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CNY IN MACAU: A POST MORTEM

Chinese New Year becoming less of a factor?

 

 

As the following chart shows, there certainly was a traditional pattern of a pre-CNY slowdown followed by a jump in Gross Gaming Revenues during the celebration.  However, we still haven’t gotten the post-CNY slowdown.  It is unclear, how much hold played a role in the recent strength but the historical post-CNY slowdown skipped at least this year.

 

Importantly for Macau, YoY growth has been surprisingly strong, with the exception of the actual CNY weeks.  Growth during those two weeks was only 4% but 24-38% the other 4 weeks presented.  We acknowledge that the comparisons are not perfect but the data is good enough to support our conclusions.  We’d say the data leans bullish for Macau.

 

CNY IN MACAU: A POST MORTEM - chart2


European Banking Monitor: Is the ECB Making Up the Numbers?

Positions in Europe: Short EUR/USD (FXE)

 

The ECB's Security Market Program, or secondary sovereign bond purchasing program, bought a paltry €59 Million in the week ended 2/10 versus a mere €124 Million in the week ended 2/3, and €63 Million in the week ending 1/27 to take the total program to €219.5 Billion. These diminutive figures compare to €2.243 Billion purchased in the week ended 1/17 and many weeks of low to mid single digit buying in the BILLIONS in previous months.  Frankly, we’re surprised that sovereign bond auction demand has been so strong across peripheral countries in the last three weeks -- successfully issuing paper at lower yields (versus previous auctions of similar maturity) -- without the ECB playing a critical role to fill demand.

 

With record levels of money being parked at the ECB’s overnight facility, much of which is a result of the 1st 36 month extension of the LTRO, we wonder just who is filling this sovereign paper demand.  Is the ECB making up the numbers?   We welcome your feedback on the issue.

 

European Banking Monitor: Is the ECB Making Up the Numbers? - 1. SMP

 

 

Below are key European banking risk monitors, which are included as part of Josh Steiner and the Financial team's "Monday Morning Risk Monitor".   If you'd like to receive the work of the Financials team or request a trial please email .

 

Euribor-OIS spread – The Euribor-OIS spread (the difference between the euro interbank lending rate and overnight indexed swaps) measures bank counterparty risk in the Eurozone.  The OIS is analogous to the effective Fed Funds rate in the United States.  Banks lending at the OIS do not swap principal, so counterparty risk in the OIS is minimal.  By contrast, the Euribor rate is the rate offered for unsecured interbank lending.  Thus, the spread between the two isolates counterparty risk. The Euribor-OIS spread tightened by 4.7 bps to 70.9 bps over last Monday.

 

European Banking Monitor: Is the ECB Making Up the Numbers? - 1. euribor

 

ECB Liquidity Recourse to the Deposit Facility – The ECB Liquidity Recourse to the Deposit Facility measures banks’ overnight deposits with the ECB.  Taken in conjunction with excess reserves, the ECB deposit facility measures excess liquidity in the Euro banking system.  An increase in this metric shows that banks are borrowing from the ECB.  In other words, the deposit facility measures one element of the ECB response to the crisis.

 

European Banking Monitor: Is the ECB Making Up the Numbers? - 1. ECB

 

European Financials CDS Monitor – Bank swaps were wider in Europe last week for 26 of the 40 reference entities. The median widening was 10.1%.

 

European Banking Monitor: Is the ECB Making Up the Numbers? - 1. banks

 

Matthew Hedrick

Senior Analyst


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MACAU SLOWS LESS THAN EXPECTED

We are increasing our February GGR projection to HK$20.5-21.5 billion, or 6-11% growth YoY, up from our previous forecast of 1-9% growth. 

 

 

Macau generated HK$751 million in table revenue per day in the second week of February versus HK$809 million in the first 5 days.  We would’ve expected a bigger slowdown.  At this point, it is unclear if hold played a role in the better than expected week in Macau.  Remember that February 2012 is a tough month due to the timing of Chinese New Year, partially offset by an easy hold comparison and an extra day this month due to leap year.

 

MACAU SLOWS LESS THAN EXPECTED - ADTR

 

In terms of market share, percentages have moderated after a volatile first week.  SJM is still trending above but much lower than the 34.9% posted last week.  Wynn also moderated downward but is still above trend.  On the other side, MPEL and Galaxy are moving back toward normal share after a hold-induced tough first week.

 

MACAU SLOWS LESS THAN EXPECTED - ADTR2


THE HBM: SBUX, CBOU, WEN, COSI, DNKN, CAKE, RUTH, BWLD, PFCB, KONA

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Comments from CEO Keith McCullough

 

Consensus continues to clamor for Greek headlines – meanwhile the rest of the world’s globally interconnected risk continues to manifest:

  1. JAPAN – top 3 economy in the world drops to a -2.3% y/y GDP print in Q411 (brutal); now its full throttle game on for the Japanese as we head toward a massive sov debt maturity in March ($745B!). When we were getting hawked up about Italian debt in Feb of 2011, consensus didn’t have it in the area code of its map either. Stay tuned…
  2. FRANCE – alongside covering our SPY short, we covered our French Equity short position on Friday as well. Typically, short-and-hold isn’t what I do. That said, I’m watching the long-term TAIL line of resistance for the CAC of 3556 very closely as I think that’s going to be a good proxy for non-German European growth/inflation for the next few quarters.
  3. OIL – hooo-wah! Big breakout for Brent Oil to $118.28/barrel this morning w/ no immediate-term TRADE resistance to $120ish. If you’re looking for the #1 factor that will slow global consumption growth sequentially here in February (vs what was a big growth ramp in DEC/JAN), the black stuff in the barrel is it.

 

Immediate-term TRADE range for SP500 is now 1338 (where I covered Friday) to 1360. Keep moving out there.

KM

 

SUBSECTOR PERFORMANCE

 

THE HBM: SBUX, CBOU, WEN, COSI, DNKN, CAKE, RUTH, BWLD, PFCB, KONA - subsector

 

 

QUICK SERVICE

 

SBUX: A Starbucks in Athens burned last night as rioters set fire to buildings during unrest following the Greek parliament’s passing of another austerity bill.

 

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

CBOU, WEN and COSI all led the QSR space on accelerating volume

 

DNKN declined on accelerating volume Friday.

 

 

CASUAL DINING

 

CAKE: Cheesecake Factory is to change its menus at its seven Massachusetts locations to include prices by March 16th, according to the Boston Herald.  A Massachusetts based attorney, Ross Mitchell, threatened to sue the chain for deceptive business practices after receiving a check that exceeded expectations.

 

CAKE: In more bad news for Cheesecake Factory, one of its restaurants in Boise is at the center of a possible Hepatitis A scare, according to local media.

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

RUTH: Gained 2.7% on accelerating volume following earnings.

 

BWLD: Continues higher, up 1.3% on accelerating volume.

 

PFCB: Down -1.2% on accelerating volume.

 

KONA: Declined -3.7% on accelerating volume.

 

THE HBM: SBUX, CBOU, WEN, COSI, DNKN, CAKE, RUTH, BWLD, PFCB, KONA - stocks

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


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