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VIP hold was normal but lower than last year which held back growth by 5%.


December gross gaming revenues (GGR) increased 25% YoY to $2.95BN.  As we discussed in our November detail note, December faced a tough hold comparison which negatively impacted growth this month.  Total direct play this month was 6.5% of the market, compared to 7.1% last year.  The total market held at 2.97% vs. 3.13% in December of 2010.  Accounting for direct play and theoretical hold of 2.85% in both months, December revenues would have increased 30% YoY or 5% better than actual.  More important than the overall deceleration of growth in December which everyone expected, was the acceleration in high margin Mass business which increased 47%, above the 40% growth we’ve seen during the last 6 months.


Macau faces a slightly difficult hold comparison in January although we expect YoY growth to accelerate nicely from December due to the timing of Chinese New Year.  We are projecting 32-40% growth for January.


Other observations from December include:

  • LVS and MPEL generated the highest same store revenue growth in December – both up 24%
  • MPEL’s growth was generated by a whopping 54% increase in Mass revenue which should be good for margins
  • Despite its focus on VIP, LVS still grew Mass 29% but lower hold kept VIP revenue growth at 20% with VIP volume growth at 35%
  • All of LVS’s VIP revenue growth was concentrated at Four Seasons (new junket rooms) while VIP revenues fell at both Venetian and Sands
  • Wynn’s Mass growth was solid at 30% but trailed the market.  VIP revenues actually declined 5% YoY despite a 16% increase in VIP volume.
  • VIP revenue also fell YoY for MGM despite higher volumes
  • In terms of market share gainers, MPEL and LVS were the big winners while Wynn also improved from November.  Galaxy, MGM, and SJM all lost share sequentially.


Y-o-Y Table Revenue Observations

Total table revenue growth slowed to 25% YoY this month, on top of 68% growth last December.  December Mass revenue growth accelerated to 47% - the best YoY growth print since we’ve been tracking the data.  VIP revenues grew 18% while Junket RC rose 25% - with both posting the slowest growth rate since August 2009. 



Table revenues grew 24% YoY, showing a continuation of the pickup from the opening of junket rooms at Four Seasons.

  • Sands was up only 2% YoY despite high hold
    • Mass as up 11%
    • VIP was down 2%, off of a tough comp of 63%.  Assuming 15% direct play (in-line with 3Q11), hold was 3.9% vs. 3.7% last December assuming the same level of direct play (also in-line with 4Q10)
    • Junket RC was down 9%
  • Venetian was up 11% YoY, driven by a Mass increase of 35% and somewhat offset by a 5% decline in VIP
    • Junket VIP RC increased 8%
    • Assuming 23% direct play in the quarter (just below the 24% we saw in 3Q11), hold was 2.6% compared to 3.0% hold in December 2010 assuming 19% direct play (in-line with 4Q10)
  • Four Seasons grew 216% YoY, driven by a tripling (309%) of YoY VIP revenue and to a much lesser extent, 54% increase in Mass revenues. 
    • Junket VIP RC increased 3.4x YoY
    • Four Seasons is clearly seeing a benefit from LVS’s recent initiatives plus an easy YoY hold comparison.  If we assume that monthly direct play volume was in the neighborhood of recent trends - ~600MM, that implies a direct play percentage of 19% and a hold rate of 2.33%.  In comparison, if December 2010 direct play was in-line with the rest of 4Q10 at 54%, then hold was just 1.25%.


Wynn table revenues were up just 0.3%, exhibiting the slowest growth of the 6 concessionaires, despite high hold (although hold comparisons were even higher to be fair).  December’s growth was also Wynn’s slowest growth month since August 2009.  As we’ve written about in “Macau Observations” on 11/16, Wynn is in a bit of pickle given LVS’s recent initiatives, the general continued shifts of play to Cotai, and the general constraints at the property.

  • Mass was up 30% and VIP declined 5% (December was actually the 4th month in 2011 where VIP growth was negative)
  • Junket RC increased 16%
  • Assuming 10% of total VIP play was direct (in-line with 3Q11), we estimate that hold was 3.3% compared to 4.0% last year (assuming 11% direct play – in-line with 4Q10)


Table revenues grew 24% - driven primarily by 54% growth in Mass and 19% growth in VIP

  • Altira revenues increased 10%, due to a 9% increase in VIP and a 20% lift in Mass growth.  VIP revenues benefited from high hold and easy comparisons.
    • VIP RC decreased 18%
    • We estimate that hold was 3.3% vs. 2.6% last year (direct play is not material at Altira)
  • CoD table revenue was up 32%, driven by 61% growth in Mass and 24% growth in VIP
    • Junket VIP RC grew 36%
    • Assuming a 15.5% direct play level, hold was 3.1% in December compared to 3.2% last year


Revs grew 10%

  • Mass was up 31% and VIP was up just 1%
  • Junket RC was up 4%


Table revenues continued its 7-month streak of triple-digit gains, +137%; Mass soared 299%, while VIP gained 117%

  • StarWorld table revenues grew 5%
    • Mass grew 66% and VIP grew just 0.6%, negatively impacted by a difficult hold comparison
    • Junket RC grew 10%
    • Hold was 2.8% compared to normal hold of 3.1% hold last December
  • Galaxy Macau's total table revenues were $281MM, 17% lower than October’s seasonal high and $1MM below November
    • Mass table of $61MM, up 8% sequentially and $2MM above October's high
    • VIP table revenue of $220MM, a 2% MoM decrease, despite high hold of 3.3% - although hold was even higher in November at 3.5%.  
    • RC volume of $6.7BN compared to $8.3BN in October, $6.5BN in November and $7.0BN in September


Table revenues only increased 0.5% YoY, impacted by a difficult hold comparison

  • Mass revenue growth was 39%, while VIP fell 6%
  • Junket RC increased 19%
  • Assuming a direct play level of 8%, we estimate that hold was 2.9% this month vs. 3.7% in December 2010, assuming direct play of 8% 


Sequential Market Share



LVS gained 90bps in December to 16.6%. This compares to 6 month trailing market share of 14.7% and 2011 average share of 15.7%.

  • Sands' share increased 90bps to 4.9%
    • VIP rev share increased 1.3% while Mass share fell 70 bps
    • RC share decreased 50bps
  • Venetian’s share remained flat at 8.1% share for the 3rd month in a row
    • VIP share declined 120 bps to 5.6%, compared to the 2011 average of 6.6%
    • Mass share improved 2.6% sequentially to 15.1%, recovering most of the 3% share loss last month
    • Junket RC ticked up 20bps to 4.9%
  • FS share improved 10bps to 3.1%
    • VIP share increased 10bps to 3.5% the best share since January 2011
    • Mass share increased 40bps to 2.1%
    • Junket RC improved 90bps to 3.9% - an all-time high for the property (in-line with Dec 2009)


Wynn’s share ticked up 40bps to 13.8% above its 6 month trailing average share of 13.6% but well below its 2011 average share of 14.1%.  Wynn’s share should continue to struggle with the opening of Sands Cotai Central in March.

  • Mass market share recovered 90bps to 10.2%
  • VIP market share increased 40bps to 14.9%
  • Junket RC share increased 90bps to 13% - below Wynn’s 6 month trailing average of 13.8% and 2011 average of 14.2%


MPEL was the largest share gainer in December (following a month of being the biggest loser).  Market share improved 1.5% points to 14.4%.  This compares to their 6 month trailing share of 14.6% and 2011 share of 14.8%.

  • Altira share ticked up 10bps to 4.3%, but was still below the property’s 2011 share of 5.3%.  Mass share fell 40bps while VIP share improved 40bps. 
  • CoD’s share improved 1.5% to 9.9% driven by share gains in VIP that were partly offset by share loss in Mass
    • Mass market share decreased 70bps to 9.6%
    • VIP share recovered its share losses in November, improving 2.2% to 10.0%
    • Junket RC improved 40bps to 8.7%


SJM lost 0.8% share in December to 26.4%, which is below their 6-month trailing average of 27.7% and below their 2011 average of 29.2%.

  • Mass market share decreased 1.6% to 35.9%
  • VIP share decreased 90bps to 24.1% - the lowest share for SJM since August 2009
  • Junket RC share was flat at 28.4%


Galaxy lost the most share in December, dropping 1.1% to 19.1%. December share compares with an average share of 15.7% in 2011 and a 6 month trailing average of 19.1%.

  • Galaxy Macau share declined 20bps to 10.0%
    • Mass share declined 30bps to 8.0%
    • VIP market share ticked down 10bps to 10.7%
    • RC share ticked down 10bps to 10.3%
  • Starworld lost 1.1% share to 7.7%, 1.4% below its TTM share of 9.1% pre-Galaxy Macau level.


MGM lost 90bps to 9.7% due to share losses in VIP share.  December share compares with an average share of 10.5% in 2011 and a 6 month trailing average of 10.3%.

  • Mass share was flat at 7.1%
  • VIP share fell 1.3% to 10.3%
  • Junket RC fell 1.0% share to 10.4% – in-line with MGM’s 6 month trailing average


Slot Revenue

Slot revenue growth accelerated to 37% YoY, hitting an all-time record of $135MM and improving $20MM sequentially.

  • As expected, GALAXY slot revenues grew the most with 393% YoY to $15MM
  • MGM slot revenues had the second best growth at 54% YoY to $22MM – a record for the property
  • LVS slot revenues grew 30% YoY to $33MM –flat with the last 2 months
  • SJM slot revenues grew 22% YoY to record $19MM
  • MPEL slot revenues grew 20% YoY to $24MM
  • WYNN slot revenues grew the slowest at 10% YoY to $23MM












Comments from CEO Keith McCullough


Raging European bears are begging for bad news and they just aren’t getting it 4 days into the year, yet…

  1. ASIA – after 2 solid up days to start 2012, the 3rd was not a charm – China down -1.4%, HK -0.8%, and India -0.5% reminds us that Equity market bottoms are processes, not points. December data implies growth slowing at a slower rate in Asia (but it’s still slowing).
  2. GERMANY – shaping up on the long side after really impressive employment data this wk (6.8% unemployment rate for DEC amidst the mayhem) and a better than bad Services PMI this morn (52.4 DEC vs 52,7 NOV). German 10yr bond auction was solid too.
  3. 10YR – really bullish for German Bunds to see 4.06B of 10yr paper printed 4bps below 10yr UST’s (1.93% on Bunds vs 1.97% on USTs). I’m watching 10yr UST’s like a hawk for a confirmation that Growth’s Bottom (2011 Slowdown) is in. I’d need to see a sustained breakout > 2.03% to sell my TLT and keep ramping up Global and US Equity exposure (moved to 12% Global Equities yest).


Don’t be perma-anything but permanently managing real-time risk.











DNKN: Dunkin’ Brands today announced that it signed a “long-term agreement” with National DCP LLS to be the exclusive procurement and distributor of its products to help with its rapid expansion.  National DCP is a Dunkin’ Donuts franchisee-owned cooperative.


DNKN: Dunkin’ Brands raised to Neutral versus Sell at Goldman.


CMG: Chipotle Mexican Grill was added to the Conviction Buy List at Goldman. The PT is $400.


YUM, WEN: Yum! Brands and Wendy’s are not well-positioned in 2012, according to Goldman. Both stocks are rated Sell.


MCD: McDonald’s has launched a geotargeted promotion that uses mobile ads to reach potential customers in an effort to boost McCafe beverage sales and in-store traffic.


SBUX: Starbucks has named Ian Cranna as its new UK marketing chief following the promotion of Brian Waring, who previously held the post, to an international role.


GMCR: Green Mountain was reiterated “Buy” at Canaccord Genuity with a PR of $94.





BWLD: Buffalo Wild Wings was down yesterday as a note from Oppenheimer suggested elevated earnings risk in 2012.


PFCB: P.F. Chang’s was upgraded to “Buy” at Miller Tabek & Co.  The twelve-month price target is $38.


CAKE: The Cheesecake Factory is a Sell in 2012, according to Goldman.





Howard Penney

Managing Director


Rory Green




The Macau Metro Monitor, January 4, 2012




According to sources, December Macau market share was as follows: SJM (27%), GALAXY (20%), LVS (16%), MPEL (14%), WYNN (<14%), and MGM (9%).



Many gamblers bring more cash to the casino tables by using their Unionpay debit card to withdraw money - for a fee.


"There is no risk. We pretend to sell the customer an expensive watch or a piece of jewelery, charge the amount in renminbi to the debit card, and then give him the equivalent amount in Macau patacas or Hong Kong dollars as if the customer had decided to return the object for an immediate cash refund," says the manager of a pawnshop up the street from the Grand Lisboa casino.


The manager says the cardholder's records will register the transaction as a purchase.  Unionpay, which was formed by China's big banks, says it bans such transactions, but the company declined to comment on the fact that the practice remained widespread.  Unionpay said it no longer released data on how much cardholders spent in Macau.

People familiar with the industry say the Macau government cannot afford to shut down the illegal services, which hundreds of pawn shops advertise publicly on neon signs.


One former junket operator and a Hong Kong owner of a mainland factory in Guangdong province described how operators also use Hong Kong business people who own companies on the mainland to transfer money illegally.  He said operators handed over renminbi debts collected on the mainland to the factory owner, who used the money to pay his staff wages. Then, the owner sent the equivalent in Hong Kong dollars from his Hong Kong bank account to the operator's account in Macau.  Both sides profited by agreeing a mutually beneficial exchange rate.



According to China Real Estate Index System, average housing prices in 100 major cities in China fell in December compared with November, marking the fourth consecutive sequential decline.  A survey of property developers and real-estate agencies showed the average home price in December was CNY8,809 a square meter, down from CNY8,832 in November.  Compared with a year earlier, the average price of a new property in December was up 2.86% from CNY8,564 in December 2010, a slower increase than November's 4.06% YoY rise.


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.46%
  • SHORT SIGNALS 78.35%

Year's End

This note was originally published at 8am on December 30, 2011. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.

“Year’s end is neither an end or a beginning, but a going on, with all the wisdom experience can instill in us.”

-Hal Borland


No matter where we go this morning, here we are – at the end of a what’s been a very long year.


While the Institutionalization of US Equities can play short-term games with our hearts and minds into month, quarter, and year-end markups, the #1 game in town from a Global Macro Theme perspective in 2011 was Growth Slowing.


For Global Macro Risk Managers, what did that mean? 

  1. Major Asian, European, and US Financials Equities crashed from year-ago levels
  2. Commodities crashed from their 2011 YTD peaks
  3. US Treasury Bonds remained in a raging bull market 

Since, magically, the SP500 has rallied once again (on no volume) to yet another lower long-term and YTD high (-19.3% and -7.3% from OCT 2007 and APR 2011 highs, respectively), I am certain that the marketing departments of Buy-And-Hold Inc will quibble with my globally interconnected interpretation of it all…


Quibble away.


Here are some of the early Major League Macro year-end final scores: 

  1. India (BSE Sensex) = -24.8% YTD
  2. China (Shanghai Composite) = -21.6% YTD
  3. Japan (Nikkei) = -17.3% YTD 

Now an Institutionalized chap running other people’s money in “Asian Equities” might try to argue that being long Japan instead of India equated to him “beating” an Asia-Pacific Index. But “cheap” stocks look a heck of a lot cheaper in Japan -17.3% lower – and his investors may quibble with the representation of his “outperformance.”


How about other countries and commodities? 

  1. Hang Seng Index (Hong Kong) = -19.97% YTD
  2. CRB Commodities Index = -8.4% for 2011 YTD
  3. Copper = -23.4% YTD 

So, I guess, another Institutionalized manager could say being long Hong Kong outperformed long China and being long Gold outperformed being long Copper…  




But these guys better not be on the record at the beginning of 2011 telling you that they nailed those relative outperformers because they thought Global Growth was going to be just fine. That’s like me telling you my Power-Ball ticket was closer to the winning number than yours. There’s only so many times you can change the thesis on why you were long!


Understanding that Piling-Debt-Upon-Debt Structurally Impairs Growth was critical to getting out of the way of most of these nasty 2011 draw-downs. That’s why the ladies and gentlemen who preferred to buy US Treasury Bonds on January 1st and hold them through today are smiling right now.


Check this out: 

  1. 10-year US Treasury Yield started 2011 at 3.29%
  2. 30-year US Treasury Yield started 2011 at 4.33%
  3. Today, 10 and 30 year Yields are trading at 1.89% and 2.89%, respectively! 

The math on that generates -43% and -33% drops in 10 and 30 year UST Bond Yields for 2011 YTD. The inverse picture of that math is best shown in the powerful 2011 chart of the TLT (which uses 20-year yields, splitting the difference between my two bellwethers).


Growth Slowing?


Yep. That was the #1 macro call of 2011. And you could have expressed that in many different ways (long FLAT, which we bought in FEB of 2011 is up +28.01% since).


As I flip the switches on my risk management machines to 2012, I’m getting peer pressure to make another outside of consensus call. Sorry, I can’t do that, yet. Timing matters. Rarely do we get a signal on December 31st.


I’m not going to broker you a gratuitous “2012 Outlook” or sell you some ad space either. In the New Year, I’m going to do exactly what I did this morning – and the morning before that… 

  1. I’m going to stick with my process
  2. I’m going to buy on red
  3. I’m going to sell on green 

And I’ll try my best to not be overly bullish or bearish on anything that worked and/or didn’t work for us in 2011, because “all the wisdom experience can instill in us” reminds me that past performance is no predictor of future results.


My immediate-term support and resistance levels for Gold (covered our short yesterday), Oil (we’re short Brent Oil), China (we bought the CAF yesterday), Consumer Discretionary (we’re long XLY), Long-term Treasuries (TLT), and the SP500 are now $1537-1568, $106.89-109.11, 2154-2226 (Shanghai Comp), $38.24-39.98 (XLY), $119.16-123.87 (TLT), and 1245-1270, respectively.


It’s been a pleasure and a privilege to both play on this team and earn your business in 2011. On behalf of all of us at Hedgeye at Year’s End, we’d like to wish you the very best of health and capital preservation in 2012.




Keith R. McCullough
Chief Executive Officer


Year's End - Chart of the Day


Year's End - Virtual Portfolio


TODAY’S S&P 500 SET-UP – January 4, 2012


Raging European bears are begging for bad news and they just aren’t getting it 4 days into the year, yet… KM


As we look at today’s set up for the S&P 500, the range is 18 points or -0.79% downside to 1267 and 0.62% upside to 1285. 






THE HEDGEYE DAILY OUTLOOK - daily sector view


THE HEDGEYE DAILY OUTLOOK - global performance




  • ADVANCE/DECLINE LINE:  +1659 (+1813) 
  • VOLUME: NYSE 855.12 (+45.42%)
  • VIX:  22.97 -1.84% YTD PERFORMANCE: -1.84%
  • SPX PUT/CALL RATIO: 1.88 from 1.49 (+26%)




10YR – really bullish for German Bunds to see 4.06B of 10yr paper printed 4bps below 10yr UST’s (1.93% on Bunds vs 1.97% on USTs). Keith is watching 10yr UST’s like a hawk for a confirmation that Growth’s Bottom (2011 Slowdown) is in. He'd need to see a sustained breakout > 2.03% to sell TLT and keep ramping up Global and US Equity exposure (moved to 12% Global Equities yest).

  • TED SPREAD: 57.23
  • 3-MONTH T-BILL YIELD: 0.02%
  • 10-Year: 1.97 from 1.89   
  • YIELD CURVE: 1.64 from 1.70


GLOBAL MACRO DATA POINTS (Bloomberg Estimates):

  • 7am, MBA Mortgage Applications, Dec. 30
  • 7:45am/8:55am: ICSC/Redbook weekly retail sales
  • 10am: Factory Orders, Nov., est. 2.0% (prior -0.4%)
  • 11:30am: U.S. to sell $30b 4-week bills
  • 4:30pm: API inventories
  • Eurozone Dec preliminary CPI +2.8% y/y vs consensus +2.8% and prior +3.0%
  • Eurozone Dec Final services PMI 48.8 vs consensus 48.3 and prior 48.3


  • President Obama to discuss economy at high school in Shaker Heights, Ohio, 1:15pm
  • Yahoo may name CEO this morning; PayPal president Scott Thompson a leading candidate: AllThingsD
  • Mitt Romney beat Rick Santorum by 8 votes in Iowa caucuses, each capturing less than 25%; Ron Paul third, Rick Perry considering whether to continue campaign
  • Bullish sentiment decreases to 49.5% from 50.5% in the latest US Investor's Intelligence poll




  • Citigroup Sues Hedge Fund Manager in Singapore Over Gold Losses
  • China’s Wen Jiabao Sees ‘Relatively Difficult’ First Quarter
  • Raw-Materials Rebound Seen as Economy Skirts Slump: Commodities
  • Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply
  • Exxon in Talks to Restructure Stake in Japan Refining Unit
  • Gold May Advance for a Fourth Day on Outlook for Asian Demand
  • Dalian to ‘Seriously Consider’ Vale-Ship Protests, Owners Say
  • Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply
  • Vedanta Plans India Caustic Soda Unit, Cost-Cuts as Prices Dip
  • Copper Drops as Europe Crisis Boosts Demand Concern; Tin Slumps
  • Chesapeake Comes Up Short of Investment-Grade: Corporate Finance
  • Hong Kong Keeps Ban on Some Poultry Imports Due to Avian Flu Tie
  • Copper Falls as Societe Generale Says Prices May Drop Almost 10%
  • Gold Demand in India Is ‘Moderate,’ Rajesh Exports Says
  • Dow Climbs to Highest Since July, Oil Surges on Manufacturing
  • Saudi Arabia May Cut Oil Premiums for February From Record Highs
  • Silver Will Lead Gains in 2012 Among Raw Materials: Table

THE HEDGEYE DAILY OUTLOOK - daily commodity view





THE HEDGEYE DAILY OUTLOOK - daily currency view





GERMANY – shaping up on the long side after really impressive employment data this wk (6.8% unemployment rate for DEC amidst the mayhem) and a better than bad Services PMI this morn (52.4 DEC vs 52,7 NOV). German 10yr bond auction was solid too - KM


THE HEDGEYE DAILY OUTLOOK - euro performance





ASIA – after 2 solid up days to start 2012, the 3rd was not a charm – China down -1.4%, HK -0.8%, and India -0.5% reminds us that Equity market bottoms are processes, not points. December data implies growth slowing at a slower rate in Asia (but it’s still slowing).


THE HEDGEYE DAILY OUTLOOK - asia performance




  • U.S. Spurns Iran’s Demand to Keep Aircraft Carrier Out of Gulf
  • U.A.E. Deposit Fall May Squeeze Banks as Debt Looms: Arab Credit
  • Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply
  • Afghan Taliban Takes Step Toward Peace Talks to End War With U.S
  • Huawei’s Work in Iran May Violate U.S. Sanctions, Lawmakers Say
  • U.S. Defense Strategy Plan Focuses on Thwarting China, Iran
  • Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply
  • Aldar’s May 2014 Bond Yield Drops to Record on Asset Sale
  • Arabtec Wins 561 Million Dirhams Contract at Dubai Airport
  • Saudi Arabia May Cut Oil Premiums for February From Record Highs
  • Iran’s Nuclear Fuel Rod Isn’t Military Threat, U.S. Analysts Say
  • Dana Gas Bond Yield Jumps Most in Two Weeks Ahead of Meeting
  • OPEC Crude Production Rises to Three-Year High, Survey Shows
  • Kuwait Oil Tanker Will Award Contracts to Daewoo, Al-Anba Says
  • Gold Rallies Most in 10 Weeks on Iran, Dollar; Wien Sees $1,800
  • Biggest Hedge Fund in Ships Sees Frozen Gas Beating Oil: Freight
  • Jarir Fourth-Quarter Profit Jumps 21% on Phone, Laptop Sales




The Hedgeye Macro Team

Howard Penney

Managing Director

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.