Help Hedgeye Save A Life

Dear Hedgeye Faithful,


Please take a moment to read the information below to find out how you can help a member of the Hedgeye extended family.  Mandi Schwartz is a Yale women's hockey player who is now in desperate need of cord blood to save her life.  Share this with any and all and perhaps we can all be Mandi's hero!




The Hedgeye Risk Management Macro Team


Efforts Expand to Find Life-Saving Donor for Mandi Schwartz


Bulldog Forward Battling Leukemia, in Urgent Need of Marrow or Cord Blood Donor


NEW HAVEN, Conn. – As Yale women’s ice hockey player Mandi Schwartz continues to battle leukemia, efforts to find her a matching marrow or cord blood donor have intensified. With help from some former Bulldogs, those efforts have expanded to include everything from hockey tournaments in Canada to the World’s Largest Baby Shower in Atlanta. For details on how you can help find a life-saving donor, read on.


Mandi, 22, was first diagnosed with acute myeloid leukemia in December of 2008, just days after helping the Yale women’s hockey team to a 4-1 win over Brown. She returned home to Wilcox, Sask., and underwent multiple rounds of chemotherapy. She was in remission by the spring of 2009, and returned to Yale in January of 2010 to complete her junior year. But less than four months later tests revealed the cancer had returned. She is once again home in Canada, undergoing chemotherapy.


This summer Mandi will need to have a stem cell transplant, which requires locating either a bone marrow or a cord blood donor. The Yale Athletics Department’s efforts to help started with bone marrow donor testing drives each of the last two springs, resulting in more than 1,600 people getting their cheeks swabbed to be added to the National Marrow Donor Program’s “Be The Match” registry. Matches were found for other patients in need, but not for Mandi. To date, the only bone marrow donor match for her is a “9 out of 10”, not a “10 out of 10”. Partially matched bone marrow cell transplants frequently result in a life-ending graft versus host response.


To increase the chances of finding a perfect match, Mandi’s family has begun working with Dr. Tedd Collins, founder of Become My Hero, an organization that works to find donors for hard-to-match patients. Because of her ancestry, Mandi is most likely to find a match from someone of German, Russian or Ukrainian heritage. A “Become Mandi’s Hero” Facebook group has been established to help look for donors and support Mandi as she battles her way back to having a normal life ( There is also a twitter account at that anyone can follow.   


Become Mandi’s Hero is focused on finding potential cord blood donors in addition to bone marrow donors. Cord blood has the same life-saving stem cells as bone marrow, except that partially matched cord blood stem cells rarely cause life-ending consequences. Dr. Collins believes that collecting cord blood from 100-200 babies with any combination of German, Russian or Ukrainian heritage will result in a realistic chance of finding donors that will be able to save Mandi’s life. This must be done within the next two months. The web page at explains the details of the three-step cord blood donation process.


To find cord blood donors, Become Mandi’s Hero is reaching out to the general public in an effort to send or give brochures to hundreds of expectant couples who are having babies that may match Mandi's German, Russian or Ukrainian ancestry. Become Mandi’s Hero will test any mother and father who may match, then collect cord blood from those that the test shows have a high probability of matching.


The efforts to reach out to expectant couples have ranged far and wide, including an assist from one of Mandi’s former Yale teammates. Jenna Spring ’07 volunteered to distribute information about Mandi and the need for cord blood donors at the “World’s Largest Baby Shower” last weekend in Georgia. The event reached the exact audience that is critical to the success of the efforts to find a donor: expectant couples.


There is also still the possibility of finding Schwartz a perfect “10 out of 10” match from a bone marrow donor. Along those lines, a former Yale men’s hockey player is finding ways to connect those who share Schwartz’ passion for hockey with her need for a donor. Brennan Turner ‘09, who attended the same high school as Schwartz (Athol Murray College of Notre Dame) has been lining up a series of bone marrow donor testing drives in Canada in conjunction with CBC's Play On! 4on4 street hockey tournament.  Billed as Canada’s largest sports festival, the tournament takes place in various Canadian cities throughout the summer. A list of those cities where there will be marrow donor testing drives is below.


Mandi’s story has received coverage throughout Canada and in the New Haven area. She also has connections in the Heartland and out West that have helped spread the word. Her younger brother Jaden was the USHL Forward of the Year with the Tri-City (Nebraska) Storm last season and is ranked No. 28 among North American skaters by NHL Central Scouting. That makes him a potential first-round pick in the upcoming NHL Draft, which takes place June 25-26 in Los Angeles. He is committed to attend Colorado College this fall and will play alongside his and Mandi’s brother, Rylan, who recently completed his freshman season at the school. 


Below is a partial list of ways that anyone can help Mandi. 


Read more about Mandi and what is being done to help her:

 E-mail  if you have any questions


 Use Facebook to learn more about the need for bone marrow and cord blood donors, and help spread the word:

Join the bone marrow donor registry:

 Help contact expectant couples who are potential cord blood donors:

Hedgeye Risk Management

World Cup Chart Of The Day: Italy

The intermediate term TREND line for the Italy Titan 30 remains broken at 2311.


World Cup Chart Of The Day: Italy - Italy Titans 30

Breaking The Buck's Third Act

The US stock market bulls like to talk about 2 things: growth and earnings. We like both, but only when they are accelerating sequentially (unless we see a price that reflects the pending slowdown in sequential growth).


Since market prices don’t lie, we use them as leading indicators for future growth. This is what made us bullish on US equities in June of 2009 inasmuch as it makes us bearish on US equities in June of 2010.


What’s a little tougher to discern is what a weakening US Dollar might do to stock market prices. While most recent history (the last 3 years – see chart) suggests that the $88 level in the US Dollar index is a formidable level of long term resistance (a long term lower-high, going back 30 years), what will be interesting this time around is seeing how the US Consumer reacts to any sequential price spikes in major US Dollar based consumption items (i.e. gas at the pump).


One of the major reasons we outlined as catalytic to calling the stock market crash of 2008 was the Burning of The Buck. A predictable go-to-move by the Keynesians in Washington would be the debauchery the currency in exchange for a hope that the Buy-And-Hope community would buy into the idea that cheap moneys would save the stock market from noticing the US Consumer going on strike (sound familiar? How about 2010 Europe?).


In the most recent three weeks prior to the US Dollar going down, US Consumer confidence in the weekly ABC/Washington Post survey had been improving week to week. The US Consumer likes it when prices at the pump go down. What will be interesting is seeing her reaction to rising pump prices. Last week’s -1% drop in the US Dollar Index fired up the price of WTI oil by +3.2% week-over-week. We’ll get the weekly reaction from the ABC survey on Wednesday morning.


For now, we are short the US Dollar via the UUP. We’re short it because it’s the best way to be explicitly short the tired strategy of the Fiat Fools in Washington. Until they realize that going back to the well of destroying this country’s currency rather than cutting the real problem (debt financed deficit spending), there is no reason for the objective mind to believe that any of the lines of support in the chart below will hold, over time.


What this will mean for the stock market remains to be seen. For the last 3 days, Breaking the Buck’s Third Act has certainly been reflationary. Good for the stock market bull how hasn’t seen a 3-day rally since April? Sure. Good for Americans? We’ll see…



Keith R. McCullough
Chief Executive Officer


Breaking The Buck's Third Act - DOLLAR

the macro show

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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.

Casual Dining - TX and FLA Exposure

If there were any “black cloud” questions being asked of the Restaurant management teams in NYC last week, the issues stemming for the oil spill were front and center but future consequences are impossible to predict.


The magnitude of the spill is staggering and the images of oil flowing into the gulf are painful to watch.  With some oil already being found in the Florida panhandle, the odds appear high that the oil slick will feed into the Gulf Stream, likely carrying the oil through the Florida Keys, past Miami and up the east coast.  The Gulf Stream travels at an average speed of 4 miles per hour, so once the oil hits the Gulf Stream, it will take 26 days to hit the Hamptons. 


As the events unfold, tourism will suffer in the state of Florida and in other parts of the east coast.  Looking past the summer, many snow birds will likely look for a new place to rest for the winter.   This is a worrying scenario for the Sunshine State’s economy.


Longer term, another concern would be the potential impact of a slowdown in drilling, particularly in Texas, which is an important state for a number of restaurant companies. 


The following table shows the casual dining industry exposure to different regions of the country, based on the Malcolm Knapp data.  The chart shows the regions of the country that are performing better or worse than the national average for the month of March. 


The two chains that stand out the most to exposure to Florida and Texas are EAT and PFCB, but CAKE RUTH, DRI and TXRH have significant operations too. 


Casual Dining - TX and FLA Exposure - StateExposure

Credit Markets . . . Bearish Is As Bearish Does

Conclusion: The TED SPREAD and junk bond yields are pointed up and to the right.  That’s bearish for equities.


Despite the bounce in equities over the past week, debt markets continue to flash bearish signals as spreads widen and bond prices hit new lows.  Below we’ve outlined a chart of high yield bond yields in the United States and the Ted Spread, both going back three months.   Admittedly,  high yield bond yields and the ted spread both measure slightly different types of risk.


The Ted Spread  is the difference between the interest rates on interbank loans and short term U.S. government debt, and is an acronym formed from T-Bill and Ed (the ticker symbol for the Eurodollar futures contract).  A typical range for the Ted Spread is between 10 and 50 basis points.  Obviously, a widening Ted Spread means that liquidity is being withdrawn and perceived credit risk, generally, is going up.  During the 2007 subprime mortgage crisis, the Ted Spread was routinely in the 150 – 200 basis points region.


Currently the Ted Spread is at 47 basis points, which is up 5 basis points week-over-week.  While this is not flashing an extreme, it is certainly at the high end of its normal range and climbing.  For the equity market to continue to rally, we will likely need to see the Ted Spread narrow.


In conjunction with the widening of the Ted Spread, high yield bond yields in the U.S. have been climbing over the course of the past few months.  As we wrote on May 7th:


“Credit spreads widening in conjunction with a declining stock market typically indicate a dramatic shift away from any type of risk by institutional investors.  More specifically, they also signal bond investors getting increasingly concerned about fundamentals and cash flow.   Over the course of the past few days, corporate high yield yields widened dramatically from 8.2% to 8.6%.  This morning yields continue to climb.”


This dramatic widening of junk bond yields was obviously a precursor to the equity market sell-off, and indicative of less certainty related to specific company cash flows and their ability to refinance at comparable rates.  In Europe, there hasn’t been a high yield bond offering in over a month, although there are a number of offerings on the docket for this week.  The success of these offerings will be an important indicator for the health of debt markets in Europe.


As ever, the credit markets are leading indicators for equity markets.


Daryl G. Jones
Managing Director


Credit Markets . . . Bearish Is As Bearish Does - 1


The Macau Metro Monitor, June 14th, 2010



Local gaming revenues for June will be lower than in May, Director Neves from DICJ told MDT. The regulator stood by his prediction of 30% GGR growth in 2010 and believes the rise “will be smoother in the second half of the year” because of tougher comparisons.  According to Neves, in the first nine days of June, GGR totaled less than MOP 3.9 billion (average of MOP 430 million per casino).  If this average remains steady, June will finish with MOP 12.9 billion GGR, up 54.7% YoY.


IM believes the relatively soft GGR in the first week of June was due to the anticipation of the three-day public holiday for the Dragon Festival on the mainland, which starts today.  IM does not believe this slowdown will continue for the rest of June.



Galaxy Entertainment's Peter Caveny said that the Galaxy Macau resort on Cotai will open in March 2011.


In other news, the president of Philippine Amusement and Gaming Corporation (PAGCOR), Rafael Butch Francisco,said the Manila Bay integrated resorts are likely to attract many Filipino nationals currently working in Macau. Around 40,000 jobs would be created, he added.  Francisco believes the wages in the Manila Bay integrated resorts will match the MSAR ones “in three, four more years," which he hopes would entice the Filipinos workers to return home.



Visitor arrivals in package tours increased by 20.3% YoY to 572,157 in April 2010. Visitors from Mainland China (429,510) and Hong Kong (22,594) rose by 17.8% and 6.3% respectively.  At the end of April 2010, total number of available guest rooms of the hotel sector increased by 2,053 (+11.7%) YoY to 19,631 rooms.  A total of 664,286 guests checked into hotels and guest-houses in April 2010, up by 15.1% YoY.


For the first quarter of 2010, new RMLs approved by Macau banks increased by 5.4% QoQ (208.3% YoY) to MOP7.0 billion.  New CRELs approved decreased by 16.0% QoQ to MOP5.3 billion but increased 164.3% YoY.

At the end of March 2010, the delinquency ratio for RMLs stood at 0.15%, down 0.04% points from three months earlier The ratio for CRELs went up 0.11% points from the previous quarter.


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