VIP hold was high but December was still a very strong month.  Here are the property details.



As we’ve discussed, total gross gaming revenues rose 67% and slightly eclipsed October’s record setting month.  We estimate approximately 13-15% of the YoY growth was related to higher VIP hold.  Nevertheless, it was a very strong month.  Importantly, high margin Mass gaming revenue climbed 34% off of a difficult 33% comparison.  Mass growth continues to approximate the visitation plus China GDP equation.  VIP Chips (junket volume) increased 59% while VIP revenue (junket and direct VIP) climbed 82%.  Slot revenue increased 29%.


Direct play appears to have remained at 7.9% of VIP volume, similar to last year. Adjusted for direct play, market VIP hold appears to be about 3.1%, higher than last year's 2.7%.


In terms of market share, it was a great month for Wynn and MGM with both earning well above trend.  LVS suffered its second consecutive weak share month and it wasn’t hold related.  While LVS got back to trend in Mass share, VIP volume only grew 2% on a YoY basis, well below the market at 59%.  We think LVS will continue to lose share in 2011.


We are still going through the models but it looks like WYNN is tracking well ahead of consensus based on its Macau performance.  Preliminarily, we think total WYNN EBITDA could exceed the Street by 20-25% in Q4.  For LVS, there doesn’t appear to be upside to Q4 and we remain a little below the Street for company EBITDA.  Macau remains a small piece of MGM’s overall business but EBITDA there is tracking ahead of consensus which we think is sustainable and should help the IPO close this quarter.  Finally, MPEL looks like it should have no problem handily besting the consensus $106MM estimate.



YoY Table Revenue Observations


LVS table revenues rose 31% YoY as VIP revenues grew 32%, reversing the decline in November, and Mass revs increased 28%.  VIP RC only rose 2% because of underperformance at Four Seasons.

  • After two months of declines, Sands led the way for LVS, increasing 43.8% in table revenues.  Much higher hold relative to last December benefited Sands.  
    • VIP revenues increased 63%, with RC volume up 10%
    • Mass revenues increased 14%
    • Assuming 14% direct VIP play (same as 2Q & 3Q2010), we estimate that hold for December 2010 was 3.7% which compares to 2.5% hold last December, assuming 9% direct play (in-line with 4Q09).
  • Venetian was up 28%
    • VIP revenues rose 25%, with RC volume up 27%
    • Mass revenues increased 32%
    • Assuming 23% direct VIP play volume, we estimate that hold for December was 3.0% compared to 3.1% last December if we assume that direct play was 17% (in-line with 4Q09 levels).
  • Four Seasons eked out a 2% gain
    • Mass revenues soared 74%, highest growth of the year
    • VIP revenues dropped 18% as VIP RC volume tumbled 56%
    • Assuming 41% direct VIP play in December, implied hold is 1.9% compared to 1.3% in December 2009 assuming direct play was 28% (consistent with 4Q09)

Wynn Macau/Encore table revenues were up 72%, driven by an 80% increase in VIP revenues and a 39% increase in Mass revenues

  • Junket RC volume increased 40%. Assuming 12% direct VIP play, December hold was 3.9% compared to 3.0% hold experienced in December 2009 (assuming 12% direct play)

MPEL table revenues soared 120% with the growth driven by a 127% increase in VIP and Mass growth of 90%

  • Altira was up 80%, due to a 77% increase in VIP revenues and a 119% increase in Mass revenues
    • VIP RC rose a healthy 48%
    • We estimate that hold in December was 2.5% vs. 2.0% in December 2009
  • CoD table revenue increased 148% YoY, driven by 85% growth in Mass and 174% growth in VIP revenues
    • Junket VIP RC increased 85%
    • Again, hold benefited CoD.  Assuming 15% direct VIP play, hold was 3.4% compared to last December's hold of 2.3% assuming 18% direct play

SJM table revenues grew 62%

  • Mass was up 24% and VIP was up 85%
  • Junket RC volumes soared 89%
  • SJM's hold was roughly normal at 2.8%, similar to last year's.  

Galaxy table revenue grew 30%, despite tough hold comparisons, driven by a 31% increase in VIP win and a 25% increase in Mass. RC Volume increased 56.1%.

  • Starworld's table revenue increased 47%, driven by 50% growth in VIP revenues and 16% growth in Mass
  • Starworld RC volumes increased 70%.  Despite hold being close to normal, the comparisons from December 2009 were difficult.  December hold for the Group and Starworld was 2.8% and 3.1%, respectively, compared to last December's hold of 3.3% and 3.5% last year. 

MGM led the market with an astounding 209% table rev growth but December's hold almost doubled that of last year.

  • Mass revenue growth was 61%, while VIP revenues ballooned 267%
  • VIP RC grew 99%
  • Hold was high, at an estimated 3.4%, and was much higher than last December at 1.8%


Table Market Share


LVS table share rebounded 1.5% sequentially to 16.3%, still way below its trailing 12-mth average of 19.3%

  • LVS's share of VIP revenues rose to 13.3% from a historical low of 11.9%
  • VIP RC share dropped again to a new low of 10.9%, from 11.6%
  • Mass share gained 2% to 26.5%, in-line with its trailing 12-mth average
  • Sands market share increased by 110bps due to a 150bps gain in VIP share
  • Venetian gained 40bps to 9.1% sequentially, driven by a 150bps gain in Mass share
  • FS share remained unchanged at 1.2%

WYNN's table share was roughly unchanged sequentially at 16.9%, but way above recent trends

  • Mass market increased 60bps to 11.5%, its highest share this year
  • VIP revenue share decreased 30bps to 18.5% sequentially
  • VIP RC share dropped 2.5% to 14.1%

MPEL's table share decreased 50bps sequentially to 14.2%, driven by a 60bps increase in Mass and an 80bps decrease in VIP share. RC volume share increased 1.4% to 15.7%.

  • CoD's share increased 80bps
  • Altira's share decreased 1.2%, driven by a 1.5% decrease in VIP share

SJM's table share decreased by 1.5% to 30.6%, driven by a 120bps loss in Mass share and 150bps decrease in VIP share.  RC volume share increased 1% to 34%.

Galaxy kept its table share of 10.3%.

  • Starworld's market share increased 60bps sequentially to 9.1%
  • Group Junket RC share increased 40bps to 14.4%

MGM's table share continued its climb to 11.6%, the property's highest share since July 2009

  • MGM's share gain can be attributed to a 110bps increase in VIP revs
  • Mass share lost 1.7% from November to 7.4%
  • RC share increased 30bps to 10.6%


December Slot Revenue Observations


Slot revenue grew 29% YoY in December reaching a total of $99MM and accounting for 4% of total revenues

  • LVS slot revs actually decreased 3.2%
  • MPEL, Galaxy, and MGM had +70% slot rev growth
  • SJM slot revs rose 50%
  • WYNN slot revs increased 12%






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Taming inflation in China, Brazil, and India

Agonizing Pain

This note was originally published at 8am on January 05, 2011. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.

“He who will not economize will have to agonize.”



Sitting at my desk in New Haven this morning, what I do know is my own pain. What I don’t know, is what someone else’s feels like. We’ll see how the levered-long US stock market bulls feel on the first tweak today. This isn’t a snap, yet – this is a tweak.


The agony of defeat isn’t new to global macro markets as of this morning. It’s been new to US Treasury and Emerging Debt Markets since November. It was new to the Gold market yesterday during a $40/oz swoon (we’re short GLD). What goes around in terms of mean reversion risk, eventually comes around. You can learn this lesson in a variety of ways in life. In markets, the best way to learn this lesson is the hard way.


If you didn’t raise your Cash position in the last week, it wasn’t because we didn’t tell you to. We started the year with a 61% US Cash position in the Hedgeye Asset Allocation Model and the US Dollar Index has been up every day for the year-to-date (including this morning).


Yesterday, on commodity market weakness we invested 6% of our cold hard cash into oil and corn. Now we have 55% of our hard earned capital in cash. Being in Cash means you can invest it lower.


To be sure, there is absolutely no doubt that you can ride Hi-ho, Silver and call yourself Captain Cowboy on the ride to everything making higher-highs, until they don’t. So you better have a risk management plan when the music stops.


In addition to Gold selling off hard yesterday, US small cap and housing stocks got creamed, trading down -1.8% and -1.5% respectively (XBH and IWM). This morning, European stock markets and US Futures are getting hit hard after Portugal raised 6-month paper at a yield of 3.68% (vs 2.04% last!) and Asia closed down across the board.


This interconnected game of risk has always been “on” – it’s just when everyone stops paying attention to the moving parts that it starts to be a lot more fun. On balance, our intermediate-term TREND view on the global economy remains intact:


1.       Global Growth Slowing

2.       Global Inflation Accelerating

3.       Globally Interconnected Risk Compounding


Now, before a US centric stock market bull gets his/her shirt in a knot about this, allow me to kick off this morning’s Global Macro Grind with a remedial reminder that all of the aforementioned points start with the word Global. That’s right, say it just like Paul Newman had the owner of the Charlestown Chiefs say “H-owned”… G-lo-bal… G-lo-bal…


In terms of the global macro data points that are in my notebook for 2011 to-date, here’s the grind:

  1. South Korean inflation (CPI) jumps to +3.5% in DEC vs +3.3% in NOV and the Korean government declared “war on inflation”
  2. South Korean exports slow, sequentially, from their NOV highs of +25% to +23.1% in DEC
  3. Polish Inflation (CPI) jumps to +3.1% in DEC vs +2.7% in NOV and 2-year bond yields in Poland are pushing to +4.9% this morning (highest in a year)
  4. Chinese manufacturing (PMI) drops for the 1st time in 5 months (53.9 DEC vs 55.2 NOV) as growth continues to slow
  5. German manufacturing (PMI) accelerates again sequentially to a new high of 60.7 DEC vs 58.1 NOV
  6. German unemployment stays unchanged m/m at 7.5% for DEC vs NOV
  7. Brazil’s newly elected President, Dilma Rousseff, kicks off the New Year calling inflation trends pushing to +6% y/y “the plague”
  8. Pakistan’s PM loses his majority and a key Governor is murdered overnight as Pakistan now has to face the Taliban and +15.48% inflation
  9. UK manufacturing (PMI) remained flat, sequentially, in DEC vs NOV at 58.3
  10. Indonesia’s inflation (CPI) accelerates, sequentially, to +6.96% DEC vs +6.33% NOV
  11. European Union inflation (CPI) accelerates to a 2-yr high of +2.2% in DEC vs +1.9% in NOV
  12. Australian manufacturing index slows for the 4th consecutive month (pre JAN floods) at 46.3 DEC vs 47.6 NOV
  13. Thailand inflation (CPI) ramps, sequentially, to +3.0% DEC vs +2.8% NOV

I’ll go Lone Ranger (sans le hi-ho, Gold) and stop at point #13 just to push my own book and summarize that if Captain American Stock Picker (he’s back!) wants to tell me that “growth is back!”… and that the rest of the world’s growth and inflation risks cease to exist… that he/she may want to, at a bare minimum, economize that bullishness and wait for lower prices.


Back to the USA, where consensus is running rampant that the US consumer is Just Lovin’ It (except the collapse of MCD’s stock), this morning’s ABC Consumer Confidence reading (it’s weekly) dropped for the 2nd consecutive week (i.e. dropping both weeks post Christmas shopping) back down to minus -45. That’s only a few points away from its all-time low and even a Thunder Bay Bear on some things US Equities would call that agonizingly cold!


My immediate term support and resistance lines for the SP500 are now 1261 and 1270, respectively. A close below 1261 puts 1237 in play.


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Agonizing Pain - 1

Bullish On America: US Dollar Index Levels, Refreshed



One of the most enjoyable aspects of evolving my investment process from Global Consumer in 2003 to Global Macro today has been having the opportunity to un-learn, re-think, and re-learn.


Being right on a currency move is a lot different than being right on what Bill Ackman is going to allegedly file on next. Maybe that’s why my batting averages are higher trading currencies?


Whatever the interconnected reasons for our successes trading the US Dollar over the last few years, we don’t want to break something that doesn’t need fixing, yet. There is absolutely no doubt in my mind that day will come – and maybe soon – but until it does, we’ll call the last 17 long and short calls we’ve made on the US Dollar Index what they are  - alpha.


From a risk management process perspective, for us to stay long any security for an extended period of time, that security needs to be bullish on both our immediate-term TRADE and intermediate-term TREND durations. The US Dollar Index currently remains bullish on both. 

  1. TRADE signal = November 4th where we bought it
  2. TREND line support = $78.70 

The question now is whether or not the US Dollar Index can breakout to higher-highs on a long term TAIL duration?


Luckily, we don’t have to answer that question today. In the immediate-term, the best we can do is measure the last price, volume, and volatility in our model in order to come up with our most immediate-term TRADE lines of upside resistance (in the chart below we show that line at $80.98).


All the while, of course, we are coagulating all of the fundamental data we can legally get our hands on, including the fundamental TRENDs in other FX that have an impact on the USD Index basket (Euro, Yen, etc…). In addition to being long the US Dollar, we are short the Euro (FXE).


The US Dollar is now up in 8 of the last 10 weeks and is confounding as many of the USD perma-bears today as the concept of “Euro-parity” confused those who shorted the Euro at the bottom of June, 2010. We like counter-cycle moves – and we love trading currencies.


A bullish currency TREND is bullish for America. Let’s hope that the official convening of the 112th Congress doesn’t screw this up.


Hope, after all, is not an investment process.



Keith R. McCullough
Chief Executive Officer


Bullish On America: US Dollar Index Levels, Refreshed - 1

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