, February Retail Sales were +0.3% vs. consensus (0.2%); ex-autos +0.8% vs. consensus +0.1%.   Rising gas and food prices, accounted for nearly 60% of the monthly gain in February sales and over 100% of the revised January sales data.  We continue to believe that inflation issues that the consumer faces are real and are supportative of our belief that the FED is behind the curve on its interest rate policy.

 

The inflation the consumer feels in his wallet is being played out in the lack of confidence.  The March preliminary University of Michigan Confidence came in at 72.5 below consensus of 74.0 and a final February reading of 73.6.  Despite a 70% move in the S&P 500 since the lows last March, Americans don’t trust the rally. 

 

Despite the stalled confidence figures, Consumer Discretionary (XLY) continues to be the “pain trade.”  The XLY was the third best performing on Friday, last week and year-to-date.  The better than expected February retail sales helped retail overcome an unexpected drop in confidence and a downward revision in January Retail Sales.

 

The Dollar index traded down for three straight days last week, declining 0.6% on Friday.  The Hedgeye Risk Management models have levels for the volatility Index (DXY) at:  buy Trade (79.79) and sell Trade (80.82).  Dollar weakness provided a tailwind for Materials (XLB) and parts of the REFLATION trade.   

 

Volatility lost 2.7% on Friday, but gained 0.9% for the week.  The VIX continues to be broken on TRADE, TREND and TAIL.  The Hedgeye Risk Management models have levels for the volatility Index (VIX) at:  buy Trade (17.10) and sell Trade (19.22). 

 

As we wake up today, equity futures are trading below fair value ahead of a week which includes a number of key MACRO data points on inflation, housing, and industrial production reports and a FED policy meeting.  As we look at today’s set up the range for the S&P 500 is 25 points or 1.3% (1,135) downside and 0.8% (1,160) upside.

 

Today's MACRO highlight will be:

  • Empire Manufacturing
  • TIC Flows
  • US Industrial Production for February
  • US Capacity Utilization for February
  • NAHB Housing Market Index for March

In early trading, copper is trading lower, extending the decline from last week’s loss on concerns that China will continue to slow growth after inflation rose to a 16-month high.  The Hedgeye Risk Management Quant models have the following levels for COPPER – Buy Trade (3.23) and Sell Trade (3.39).

 

Gold is trading higher in early trading higher after hitting a two-week low last week.  The Hedgeye Risk Management models have the following levels for GOLD – Buy Trade (1,097) and Sell Trade (1,122).

 

Crude oil is trading lower for a second day ahead this week’s OPEC meeting in Vienna.  The Hedgeye Risk Management models have the following levels for OIL – Buy Trade (79.57) and Sell Trade (83.10).

 

Howard Penney

Managing Director

 

US STRATEGY - SENTIMENT INCONSISTENCY - sp1

 

US STRATEGY - SENTIMENT INCONSISTENCY - usd2

 

US STRATEGY - SENTIMENT INCONSISTENCY - vix3

 

US STRATEGY - SENTIMENT INCONSISTENCY - oil4

 

US STRATEGY - SENTIMENT INCONSISTENCY - gold5

 

US STRATEGY - SENTIMENT INCONSISTENCY - copper6

 


Attention Students...

Get The Macro Show and the Early Look now for only $29.95/month – a savings of 57% – with the Hedgeye Student Discount! In addition to those daily macro insights, you'll receive exclusive content tailor-made to augment what you learn in the classroom. Must be a current college or university student to qualify.


The Week Ahead

The Economic Data calendar for the week of the 15th of March through the 19th is full of critical releases and events.  Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.

 

The Week Ahead - cal1

The Week Ahead - cal2


Who Do Americans Trust?

We held a very interesting in-house conference yesterday in New Haven. Our goal was to take half a day, away from our screens, to think.

 

One of our latest hires, Diego Scataglini, talked about trust and how American society is losing theirs. Interestingly, almost 4x the amount of people in America believe in ghosts than they currently trust in the US government.

 

This isn’t a political point. This is a point about politics. AFTER the US stock market has tacked on a +70% rally to the upside, and AFTER the entire global economy has recovered from the said “great depression” of some who missed an annual bonus, this is what you get – the score:

 

1. AFTER the SP500 ramped +3.1% last week, the ABC/Washington Post Consumer Confidence reading remaining at minus -49 (vs. -49 in the wk prior).

 

2. AFTER the SP500 has ripped those Selling Fear in February for a +8.8% move to the upside (Feb 8th to March 12th), this morning’s University of Michigan Consumer Confidence report put in a lower-high, decelerating to 72.5 in March versus 73.6 in February (see chart below).

 

3. AFTER his final countdown healthcare tour, President Obama’s approval rating hit a new low this week (The Rasmussen Reports daily Presidential Tracking Poll for Wednesday showed that 22% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-three percent (43%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -21. That matches the lowest Approval Index rating yet recorded for this President).

 

What gives?

 

Americans don’t trust the rally, and Americans don’t trust the government. Now that the immediate term (TRADE) bubble in gold has popped, and the intermediate term (TREND) bubble in US Treasuries keeps popping, I guess the only bubble we have left to make a call on is the one that we have held out on our longest duration (the TAIL) – the Bubble In US Politics.

 

Its sad, but these numbers don’t lie; politicians do.

KM

 

Keith R. McCullough
Chief Executive Officer

 

Who Do Americans Trust? - um

 


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.

next