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ASCA YOUTUBE

In preparation for ASCA's Q4 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.


 

AMERISTAR CASINOS INCREASES CASH DIVIDEND BY 19% (01/30/2012)

  •  “ASCA announced that its Board of Directors has declared a quarterly cash dividend of $0.125 per share, payable March 15, 2012 to stockholders of record as of Feb. 29, 2012. This represents an annual rate of $0.50 per share, a 19% increase over the annual dividend for 2011.” 

ASCA ANNOUNCES CLOSING OF PURCHASE OF CASINO RESORT DEVELOPMENT SITE IN SPRINGFIELD, MASS (01/25/2012)

  • “Ameristar purchased the site at Page Blvd. and Interstate Highway 291 for $16 million from an affiliate of the O'Connell Development Group Inc. Westinghouse.”
  • “Ameristar's development plans are preliminary but are expected to include a state-of-the-art casino continuously updated with the newest and most popular slot machines (a hallmark of the Ameristar brand) and a variety of table games, a luxury hotel, a diverse offering of dining venues, retail outlets, entertainment and meeting space and structured parking.”

YOUTUBE FROM Q3 2011 CONFERENCE CALL

  • As I mentioned, we're obviously controlling our costs well across our properties, particularly in promotional spending.  And we're confident we can achieve a high flow through rate going forward.”
  • “We're allowed to have up to seven times on a total net leverage basis.  And the senior leverage ratio is now below three times at 2.92 for Q3. The allowable rate at this present time would be 4.5 times.”
  • “Q4 2011 estimates for non-cash stock-based compensation expense is expected to between $10 million and $11 million in the fourth quarter. For the year, we anticipate we'll hit $22 million to $23 million. Our blended federal and state tax rate is projected to be between 41% and 43% for the fourth quarter and for the year. Capital spending for the remainder of 2011 is expected to be in the range of $19 million to $24 million, which we anticipate will be predominantly maintenance CapEx. Interest expense in Q4 is expected to be near $27.4 million. Non-cash interest is expected to between $1.1 million and $1.6 million for Q4.”
  • “Based on our operational cash flow needs that occur every year in the fourth quarter, we'll probably only be making the one mandatory principal repayment at the end of the quarter, which will bring our full year debt repayment to somewhere around $184 million to $187 million, which obviously has been substantial. Use of our free cash flow was concentrated on retiring debt this year to get our debt multiple down, to put the company in a position to pursue other strategic opportunities. And the board has approved the fourth quarter dividend that will be paid in December.”
  • “Basically we've seen a significant decline in professional fees through the year and as we've wrapped up a few things. And there were some costs related to the share repurchase and to the refinancing and to some changes in personnel that occurred in the first six months of the year that are obviously not going to be reoccurring going forward.”
  • “We haven't made anything public as how we believe this will impact us or not impact us, other than to suggest people take a look at what South County's Pinnacle property impact had on our St. Charles property. They're literally the same distance from each other, 24, 25 miles. And that should give you a pretty good indication of what could happen in Kansas City once the racetrack casino opens.”

THE HBM: WEN, SBUX, YUM

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Commodities

 

The world is running out of time to make sure there is enough food, water and energy to meet the needs of a rapidly growing population and to avoid sending up to 3 billion people into poverty, a U.N. report warned on Monday. As the world's population looks set to grow to nearly 9 billion by 2040 from 7 billion now, and the number of middle-class consumers increases by 3 billion over the next 20 years, the demand for resources will rise exponentially. Even by 2030, the world will need at least 50 percent more food, 45 percent more energy and 30 percent more water, according to U.N. estimates, at a time when a changing environment is creating new limits to supply. – Cattle Network

 

 

Comments from CEO Keith McCullough

 

Everything has a time and a price – good spot to buy on yesterday’s lows; don’t chase into today’s month-end:

  1. GERMANY - Contrast of The Day: Italy's unemployment rate hits an 8yr high of 8.9% as Germany's hits 20yr low of 6.7% - the Germans are absolutely killing it right now – gaining big political power, seeing a +10.2% YTD stock market move, and unemployment fall #winning
  2. COMMODITIES – anyone long inflation has to be right fired up again this morning (I am – bought Energy yesterday); the Bernank Tax is obviously very bad for the country/economy, but great for commodity longs – Gold and Copper have gone vertical since the FOMC statement, up +11.4% and +12.5% for JAN respectively!
  3. MONTH-END – you know it, I know it – it is what it is. Today is the day where anyone can suspend disbelief that the best JAN for stocks since 1997 is going to straight line as what happens for the rest of the year. From an immediate-term TRADE overbought perspective, this looks a lot like FEB 2011 – lower long-term highs right as Growth Expectations start slowing.

Treasuries agree w/ me on that last part. 10 and 30yr collapsing again to 1.85% and 3.01% respectively – both remain in a Bearish Formation as US policies to inflate have funds flowing to US Treasuries instead of US Stocks.

 

SUBSECTOR PERFORMANCE

 

THE HBM: WEN, SBUX, YUM - subsector

 

QUICK SERVICE

 

WEN: Wendy’s held its annual Analyst Day in New York City yesterday.  As we wrote in our note, published last night, at least $3.7 billion of spending is needed to carry out the remodeling program, according to the company’s figures.

 

WEN: Wendy’s was reiterated “Sell” by Goldman after the Analyst Day.  The firm feels that “resources were lacking and that there is still a risk to guidance.”

 

SBUX: Starbucks plans to raise prices of some espresso-based beverages and fresh-brewed coffee products by 1 Yuan to 2 Yuan in China.

 

SBUX: Starbucks has officially backed gay marriage, according to media reports.  Starbucks EVP Kalen Holmes expressed the company’s support for legislation in Washington State recognizing marriage equality for same-sex couples, saying that the legislation is “core to who we are and what we value as a company.”

 

YUM: Pizza Hut expects to surpass 2 million pizzas sold on Super Bowl Sunday.

 

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

PNRA: Steps up expansion in CDA – reporting EPS on 2/7 AMC

 

YUM: 2nd day of strong volume – reporting EPS on 2/6 AMC

 

GMCR: 2nd day of strong volume – reporting EPS 2/1 AMC

 

SBUX: Tata surged 10% on JV with SBUX

 

WEN: See my note from yesterday – my outlook for WEN has diminished

 


CASUAL DINING


KONA: Kona Grill named Berke Bakay president and CEO.  Bakay is the investment manager to BBS Capital Fund, Kona Grill’s largest shareholder (15.2% stake).

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:


CHUX: Trading well heading into EPS – reporting 2/7 BMO

 

BBRG: Another good day: up 12% over the past month

 

THE HBM: WEN, SBUX, YUM - stocks

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


THE M3: JAN GGR, SITE 7 & 8; SANDS DIVIDEND; OKADA; CNY; MBS DEBT; UNEMPLOYMENT

The Macau Metro Monitor, January 31, 2012

 

 

GAMING REVENUE EXPECTED TO GROW OVER 25% IN JANUARY Macau Business

Macau GGR is expected to surpass MOP23 billion (US$2.9 billion) in the month of January alone, up by 25% YoY. According to Lusa News Agency, casino companies expect the number to be between MOP23 billion and MOP24 billion, mainly due to the Chinese New Year holidays.

 

SANDS CHINA HEARING ON PARCELS 7 AND 8 UNDERWAY Macau Business

The appeal hearing by Sands China on a government decision not to approve the company’s application for a land concession for Sites 7 & 8 is underway.  The first court session took place just before Chinese New Year.  The appeal was submitted in January 2011.

 

SANDS CHINA DECLARES INTERIM DIVIDEND Sands China

Sands China has announced an interim dividend of HK$0.58 per share.  The interim dividend will be paid on February 28, to those who own shares in the company as of February 20.  Sands has "sufficient reserves, after the payment of this interim dividend, to finance its operations and the expansion of its business, including the development of additional integrated resorts in Macau.”  This is the first dividend for Sands.

 

WYNN ASKS COURT TO DISMISS OKADA'S REQUEST Macau Business 

WYNN is seeking to have Kazuo Okada’s lawsuit dismissed.  In a court filing, the company says Okada’s allegation that he was denied access to the company’s financial books is “innuendo, hyperbole, half-truths and sweeping generalizations.” WYNN says Okada’s request to access the company’s books are nothing more than stockholder inspection requests. WYNN adds that, under Nevada law, shareholders have no rights to inspect the books “of publicly-owned companies that are timely with SEC filings (as Wynn is).”  Wynn Resorts says that to try to get around this problem, Okada had presented his request as a director rather than a shareholder, a “maneuver” the company expects to be “flatly rejected by the court”.

 

NEW TOURIST RECORD IN LUNAR NEW YEAR Macau Daily Times, Macau Business

894,400 tourists arrived in the territory during the Chinese New Year holidays (January 21 to 28), up 2.1% YoY and a new record high.  However, in 2011, this period started on a Thursday and as such was a day shorter, going from February 2 to 8.  During the eight days about 1.36 million crossed Macau’s borders, with most of them (about 912,000) using the Border Gate, followed at a big distance by the Outer Harbour Ferry Terminal (almost 252,000).  The two last days of the holiday period, January 27 and 28, were also the peak at the MSAR borders.  

 

MBS GOES TO COURT TO GET BACK $1 MILLION FROM 2 DEBTORS Strait Times

Marina Bay Sands, which is seeking to recover about $1 million in debts from two gamblers, wants to grill one on the witness stand and slap a court notice on the other in his Malaysian home.  In the first of the two separate cases, it wants Octavius Tok to disclose all his assets in court.  The High Court last year ordered Tok to pay a $619,589 bill he racked up at MBS, but he has still not done so.  Tok, a Singaporean, chalked up the bill during a 23-day stay at the hotel last year. It includes charges for 125 bottles of liquor worth a total of $522,481, 5,285 packs of cigarettes, and 62 phone top-up cards.

 

EMPLOYMENT SURVEY FOR OCTOBER - DECEMBER 2011 DSEC

The unemployment rate for October-December 2011 was 2.1%, down by 0.2% point over the previous period (September-November 2011) - a new record low.  Total labour force was 347,000 in October-December 2011 and the labor force participation rate stood at 72.9%, up by 0.4% points from the previous period.


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Changing Direction

This note was originally published at 8am on January 26, 2012. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.

“There is nothing wrong with change, if it is in the right direction.”

-Winston Churchill

 

When they were both green yesterday, I sold my entire US Dollar (UUP) and US Equity positions (XLY and XLU) in both the Hedgeye Portfolio and the Hedgeye Asset Allocation Model. That takes me to 91% Cash.

 

What changed?

  1. Growth Expectations
  2. Inflation Expectations
  3. Fiscal and Monetary Policy

Very rarely do all 3 core fundamental research factors (Growth, Inflation, and Policy) change in a 24 hour period. Very rarely has the United States of America had both its President and Federal Reserve Chief delivering US Dollar Debauchery messages on back to back days.

 

Rather than listen to some Keynesian Quack tell you how yesterday’s Fed message isn’t inflationary or have another Washington “forecaster” tell you that inflation doesn’t slow growth, listen to what the market is telling you this morning:

  1. Growth Expectations are falling (10-year US Treasury Yield snaps my 2.03% TREND support; Yield Spread compresses 6bps day/day)
  2. Inflation Expectations are rising (Gold, Copper, TIPs, etc. all went vertical post The Bernank’s 1230PM 1/25/12 USD Debauchery)
  3. The Growth Slowing TRADE (US Treasury Flattener, FLAT) is ripping – that’s what pancaking free market pricing of bond yields does

Now Masters of The Obvious will be quick to point out, as they tend to during any short-term hyper-inflationary move for stocks and commodities (German stocks looked awesome during the hyper-inflation of the 1920s) that this is good. No doubt it’s good for those who are long of the inflation policy – but really bad for the other 99% who get the inflation bill at the pump or in their food.

 

I’m not going to re-hash everything about my Globally Interconnected Economic Risk Management Model that got us to make the Growth Slowing call at this time of 2011. The model hasn’t changed. Big Government Interventions in markets have. *Reminder: they A) Shorten Economic Cycles and B) Amplify Market Volatilities.

 

Oh, and by the way – it’s not just a non-bank bailout Independent Research firm in New Haven, CT that gets it at this point:

  1. Jaime Dimon is explicitly calling out Bernanke for lowering long-term yields and compressing the Yield Curve
  2. Mitt Romney told Larry Kudlow last night that he’ll fire Bernanke and bring in his “own guy”
  3. The American Institute of Economic Research (www.aier.org) has already quantified what 0% means to the 99%

Just to recap the headline calculations out of the AIER that were released after Qe2 failed (July of 2011) in a paper titled “The Steep Cost of Cheap Money”:

  1. Zero Percent rate of return on American Savings accounts is huge income tax (it’s called interest income, confiscated)
  2. GDP lost (due to the interest income you could have spent) = upwards of $587B in US Consumption
  3. US Jobs lost (due to lost Consumption) = 2.4-4.6 million and “shaved between 1.75-3.32% to gross-domestic-product growth”

Oh, and by the way Part II – unlike the Fed who is completely politicized and dogmatized at this point, the American Institute of Economic Research is independent (neither politically or academically partisan).

 

Whenever the names of politicians are included in economic analysis, partisan people get emotional paralysis. Bush’s fiscal and monetary policies were as bad as Obama’s inasmuch as Jimmy Carter’s were as bad Nixon’s.

 

Nixon had no problems lying to the American People, but he actually told the truth on this score when he admitted “we are all Keynesians now.” Neither Bush nor Obama have been brave enough (or advised by someone analytically competent enough) about globally interconnected markets to say the same about the 1 thing they had in common – Bernanke.

 

To recap how the Global Macro market actually work:

  1. GROWTH: US and Emerging Market Growth is highly dependent on 71% of the US GDP number (Consumption Growth)
  2. INFLATION: Policies to Inflate (devalue the world’s Reserve Currency) slow real (inflation adjusted) growth
  3. SLOPES: since Qe2, the sequential rate of change in Growth has been highly affected by the rate of change in inflation (prices)

Bernanke and his boys will tell you inflation is “low” when it’s up and down. How else could a man tell you with a straight face that during all-time highs in the price of Oil, Food, and Gold that there is no inflation?

 

Since 2006, this guy hasn’t tightened monetary policy once. Whether his Qe2 Policy To Inflate slowed US GDP Growth to 0.36% in Q1 of 2011 or if it’s +733% higher at 3% GDP Growth today, he will not change as the data does. This is an embarrassment to the American flag. In order for Bernanke to have every last lemming who remains willfully blind enough to the math to believe him, he needs to fear-monger.

 

Fear-Mongering just when Strong Dollar = Stronger Employment = Stronger Confidence… just when things were getting better by simply having him out of the way – he’s back.

 

He’s telling American savers to go lever themselves up with stocks after a +96.2% run off the March 2009 lows. He’s telling Obama to give a “Mega Refi” to every one of your neighbors who levered themselves up and crushed the value of your home. He’s telling you to take 0% rate or return on your hard earned savings until 2014 and like it.

 

I’m telling you I’m Changing Direction. This country’s said political and academic leadership should too.

 

My immediate-term support and resistance ranges for Gold, Oil (Brent), EUR/USD, and the SP500 are now $1676 (big TREND breakout level)-1721, $110.11-111.98, $1.29-1.31, and 1308-1331.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Changing Direction - Chart of the Day

 

Changing Direction - Virtual Portfolio


THE HEDGEYE DAILY OUTLOOK


TODAY’S S&P 500 SET-UP – January 31, 2012

 

As we look at today’s set up for the S&P 500, the range is 18 points or -0.53% downside to 1306 and 0.84% upside to 1324. 

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -797 (-1654) 
  • VOLUME: NYSE 743.68 (-12.53%)
  • VIX:  19.40 4.70% YTD PERFORMANCE: -17.09%
  • SPX PUT/CALL RATIO: 1.97 from 1.94 (1.55%)

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 50.10
  • 3-MONTH T-BILL YIELD: 0.05%
  • 10-Year: 1.87 from 1.84
  • YIELD CURVE: 1.65 from 1.63

MACRO DATA POINTS (Bloomberg Estimates):

 

MONTH-END – you know it, we know it – it is what it is. Today is the day where anyone can suspend disbelief that the best JAN for stocks since 1997 is going to straight line as what happens for the rest of the year. From an immediate-term TRADE overbought perspective, this looks a lot like FEB 2011 – lower long-term highs right as Growth Expectations start slowing.

  • 7:45/8:55am: Weekly retail sales
  • 8:30am: Employment Cost Index, 4Q, est. 0.4% (prior 0.3%)
  • 9:45am: Chicago Purchasing, Jan., est. 63.0 (prior 62.2)
  • 10am: Revisions: ISM’s 2012 Seasonal Adjustments
  • 10am: Consumer Confidence, Jan., est. 68.0 (prior 64.5)
  • 10am: NAPM-Milwaukee, Jan., est. 57.5 (prior 57.8)
  • 11:30am: U.S. to sell $33b 4-week bills

GOVERNMENT:

    • Republican presidential primary in Florida
    • BGOV survey showing how much it may cost U.S. companies to strengthen their computer network defenses against cyber attacks, 8am
    • U.S. presidential candidates release financial reports showing donors, funding levels, how much candidates are contributing to their campaign
    • Congressional Budget Office to release report on “The Budget and Economic Outlook,” 11am
    • Senate in session:
      • Senate Energy Committee holds hearing on the global energy outlook for 2012, 10am
      • Senate Finance Committee holds hearing on tax extenders, 10am
      • Senate Banking Committee hears from Consumer Financial Protection Bureau Director Richard Cordray, 10am
    • FAA conference committee meets, 4pm

WHAT TO WATCH: 

  • European governments moved toward a confrontation over a second rescue package for Greece even as leaders signed off on key planks of strategy to end financial crisis
  • Mitt Romney leading in polls in Florida; Newt Gingrich says he will continue race after today’s primary
  • BlackRock forecast the Fed will refrain from third round of debt purchases as economy grows
  • S&P/Case-Shiller index of property values in 20 cities may have gained 3.3% Y/y, economists est.
  • CFTC is weighing new rules and oversight of companies that use automated and high-frequency trading systems
  • Apple named Dixons CEO John Browett to lead retail business
  • Facebook IPO watch

EARNINGS:

    • CIT Group (CIT) 6am, $0.01
    • Danaher (DHR) 6am, $0.78
    • Mattel (MAT) 6am, $1.00
    • Tyco International (TYC) 6am, $0.79
    • Helmerich & Payne (HP) 6:30am, $1.16
    • L-3 (LLL) 6:30am, $2.41
    • Eli Lilly (LLY) 6:30am, $0.81
    • Archer-Daniels-Midland Co (ADM) 7am, $0.76
    • Celanese (CE) 7am, $0.56
    • Entergy (ETR) 7am, $0.89
    • Lexmark International (LXK) 7am, $1.16
    • Metro (MRU/A CN) 7am, $0.96
    • Pfizer (PFE) 7am, $0.47
    • Pentair (PNR) 7am, $0.54
    • Tellabs (TLAB) 7am, $(0.01)
    • Oshkosh (OSK) 7am, $0.34
    • United States Steel (X) 7:05am, $(0.86)
    • McGraw-Hill Cos /The (MHP) 7:10am, $0.57
    • Biogen Idec (BIIB) 7:15am, $1.49
    • Inergy (NRGY) 7:45am, $0.23
    • United Parcel Service (UPS) 7:45am, $1.26
    • Valero Energy (VLO) 7:45am, $(0.19)
    • Illinois Tool Works (ITW) 8am, $0.88
    • Paccar (PCAR) 8am, $0.79
    • Exxon Mobil (XOM) 8:03am, $1.98
    • Avery Dennison (AVY) 8:30am, $0.46
    • Potlatch (PCH) 8:30am, $0.13
    • Imperial Oil Ltd (IMO CN) 9am, $0.92
    • JDA Software Group (JDAS) 4pm, $0.63
    • Plantronics (PLT) 4pm, $0.68
    • WR Berkley (WRB) 4pm, $0.47
    • Illumina (ILMN) 4:01pm, $0.34
    • Seagate Technology (STX) 4:01pm, $1.09
    • Amazon.com (AMZN) 4:05pm, $0.17
    • Broadcom (BRCM) 4:05pm, $0.65
    • Ace Ltd. (ACE) 4:05pm, $1.77
    • Aflac (AFL) 4:06pm, $1.51
    • Arthur J Gallagher & Co (AJG) 4:11pm, $0.33
    • CH Robinson Worldwide (CHRW) 4:15pm, $0.68
    • Boston Properties (BXP) 5:15pm, $1.19
    • Suncor Energy (SU CN) 10pm, C$0.89

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

COMMODITIES – anyone long inflation has to be right fired up again this morning (We are – bought Energy yesterday); the Bernank Tax is obviously very bad for the country/economy, but great for commodity longs – Gold and Copper have gone vertical since the FOMC statement, up +11.4% and +12.5% for JAN respectively!

  • Silver Powering 20 Million Homes as Glut Subsides: Commodities
  • Gold Climbs to Seven-Week High in Best Start to Year Since 1980
  • Wheat Rises as Cold Weather in Europe May Harm Winter Crops
  • Oil Heads for Monthly Gain on Europe Optimism, Iran Tension
  • Copper Rises, Heads for Best Start to a Year Since at Least 1987
  • Cocoa Rebounds as Dry Weather May Hurt Crops, Sugar Advances
  • Iron Ore Set for Worst Month Since October on Slowdown Concerns
  • Outokumpu Agrees to Buy ThyssenKrupp’s Stainless Steel Unit
  • Myanmar Rice Shipments May Double This Year, Group Predicts
  • Korea Gas to Buy U.S. LNG as Gas Slump Attracts Asian Importers
  • Cocoa May Climb to 1,668 Pounds on Fibonacci: Technical Analysis
  • Oil Supplies Rise in Survey as Fuel Output Falls: Energy Markets
  • ADM Second-Quarter Profit Misses Estimates After Corn Costs Rise
  • COMMODITIES DAYBOOK: Oil Gains as Japan Industrial Output Rises
  • Coal-Carrier Rates Seen at Decade-Low as Glut Expands: Freight

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES


THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS


GERMANY - Contrast of The Day: Italy's unemployment rate hits an 8 year high of 8.9% as Germany's hits 20 year low of 6.7% - the Germans are absolutely killing it right now – gaining big political power, seeing a +10.2% YTD stock market move, and unemployment fall #winning.


THE HEDGEYE DAILY OUTLOOK - 6

 


ASIAN MARKETS


THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

 

The Hedgeye Macro Team

 

 

 

 

 



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