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HST 2Q2010 CONF CALL NOTES

As expected, HST beat and raised and held a bullish conference call. While they missed our EBITDA estimate, it was due to lower cancellation and attrition fees. Here are our notes from the conference call.

 

 

HIGHLIGHTS FROM THE RELEASE

  • "The increase in RevPAR was significantly affected by an increase in transient demand of 8.1%, combined with an improvement in average room rate of 2.8%, the first such rate growth since the second quarter of 2008. Group demand increased 10%, though this was partially offset by a 4.7% decrease in rate."
  • "Comparable hotel adjusted operating profit margins were unchanged as a decrease of $16 million in incremental attrition and cancellation fees reduced margins by 100 basis points compared to 2009. For year-to-date 2010, margins declined 110 basis points and the decrease in attrition and cancellation fees was $28 million, which resulted in a similar 100 basis point decrease in operating margins."
  • Acquisitions & Developments:
    • "On July 14, 2010, the Company participated in a settlement agreement with the owner of the W New York - Union Square and the property's mezzanine lenders under which the hotel owner will be acquired by a venture led by the Company and in which Istithmar World will be a minority member... Closing is anticipated to occur by September of 2010 and is subject to bankruptcy court approval."
    • "On July 20, 2010, the Company reached an agreement to acquire the 424-room Westin Chicago River North for approximately $165 million... The Company expects to complete this acquisition, which is subject to customary closing conditions, in August of 2010."
    • "On July 20, 2010, the Company's joint venture in Asia, Asia Pacific Hospitality Venture Pte., Ltd. (the "Asian joint venture"), in which it is a 25% partner, reached an agreement with Accor and InterGlobe to develop seven properties totaling approximately 1,750 rooms for a total cost of approximately $325 million in three major cities in India; Bangalore, Chennai and Delhi (the "Indian joint venture"). The Asian joint venture will invest approximately $50 million to acquire approximately 36% of the interest in the Indian joint venture. The properties will be managed by Accor under the Pullman, Novotel, and Ibis brands. Development of the properties is underway, and the first hotel is expected to open in the second quarter of 2011."
  • 2010 FY Guidance:
    • RevPAR: 4% to 5.5% [1.5% to 3% increase over prior guidance]
    • Operating profit margins (GAAP): increase 205 to 270 basis points
    • Comparable hotel adjusted operating profit margins:  -50bps to flat [50 to 75bps better then prior guidance]
    • FFO per diluted share: $.66 to $.70 [$0.05 to $0.08 raise from prior guidance - consensus is $0.66]
    • Adjusted EBITDA: $795 to $825MM [$25-45MM raise from prior guidance]

CONF CALL "NOTES"

  • RevPAR improved throughout the quarter, with period 6 RevPAR up 10%; ADR also turned positive in the quarter.
  • Hotels are becoming less reliant on discounted room nights.
  • Average rate in premium and corporate business increased more than 6%.
  • 1% decrease in discounted business in the quarter.
  • Average decline in group ADR was less than 5% in the quarter.
  • Booking pace had improved to +8% by quarter end for 3Q2010.
  • Timeline for opening the hotels in India: early 2011-2013.
  • Guidance assumes that they will complete at least one additional deal this year and no dispositions.
  • Comparable RevPAR results and outlook:
    • Boston was their top performing market - +23.8% (13pts occupancy growth, 3.4% ADR growth). Mix shift, easier comps due to renovations underway last year.  For 3Q, expect Boston to perform in-line.
    • New Orleans: (+7.9pts Occ, 7.5% increase in ADR).  Expect outstanding 3Q.
    • NY: 19.1% (7% rate increase). Expect strong 3Q.
    • Miami / Ft Lauderdale (rate was down 2.9%) RevPAR +14%.  Expect a weak 3Q due to the renovations and tougher comps.
    • Orange county: expect it to underperform in the 3Q due to business booking decline.
    • San Fran: 10.2% RevPAR, expect them to slightly underperform in 3Q.
    • Chicago: 9.2% RevPAR, Swisshotel had 26% increase in RevPAR due to renovation. Expect outperformance in 3Q.
    • Hawaiian hotels: RevPAR down 2%, ADR was down 12.4%. Expect Maui market to outperform in the 3Q.
    • Phoenix: 3.9% RevPAR decline, (group rate discounting).  Expect continued underperformance in 3Q.
    • San Diego continued to underperform - RevPAR was down 12.9%.  Expect them to outperform in the 3Q though.
    • European JV: 5.6% increase for RevPAR (ADR down 5%) in local currency.
  • Property level bonuses increased in the quarter and negatively impacted margins in the quarter by 25bps.
  • Mix shift to more banquet and audio & visual business helped margins in the quarter.
  • Wages and benefits increased 3.5%, unallocated expenses increased 6% (credit cards fees, rewards, etc- occupancy related). Utility increased .6%, property taxes decreased 2.8%, insurance increase 15%.

Q&A

  • +/- 80% flowthrough on the room when RevPAR is ADR driven.  50% flowthrough in F&B this quarter, but 40%ish is more normal.
  • Feel like there is a better opportunity to invest in the mid and upscale sectors in markets like India and China vs. upper upscale & luxury sectors in US.
  • Update on the hotel transaction market
    • Have seen a pick up recently, but we are nowhere near a "hot" market.  Most deals are either distressed or have near term maturities that are difficult to refinance.
    • In looking at the assets that they would like to sell, it makes more sense to wait until 2011/2012 to market them.
    • In general will be more active in the US than international markets over the next few years, but not imbalanced.
    • In certain markets, you can see some sub 5% cap rates and in others, it's a little higher, but that assumes nice recovery.  Europe has slightly lower cap rates then the US.  Asia Cap rates are far more varied given emerging markets and stable market mix. In EM, there is a higher projected ROI.
    • Ultimately, they are looking for acquisitions that will exceed their cost of capital using a 10 year unleveraged IRR.
  • Desert Springs Marriott is encumbered by a $74MM loan, and it's the only one in breach of its covenants and has negative coverage but they are making the payments for it.
  • They would need an improvement above their forecast to increase their dividend.  However, if they sell assets and have capital gains, then they would do a special dividend.
  • Why did they pay so much per key for the Chicago asset?
    • assumes that there were fairly material capex needs in other assets that traded hands in that market.
    • This hotel doesn't need a lot of capex.
    • This hotel is performing very well among its peers. The management contracts expired in 2020 - they have the option whether to extend it or not -so that's unusual and attractive. 
  • They have seen consistent short term bookings strength for the last 2 quarters, so they are getting more optimistic. Corporate demand has really been growing and corporate pays the best rate.  Hotels also feel less need to offer discounts in order to get occupancy.  So not only is the pace of bookings up but also the rate on those bookings are up YoY.
  • Doesn't think that the reinstitution of brand standards will cause their capex to tick up, since they have been consistently investing in their portfolio. However, over-leveraged hotels purchased in 2006/7 may be pushed over the edge by the reinstitution of brand standards.
  • There was a relatively small group of bidders for the Chicago Westin - it wasn't a widely marketed deal.
  • Have 2 assets that they are close on acquiring and feel confident that at least one will come through.
  • Union Square deal - don't expect cash flow to be negative at the hotel and the capex program they are contemplating is nowhere near $25MM.
  • Performance over the last 2-3 weeks has been good for them. Corporate travel trends have still been strong. Group bookings pace has also been normal.
  • Thinks that ground up development for them will be primarily in Asia.
  • How much EBITDA growth is from contributions from acquisitions?
    • Approximately $5MM, since they now have to expense acquisition costs.
  • For business that is booked close in, there is very little cancellation and attrition fees. Part of that is that they don't negotiate for fees since it's so close in and because they would rather get higher rates on F&B and rooms. However, for further out conferences, they are negotiating for some cancellation and attrition fees but they are lower than what they used to get back in 2006 & 2007.
  • Current pricing and occupancy trends
    • June/July RevPAR came in around 9-10%, some rate growth there
  • So far they aren't seeing a pullback from customers. They are expecting rates to go up nicely for corporate rate negotiations and their sense is that their corporate customers are accepting that.
  • Property bonuses are $11MM annualized this year.
  • 2011 is still a little behind (4%) for what's on the books now. From a rate perspective, they are flat already-- expect that tide to turn in 2H2010.  Will start out 2011 at least as good as 2010 if not a little better.

WYNN FIRST MORTAGE NOTES CALL: "NOTES"

WYNN FIRST MORTGAGE NOTES CALL: "NOTES"

 

OFFER DETAILS

  • Issuer: Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp.
  • Size: $1.32BN
  • Issue: First Mortgage Notes
  • Format: 144A w/ Reg Rights
  • Maturity: 2020 (10-Year)
  • Optional Redemption: NC-5
  • Ratings: Existing Ba3 / BB+, expect same
  • Use of Proceeds:  To fund tender offer of any and all 6⅝ First Mortgage Notes due 2014

CALL "NOTES"

  • They are at 4x leverage currently and are comfortable operating at that level.
  • Rates are still lapping tough comparisons for long term group business that was on the books last year.
  • Their goal is to capture market share.
  • Beach Club and Surrender cost them $68MM- already seeing a huge return on investment.
  • They are going to remodel the rooms at Wynn Las Vegas which they already launched last week. Standard rooms are going to be remodeled over the next 6-9 months, followed by the suites. They are also adding a wine bar and remodeling some of areas on the floor.
  • Why the bond offering now?
    • Takes a solid balance sheet into an "impenetrable" one .
    • Coupled with this deal is a bank amend and extend deal which is going well.
  • 2011 / Future room bookings
    • Have significantly more convention rooms booked on the bookings for this year and next year.  Rate is still challenged.  They are starting to see rates tick up slightly on the convention side.
    • Convention room nights booked were only 13% in 2009, should be 20%. In the back half of 2010, they will be above 13% and should be a lot better in 2011 as well. This should help them yield up a bit.

R3: Cutting Losses

R3: REQUIRED RETAIL READING

July 21, 2010

 

Shuttering the Liz Claiborne branded outlet business ends one of the more substantial drags on the Partnered Brands segment and keeps management focused on returning to profitability in the 2H of F10.

 

 

TODAY’S CALL OUT

 

After the close yesterday, LIZ announced that it will be closing its Liz Claiborne branded outlet stores (a ~$90-$95mm business at about $1mm/store) over the course of 2010 and into early 2011.  The shuttering of these locations (which obviously have very little reason to exist given JCP’s “ownership” of the brand now) ends one of the more substantial drags on the Partnered Brands segment.  This move makes a ton of sense, it’s an unprofitable channel with outdated, oversized stores and extremely poor productivity (<$112/sq. ft.) that has been a substantial money loser. While the company originally had hopes for turning the business around, these decisive steps to clear the decks of residual drags on the business keep management focused on returning to profitability in the 2H of F10.

 

In an effort to quantify the impact of the news, we looked at the sub-segments within Partnered Brands that have been losing money. Liz outlets account for ~10% of Partnered Brands revenue.  Liz International accounts for modest losses in 1H FY10 and the DKNY Jean business is about twice the size of the Liz outlets with similarly poor profitability.   Excluding these other factors, we attribute ~$5-$10mm in losses to the outlet business in the first half of 2010, or about $10-$15mm annually which equates to a drag of ($0.05-$0.12) in EPS in FY10.

 

Looking at the business going forward, a portion of the investments in the Liz outlet business will be reallocated toward higher ROI QVC/JCP initiatives with the balance of losses largely eliminated. After renovating ~12-15 outlets last year at ~$150k/door, the company had held off an any additional spend once the JPC/QVC deals were on the horizon. The investment in outlets last year will be part of the $7mm non-cash write off realized in Q2.

 

The bottom-line here is that LIZ is taking the steps necessary to return to profitability and on the eve of the JCP/QVC transition in August and the first launch of product from the ‘new Mexx’ business under Thomas Grote’s leadership. With a big month ahead for the company and business at an inflection point, we expect to be increasingly focused on this story in the near-term.

 

-Casey Flavin

 

R3: Cutting Losses - 1

 

 

LEVINE’S LOW DOWN 

 

- In an effort to boost sales as well as generate some “buzz” Target is teasing customers with its “Back in Black Friday” promotion this week.  The online-only event takes place this Friday, with the full selection of sale items to be revealed at that time.  For now the company’s splash page suggests prices will be almost like the “real” Black Friday.

 

- A recent study by Nielsen suggests the Boomers (78 million consumers) spend 38.5% of CPG dollars.  Interestingly, only about 5% of the industry’s marketing dollars are targeted at the demographic spanning ages 35-64. 

 

- Despite troubles off the course, Tiger Woods retains his status as America’s favorite sports star for the fifth year in a row according to Harris Interactive.  Kobe Bryant was also tied for the first place spot with Woods, moving up from number 4 last year.  Michael Jordan is the only retired athlete on the top 10 list, occupying the number seven spot.  A full 50% of the top ten favorite sports stars are Nike endorsed.

 

MORNING NEWS 

 

Consumers Plan to Spend More Online in Q3 - The eBillme Online Spending Index, which is based on a survey of 1,200 consumers, notes that consumers plan to spend an average of $271.77 online in 3Q, up 20% from what surveyed consumers said they planned to spend in 2009’s 3Q. The report notes that 30% of consumers plan to spend $250 or more online in Q3, including  13% who plan to spend $500 or more online, 5%, $1,000 or more and 2%, $2,000 or more. <internetretailer.com>

Hedgeye Retail’s Take:  Consistent with results seen out of retailers with solid .com businesses, double digit growth has been common for the past several months.  As such, we’re seeing retailers like KSS, DKS, and TGT all investing meaningfully in .com infrastructure to support such rapid and substantial growth. 

 

R3: Cutting Losses - 2

 

R3: Cutting Losses - 3 

 

Fear of Brazilian Slowdown May Affect Brands Exposure to the Country - As fashion brands such as Giorgio Armani, Diane von Furstenberg, Burberry, Chanel and Christian Louboutin flock to tap into the booming market with freestanding stores, joining the likes of Gucci and Louis Vuitton that are there already, there are growing concerns Brazil’s growth could slow down over the next 18 months, even as more brands enter the country. The following are risks of the Brazilian market: Lula da Silva stepping down and a new leader take over, massive income inequality, poor infrastructure, a fashion market that is centered almost entirely in São Paulo, and continuing high duties on fashion imports. <wwd.com/business-news>

Hedgeye Retail’s Take: Yes, Brazil has risks just like every other country, but our macro team has Brazil on its shortlist of economies it likes in the 2H of F10 and into 2011 as one of the few setup to accelerate domestic consumption to offset a decline in global trade and industrial production – last we checked, that’s bullish for retail.

 

 

TJX Canadian Push - The TJX Cos. Inc. said Tuesday that it will open its first Marshalls store in Canada in the spring as part of a six-unit rollout in the country next year. Like TJX’s Winners, HomeSense and StyleSense nameplates, the Marshalls stores will be managed by the company’s TJX Canada group. TJX Canada provides the company its highest financial returns and has been estimated support of 90 to 100 Marshalls units. <wwd.com/business-news>

Hedgeye Retail’s Take:   Add Marshall’s the list of other U.S  based big box retailers heading north.  All in Canada is more profitable than the U.S for most retail chains, but unfortunately the population does not support enough stores to really move the needle much. 

 

TRLG Re-Enters Footwear - True Religion announced Tuesday it will launch a True Religion Brand footwear range for women with Titan Industries Inc., which also holds footwear licenses for Badgley Mischka, Betsey Johnson, Bebe and L.A.M.B. The collection will launch in spring ’11 with approximately 30 styles, featuring leathers in neutral and metallic hues and bright exotic skins, in flats, wedges and stilettos. The True Religion women’s shoes will be priced from $125 to more than $250 at retail and will be distributed in major department stores and specialty stores both nationwide and internationally. The denim brand previously launched a footwear line in fall ’07 with licensee GMI Footwear.  <wwd.com/footwear-news>

Hedgeye Retail’s Take:  Interesting price point for the shoes relative to the $200 +/- price point for the company’s core denim products.  It almost makes the shoes seem like a bargain. 

 

UK Outdoor Retailer Blacks Leisure Wilts in Summer Heat - British outdoorwear retailer Blacks Leisure posted a sharp fall in first-half sales, blaming the hot summer weather and faltering consumer confidence in the weeks following the May 6 general election. The 313-store company experienced a 7.5% decline in comps over the 17 weeks to the end of June. Chief Executive Neil Gillis stated: "If it's very dry and you're worried about your job I'm not sure you're going to go out and buy a 200 pounds ($306) waterproof jacket." On a positive note gross margins improved 110 bps from more targeted promotional activity. <reuters.com>

Hedgeye Retail’s Take: Interesting example of when too much heat can trump the benefits of increased seasonal sales.  To be fair, the UK sporting goods market has been challenged for quite some time, hot or cold. 

 

Nike Names Craig Cheek VP and GM of Greater China - Intent on doubling its business in China by 2015, Nike Inc. on Monday named Craig Cheek vice president and general manager of Greater China. He succeeds Willem Haitnik, who will become vice president and general manager of Converse’s European, Middle Eastern and African businesses.  <wwd.com/business-news>

Hedgeye Retail’s Take: Moving a VP and GM of North American ops to head its efforts in China is reflective of just how important this opportunity is to Nike.

 

Uniqlo Renews Textile Partnership with Toray - Japanese fast-fashion retailer Uniqlo is renewing its strategic partnership with textile manufacturing giant Toray for another five years to co-develop new fabrics and products. The original partnership began in March 2006 and expires next year but now the two companies will continue to work together through 2015. Toray and Uniqlo are aiming for total transactions between the two companies over the five-year period to total 400 bn yen, or $4.6 bn. For the period between 2011 and 2015, the two companies will also focus more on developing the global scope of their business, both on the production and the sales end. Toray opened a new factory in Bangladesh, called TM Textiles & Garments Limited, on July 8, and this operation will join other Toray facilities in supplying Uniqlo with its products and materials.  <wwd.com/business-news>

Hedgeye Retail’s Take:  This type of strategic partnership is precisely what allows Uniqlo to offer such compelling price points while at the same time delivering innovation at the same time.  Recall that the company’s Heatech product (essentially a very well priced technical base layer) sold out during the winter, which is likely the reason for this renewed deal. 

 

Swiss Watch Exports Jump 35% - In June, foreign sales of Swiss watches increased 35% year-on-year to $1.28 bn, driven largely by bimetallic watches and gold timepieces, the Federation of the Swiss Watch Industry said. “All price segments registered an increase in June, with rates of growth rising in proportion to the value of watches,” the federation stated. Sales in Hong Kong, the largest market for Swiss timepieces, rose 58.6%, while China’s business grew 69%. <wwd.com/business-news>

Hedgeye Retail’s Take: Following strong results in May, watch sales continue to benefit from a favorable currency arb in the far east. 

 

Hermès International Sales Increase 27% in Q2 - Q2 was well above the expectation outlined for sales growth target of 10% to 12% for the year. In the three months ended June 30, the French luxury firm posted a solid performance in its own stores — up 27.7% — with all key divisions showing strong increases. Sales of leather goods were up 31.5%, while ready-to-wear and fashion accessories posted a 25.7% rise. Sales of silk and textiles, including the company’s iconic silk scarves, rose 24.3%. Wholesale revenues were up 19.8%, with most of the increase due to watches, which saw sales rise 35.9% as consumers regained their appetite for luxury timepieces. Perfume sales were up 16.9% , helped by the launch of Voyage d’Hermès, though the increase was down from the 38.1% jump registered in the first quarter. In regional terms, non-Japan Asia registered the strongest performance in the quarter, up 57.1%, with the Americas up 35.5% and Europe – excluding France – up 26.3%. In Japan, sales were up 10%. <wwd.com/business-news>

Hedgeye Retail’s Take: Further evidence that Asian-based demand for leather goods is almost single-handedly driving the recovery in luxury leather goods.

 

Indian Luxury Consumer Prefers to Shop Abroad - Many Indians prefer to travel more than 4,000 miles to London to get suits from their favorite brand, Ermenegildo Zegna, than to drive half an hour to New Delhi’s luxury mall. The feel-good factor and the whole experience of shopping abroad is better than in India because of  the ambience, wider selections and lower prices to be found overseas. Luxury spending in India, the world’s second-most populous nation, was less than a tenth of that in China last year, according to Bernstein Research. Wealthy shoppers’ penchant for the shopping centers of Paris, London and Milan pose a challenge for companies luxury companies entering the domestic Indian market such as LVMH and Gucci. One luxury retailer stated he didn't see luxury taking off for at least another decade.  <bloomberg.com>

Hedgeye Retail’s Take:  The bigger issue in Indian retailing still lies within the country’s willingness to allow foreign direct investment in retail.  If the laws are relaxed, it’s likely we’ll see a bigger wave of “mainstream” brands looking to enter the market and tap the worlds second largest population. 

 

Email Still Driving Shopping over Social Media Marketing - Social media marketing is undeniably important for retailers, but most consumers prefer to receive communications by email. And the more traditional online tactic seems to be driving more in-store shopping. <emarketer.com>

Hedgeye Retail’s Take:  Hard to believe consumers are still willing to deal with spam as a primary motivator to hit the mall.  With that said, social media efforts for most major retailers have barely scratched the surface.   

 

R3: Cutting Losses - 4

 

 

 


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TALES OF THE TAPE

Yesterday was a strong day for most restaurant stocks.  However, there was some telling weakness on my screen.

 

The quick service category rose an average of 1.5% yesterday, with GMCR, THI, CMG, and PNRA gaining on strong volume.   Overall, volume declined an average of 25% versus the 30-day average.  The casual dining category gained an average of 2.7%, with CAKE, CPKI, DIN, and EAT all seeing their stock rise on strong volume. 

 

Notable as the only stock to decline on strong volume was BWLD.  In my recent post, “RESTAURANT SIGMAS – WHERE TO NEXT? DEEP HOLE OR NIRVANA”, I outlined some of the issues facing BWLD.  April comps were not encouraging and new unit volumes are declining due to the company’s real estate issue having grown too fast over the last few years.

 

In addition, I decided to stop at BWLD last night to take advantage of the 50 cent wings.  After eating said wings, I think 50 cents is too expensive!  Judging by the low volume of customers in the restaurant, I think many people out there agree with me.

 

TALES OF THE TAPE - stocks 720

 

Howard Penney

Managing Director


STEVE APPLYING MACRO ANALYSIS

WYNN announced a $1.3 billion note offering not due until 2020. Taking out the 2014 notes leaves no significant fixed maturities until 2017. Not exactly a bullish bet on the US economy.

 

 

WYNN is offering to sell $1.32 billion of First Mortgage Notes due 2020.  The proceeds will be used to purchase the 2014 Notes and in the process, will leave no significant fixed maturities until 2017.  WYNN’s credit facility does mature in July of 2013 but there is only $250 million drawn which shouldn't go any higher.  So is WYNN just overly conservative or is Steve actually scared?

 

In conjunction with the offering announcement, WYNN provided Wynn Las Vegas Q2 preliminary results.  EBITDA of $65 million actually beat our $62 million with table hold at 20%, exactly in-line with our projection.  Better margins drove the upside.

 

Mr. Wynn has made it clear that he is very much in disagreement with Obamanomics.  Pushing out the maturities may indicate that Steve fears stagflation and a potential credit crisis.  Hedgeye isn’t too far from that thesis.  If Steve is right, then this financial move is the right one.  Of course, if Steve is right, it won’t be good for US stocks, particularly gaming stocks with significant US exposure and leverage – MGM comes to mind.


US STRATEGY - RECOVERY OR HOPE?

TODAY’S SET UP

 

As we look at today’s set up for the S&P 500, the range is 44 points or 2.3% (1,059) downside and 1.8% (1,103) upside.  Equity futures are trading above fair value, as technology stocks in Europe are among the leading performers, buoyed by strong results from Apple (AAPL).

 

The Recovery/Reflation trade drove the market higher yesterday as Materials (XLB), Energy (XLE) and Industrials (XLI) were the three best performing sectors yesterday.  The RECOVERY trade benefited from a  three-week high in China shares on speculation surrounding a relaxation of tightening measures aimed at the residential property market. In addition, Spain, Ireland and Greece held relatively successful bond auctions yesterday.

 

China closed up another 0.26% this morning.  Also helping to confirm the move in the RECOVERY trade yesterday, copper rose 1.6% - the most in three weeks.     

 

Following yesterday’s move in the S&P 500, the Materials (XLB) and Energy (XLE) are now positive on TRADE, bringing the total to five of nine - the other three Utilities (XLU), Consumer Staples (XLP), and Technology (XLK).  Utilities (XLU) remains the only sector positive on TREND.

 

The only sector to decline yesterday was Healthcare (XLV).  The weakness largely attributed to JNJ which declined 1.7%.  JNJ missed on the top-line for Q2 and lowered its 2010 EPS guidance by a larger-than-expected $0.15 to reflect the impact of the OTC recall and manufacturing suspension and FX headwinds.

 

Fed Chairman Ben S. Bernanke will give his semiannual report on monetary policy to the Senate

Banking Committee today and will testify at the House Financial Services Committee tomorrow. 

 

Treasuries were unchanged to a tad firmer yesterday despite the recovery in stocks. The dollar index traded up 0.1% and the VIX declined 7.9%. 

 

The Investors Intelligence poll sees bullish sentiment increases to 35.6% from 32.6% in the latest Investor's Intelligence poll. 

 

US STRATEGY - RECOVERY OR HOPE? - 1

 

THE EARNINGS SEASON

 

Yesterday of the 26 companies that reported 2Q earnings 81% beat the earnings estimates, while 35% of the companies missed revenue expectations.  Those same percentages hold for what we have seen so far in the 2Q earnings season. 

 

THE HEDGEYE MACRO TRADE RANGES FOR 7/21/10:

 

US STRATEGY - RECOVERY OR HOPE? - S P

 

US STRATEGY - RECOVERY OR HOPE? - DOLLAR

 

US STRATEGY - RECOVERY OR HOPE? - VIX

 

US STRATEGY - RECOVERY OR HOPE? - OIL

 

US STRATEGY - RECOVERY OR HOPE? - GOLD

 

US STRATEGY - RECOVERY OR HOPE? - COPPER


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