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European Bank Swaps Fall

Position: Long Sweden (EWD); Short Italy (EWI), and Euro (FXE)

 

Below we include a portion of a product offering from our Financials’ team, the Weekly Risk Monitor for Financials, that tracks CDS across global banks. The table below covers major banks throughout Europe and the trend week-over-week was down, with a mean move of -18bps or -5.4%.  As a follow-up to a post we wrote on Sweden on 2/2 titled “Buying Swedish Fish”, Swedish banks maintain their relatively low risk premium, a further positive indicator of present strength and additional confirmation that fears associated with their past leverage to the Baltic states are rearview.

 

Spain, on the other hand, and despite a positive (downward) move in CDS week-over-week, remains on our screens due to the uncertainty in the size and timing of the government’s bid to capitalize (or convert) its lenders.

 

You’ll remember that late last month Spain’s government set a September 2011 deadline for lenders to raise their core capital ratios to 8% (or 10% for the cajas, or savings banks).  Finance Minister Elena Salgado said that Spanish banks require no more than €20 Billion of extra capital to meet these targets, however Moody’s estimated the number as high as €89 Billion. Although the country has a bank-rescue fund, known as FROB, there’s still much uncertainty about the absolute value in funding needed and the ability of the lenders, especially the cajas, to raise debt in the market.

 

Matthew Hedrick

Analyst

 

European Bank Swaps Fall - bank1

European Bank Swaps Fall - bank2


MACAU FEBRUARY UPDATE

We wouldn’t read too much into the first week’s numbers but they are not good.

 

 

The week before and the first few days of Chinese New Year (CNY) are usually slow.  We are hearing that overall market hold percentage may have been low and it certainly was at Wynn and MGM (possibly below 1% at both).  Macau was very crowded on Saturday and Sunday and that is likely to continue.  The strong CNY-related VIP play likely began in earnest on Sunday, which is not included in these numbers.

 

Our concern is that some analysts/investors may be expecting close to a HK$20bn month while we think HK$17-18bn is more likely even with strong CNY volumes this week.  MPEL continues to have the most upside relative to expectations, in our opinion.  Wynn’s market share should bounce back nicely.  We are hearing their numbers were extremely strong the last two days.

 

MACAU FEBRUARY UPDATE - table1


MACAU FEBRUARY UPDATE

We wouldn’t read too much into the first week’s numbers but they are not good.

 

 

The week before and the first few days of Chinese New Year (CNY) are usually slow.  We are hearing that overall market hold percentage may have been low and it certainly was at Wynn and MGM (possibly below 1% at both).  Macau was very crowded on Saturday and Sunday and that is likely to continue.  The strong CNY-related VIP play likely began in earnest on Sunday, which is not included in these numbers.

 

Our concern is that some analysts/investors may be expecting close to a HK$20bn month while we think HK$17-18bn is more likely even with strong CNY volumes this week.  MPEL continues to have the most upside relative to expectations, in our opinion.  Wynn’s market share should bounce back nicely.  We are hearing their numbers were extremely strong the last two days.

 

MACAU FEBRUARY UPDATE - table1


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.




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