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Breakdown: SP500 Levels, Refreshed...

POSITION: Short SPY

 

Life is good. Risk management is hard.

 

Given the heightening probability of a US Currency Crisis (see slides and replay from our Q2 Global Macro Themes call we hosted on Friday), it shouldn’t be a conceptual surprise to see the SP500 slicing through both our immediate and intermediate-term levels of risk management support: 

  1. TRADE = 1319
  2. TREND = 1302 

As I wrote on Friday, citing Baupost’s Seth Klarman, “There’s an invisible tipping point – when we get there, it’s far too late.”

 

We didn’t need a ratings agency to remind us of that.

 

The long-term TAIL of support for the SP500 is still intact, but it’s a lot lower – down at 1186.

KM

 

Keith R. McCullough
Chief Executive Officer

 

Breakdown: SP500 Levels, Refreshed... - 1


MACAU ACCELERATING, AGAIN

Trending +HK$20BN for April

 

 

Macau continues to defy expectations with this past week actually accelerating from already strong weekly revenues.  Through April 17th, total table gaming revenues were HK$11.7 billion and average daily revenue exceeded HK$688 million month to date.  Total April gaming revenues including slots are now on pace for HK$20.0-21.0 billion, up 52-59%, and that assumes a pre-holiday slowdown the rest of the month.

 

In terms of market share, MPEL and WYNN are the standouts while Galaxy and SJM are “struggling”.  Of course, with market numbers like these, market share probably isn’t such a concern.  Here is the data:

 

MACAU ACCELERATING, AGAIN - macau


TALES OF THE TAPE: PZZA, MSSR, DRI, WEN, BJRI

Notable news items from the past few days, Friday’s price action, and our fundamental view on select names.

  • PZZA President and Co-CEO Jude Thompson resigned from the pizza chain Friday, leaving the company in the hands of founder and co-CEO John Schnatter.
  • PZZA was cut to Hold from Buy at Stifel Nicolaus.
  • PZZA shares gained prior to the news announcement (AMC) by 1.9% on accelerating volume.
  • MSSR many delay its AGM if Tilman Fertitta has his way.  Fertitta is calling for shareholders of the company to sign a gold proxy card giving LSRI, a subsidiary of Fertitta’s Landry’s Restaurants Inc., power over their share for the meeting.  This would prevent a quorum being reached, effectively impeding the company from addressing its business at the meeting until first discussing LSRI’s unsolicited tender offer.
  • DRI made the cut for JPM’s “Best Equity Near-Term Ideas” report led by Thomas Lee.  JPM's price target is $56.
  • WEN gained on accelerating volume on Friday.
  • BJRI shares gained 2.82% on accelerating volume.

TALES OF THE TAPE: PZZA, MSSR, DRI, WEN, BJRI - stocks 418

 

Howard Penney

Managing Director


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THE HEDGEYE DAILY OUTLOOK

THE HEDGEYE DAILY OUTLOOK


Sovereign debt concerns in Europe are mounting, once again, as Greek two- and ten-year government bonds slumped, driving yields to the highest level since before the inception of the Euro.  Oil has declined as Saudi Arabia’s oil minister says that markets are “oversupplied”. 

 

THE HEDGEYE DAILY OUTLOOK - daily sector view

 

THE HEDGEYE DAILY OUTLOOK - BEST PERFORMING GLOBAL

 

THE HEDGEYE DAILY OUTLOOK - WORST PERFORMING GLOBAL

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1105 (+878)  
  • VOLUME: NYSE 1040.22 (+16%)
  • VIX:  15.32 -5.84% YTD PERFORMANCE: -13.69%
  • SPX PUT/CALL RATIO: 2.11 from 1.50 (40.67%)

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 21.32 -0.075 (-0.351%)
  • 3-MONTH T-BILL YIELD: 0.07%
  • 10-YEAR: 3.43 from 3.51
  • YIELD CURVE: 2.72 from 2.74

 

MACRO DATA POINTS:

  • 08:30 a.m.: Housing Starts: est. 520k, prior 479k
  • 08:30 a.m.: Building Permits: est. 540k, prior 517k
  • 08:30 a.m.: Housing Starts MoM % Chg: est. 8.6%, prior -22.5%
  • 08:30 a.m.: Building Permits MoM% Chg: est. 1.1%, prior -8.2%
  • 10:00 a.m.: Fed’s Fisher, Lockhart to discuss globalization in Atlanta
  • 11:00 a.m.: Export Inspections (corn, wheat, soybeans)
  • 11:30 a.m.: U.S. to sell $30b in 3-mo., $28b in 6-mo. bills.
  • 12:30 p.m.: Fed’s Bullard to speak on banking rules in Kentucky
  • 04:00 p.m.: Crop progress report

WHAT TO WATCH:

  • U.S. 2yr yield falls to 3-week low before housing data at 10 a.m, median est. 17 by 39 analysts:
  • Pulitzer Prize winners announced, 3 p.m.
  • ECB’s Bonello urges caution against rate hikes at the expense of economic growth
  • Deutsche Telekom, France Telecom agree on JV to save EU1.3b
  • Ferrari IPO should be worth $7.3b, Marchionne says

COMMODITY/GROWTH EXPECTATIONS:

 

THE HEDGEYE DAILY OUTLOOK - daily commodity view

 

COMMODITY HEADLINES FROM BLOOMBERG:

  • Snickers-to-Noodles Surge Drives Cooking Oil Supplies to Three-Decade Low
  • China Said to Limit Industrial Corn Use to Meet Demand For Livestock Feed
  • Oil Declines in New York After Saudi Arabia Says Market Is `Oversupplied'
  • Hedge Funds Raise Bearish Gas Bets After ‘Dead Cat Bounce’: Energy Market
  • Corn Falls for Second Day as China Raises Reserve Ratios to Cool Inflation
  • Coffee Climbs as Rains May Delay Colombian Harvest; Cocoa Prices Advance
  • Gold Falls as Some Investors Sell Following Advance to Record-High Price
  • Copper for Three-Month Delivery Declines 0.5% to $9,360 a Ton in London
  • Minmetals Will Raise Up to $864 Million in Share Sale to Fund Zinc Project
  • China Has ‘Pent-Up Demand’ for Sugar, May Buy 1.8 Million Tons, ANZ Says
  • Palm Oil Gains After Drop to Lowest Price in Four Months Lures Some Buyers
  • Corn, Soybeans May Rise as Wet, Cool Weather Stalls Planting, Survey Shows
  • Singamas May Raise Container Prices 11% on Higher Steel Cost, Japan Quake
  • Gold-Shortage Threat Drives Texas Schools Hoarding 664,000 Ounces at HSBC

 

CURRENCIES:

 

THE HEDGEYE DAILY OUTLOOK - daily currency view

 

EUROPEAN MARKETS

  • Bonello Urges ECB Caution in Raising Rates as Most-Indebted Nations Trail
  • European Stocks, U.S. Futures Slide as Banks, Insurance Companies Retreat
  • Greek, Portuguese Government Yields Surge to Records on Default Concerns
  • Ferrari Should Be Valued at $7.3 Billion in IPO, Marchionne Tells Bankers
  • Czech Central Bank Governor Says Mixed ‘Signals’ Are Clouding Rate Outlook
  • Allied Irish Swaps Decline on Concern Payout at Risk in Any Restructuring
  • France Telecom to Make Joint Purchases With Deutsche Telekom to Save Money
  • London Homes' Asking Prices Rise to Record Amid Shortage, Rightmove Says
  • Sberbank Joins Credit Suisse to Set Up $1 Billion Investment Russia Fund
  • Czech Central Banker Says Preventing Crises by Regulation Is ‘Nonsense’
  • BOE Should Maintain Key Rate at Record Low as Recovery Struggles, E&Y Says
  • Ruble Eurobond Yield Lowest to Domestic Spurs Second Sale: Russia Credit

 

THE HEDGEYE DAILY OUTLOOK - BEST PERFORMING EURO

 

THE HEDGEYE DAILY OUTLOOK - WORST PERFORMING EURO

 

ASIA PACIFIC MARKETS:

  • China Raises Reserve Ratio to Curb Inflation as Zhou Pledges More to Come
  • Most Asian Stocks Retreat on China Policy Tightening Concern; AIA Surges
  • BOJ Said to Forecast Inflation Accelerating to 0.5% for Year to March 2012
  • G-20 Targets ‘Too Big to Ignore’ Economies as Growth Will Outweigh Shocks
  • Hysan Says Causeway Bay Rents to Narrow Price Gap With Hong Kong’s Central
  • ‘Ugly’ Inflation Drives Biggest Bond Selloff Since January: India Credit
  • China's Huawei Closes In on Ericsson After Revenue Triples Over Five Years
  • Kissinger’s ‘Basket Case’ Bangladesh Targets Record Growth in Three Years
  • Pimco ‘Open to Adding’ Investments Across Asia as Gross Shuns Treasuries
  • Temasek's Mapletree Commercial Raises $718 Million in Singapore Share Sale
  • Hong Kong's Home Prices to Drop When Fed Policy Shifts: Chart of the Day
  • Hong Kong Canary Singing Commodities Boom Peaking in Aussie Mine: Real M&A

THE HEDGEYE DAILY OUTLOOK - BEST PERFORMING ASIA

 

THE HEDGEYE DAILY OUTLOOK - WORST PERFORMING ASIA


MIDDLE EAST:

 

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

 

Howard Penney

Managing Director


HOT 1Q PREVIEW

We’re expecting Q2 guidance below the Street and mediocre full year guidance.  Given MAR’s negative pre-announcement, how will that be perceived by investors?

 


We estimate that Starwood will report an in-line number on April 28 and give guidance for a below consensus 2Q11 and mediocre full year.  We’re at $207MM of Adjusted EBITDA and $0.27 of Adjusted EPS.  More importantly, we remain concerned with the extremely difficult comparisons (absolute dollar RevPAR) in the May through July period of 2010.  Thus, we think RevPAR growth could materially disappoint relative to the Street’s 6-9% expectations.

 

1Q2011 Detail:

  • Non-same store WW RevPAR of 8.5% (the reported SS number is usually higher)
  • We estimate owned, leased and consolidated JV revenue and gross margin of $410MM and $61MM
    • Owned RevPAR of $135, up 8% YoY and RevPOR (revenue per occupied room) of $323.43, up 4% YoY
    • Room revenues of $257MM, up 6% YoY
    • F&B revenue of $153MM, up 10% YoY
    • CostPAR of $275.31 up 3% YoY, producing a 120bps expansion in EBITDA margins
  • We estimate management, franchise & other income of $177MM with management and franchisee fees up 17% to $142MM
    • Base fees of $69MM and incentive fees of $32MM
    • Franchisee fees of $41MM
    • $29MM of amortization of deferred gains, termination fees and other income
    • $6MM of “other revenues”
  • VOI sales and services revenue of $132MM and operating profit of $31MM
  • Other details:
    • SG&A: $79MM
    • Income statement D&A of $68MM and a $78MM addback for the Adjusted EBITDA calculation
    • Interest expense: $56MM
    • 25% tax rate

THE M3: GAMING STATS; SIC BO; USS GRAND OPENING; CHINA RRR; PROPERTY PRICES

The Macau Metro Monitor, April 18, 2011

 

 

GAMING STATISTICS DSEC

In 1Q 2011, gaming tables increased 62 to 4,853 and slots decreased 263 to 13,787, relative to Q4.

 

PROBLEMS BIG AND SMALL FOR SIC BO Inside Asian Gaming

Recently, Sands China was told by the DICJ that its Shuffle Master Rapid Sic Bo products at The Venetian and Sands Macau will be regulated—at least as far as the odds were concerned—as live sic bo, because they use a live dealer alongside the electronic betting and bet settlement technology.  But Sands China complained that this would put their products at a disadvantage since payouts on live sic bo bets were lower than those offered on electronic sic bo.  DICJ resolved the issue by bringing down the payout ratio for all electronic games.

 

IAG says the DICJ is watching over the flourishing of semi-automated gaming technology, particularly if it is being used by operators to get around the 5,500 table cap.

 

UNIVERSAL STUDIO'S GRAND OPENING IN MAY Strait Times

Despite being open for almost a year, Universal Studios Singapore (USS) will have its grand opening on May 28.  The Madagascar and Transformers-themed rides are scheduled to open for later this year.


CHINA ORDERS BANKS TO RAISE RESERVES, EFFECTIVE 18-APR New York Times, Reuters

China's official reserve requirement ratio for most banks will be 20.5% (previously, 20%) after the latest increase takes effect.  However, the central bank may force banks who are lending too aggressively to hold even higher levels of reserves.

 

BEIJING, SHANGHAI PROPERTY-PRICE GAINS SLOW AS CHINA TACKLES BUBBLE RISKS Bloomberg

New home prices in Beijing rose 4.9% YoY (flat MoM) in March, down from a 6.8% YoY gain in February.  In Shanghai, prices climbed 1.7% in March (+0.2% MoM), slower than the 2.3% growth in February.  Of the 70 cities monitored by the government, 67 cities posted YoY gains, down from 68 in the first two months.

 

Existing home prices in Beijing fell 0.1% MoM, while those in Shanghai jumped 0.4% MoM.


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20 Proprietary Risk Ranges

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