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MACAU OFF TO SLOWER START IN MARCH

March GGR estimate up 23-33% YoY

 

 

It’s only 4 days so not much read through yet but we’ll tell you what we have.  Average daily table revenues were HK$748MM which is down from February’s surprisingly strong HK$779MM.  We would have expected better since two out of the four days were weekend days.  On a full month basis, the calendar is favorable with one extra weekend days.  Some people are saying two extra weekend days but the Macau government counts one day in arrears.  Overall for the full March including slots, we are estimating GGR at HK$24-26 billion, up 23-33% YoY.  Last year in March, VIP hold was percentage was the lowest of the year.   

 

MACAU OFF TO SLOWER START IN MARCH - macau1

 

Market share is irrelevant at this stage of the month so we have little commentary other than to say Galaxy looks like it is taking one on the chin in terms of hold.  Galaxy has been struggling with share recently and we expect that trend to continue, particularly with the opening of Sands Cotai Central next month.  Wynn and MPEL are off to strong starts.

 

MACAU OFF TO SLOWER START IN MARCH - MACAU2


European Banking Monitor: Interbank Risk Throws Off Mixed Signals

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 .

 

Key Takeaways:


*Interbank risk throws off mixed signals. Last week the Euribor-OIS spread tightened by 4 bps to 61 bps while the TED spread rose 1.6 bps over the same period to 41 bps. What's interesting here is the emerging divergence between the two series. Euribor-OIS continues to improve at a consistent rate, as it has done since the start of the year. The TED spread, however, has flattened out since mid-February and is essentially just moving sideways now. Last week's round two of LTRO was the short-term catalyst the markets had their sights set on. While interbank risk was among the most significant factors at the start of the year, the amount of renormalization that has occurred in Euribor-OIS (we estimate ~60% complete) leaves far less room for improvement today than there was back just two months ago.

 


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 bps to 61 bps.

 

 European Banking Monitor: Interbank Risk Throws Off Mixed Signals - 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.  Friday made a new high of €820.8 Billion.

 

European Banking Monitor: Interbank Risk Throws Off Mixed Signals - 1. ECB overnight

 

European Financials CDS Monitor – Bank swaps were tighter in Europe last week for 38 of the 40 reference entities. The average tightening was 8.2% and the median tightening was 8.8%.

 

European Banking Monitor: Interbank Risk Throws Off Mixed Signals - 1. banken

 

Security Market Program – The ECB's secondary sovereign bond purchasing program did not buy any paper in the week ended 3/2, which equates to three straight weeks of no purchasing and a mere €183 Million in the first two weeks of February, versus €2.2 BILLION in the week ended 1/20 and €3.8 BILLION in the week 1/12, and a total program of €219.5 Billion. Interesting, and despite ECB purchases, last week saw solid bond demand and lower yields across auctions from Italy, Spain, and France. Who is taking down this paper?  Is the ECB just on hold? Is the ECB winding down the SMP?  Is the ECB making up the numbers? How much further can yields fall despite only marginal changes to the sovereign debt and deficit levels across much of the region, weakness in the banking system, and a tight credit environment?   We continue to scratch our heads….

 

European Banking Monitor: Interbank Risk Throws Off Mixed Signals - 1. SMP

 

Matthew Hedrick

Senior Analyst


THE HBM: SBUX, DNKN, CMG, PZZA

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Comments from CEO Keith McCullough

 

Got Growth Slowing? The #1 Most Read finally has nothing to do w/ Greece or Apple – it’s all China this morning:

  1. CHINA – Growth Slowing has been plainly obvious in just about every high frequency economic data point in Jan-Feb – plenty shrugged that off as being all about the Lunar calendar, but this morning’s Services PMI print out of China is a 48 and that’s more inline w/ what Wen’s guiding to in a 7.5% GDP Growth rate (vs the 9-12% China has been tracking since 2009)
  2. YEN – President of Japan’s Credit Rating Agency Inc said the BOJ is “damned if they do, damned if they don’t” (buy bonds) w/ this massive debt maturity spike in 2012. Them be fighting words in Japan as the Yen continues to be in a Bearish Formation (bearish TRADE, TREND, and TAIL) w/ an immediate-term oversold level of $81.96 USD/JPY.
  3. USD – after a +1.3% week, finally attempting to stabilize above critical $79.03 support – Romney solidifying the Republican base has had a high correlation to a more stable dollar than the Newt/Santorum thing. Super Tuesday could be another bullish USD catalyst inasmuch as winning Michigan was.

Dollar up would Deflate The Inflation and get me more bullish on Equities broadly (again). But there’s a time/price bridge to pass over called beta in between these Growth Slowing Expectations falling and stocks addicted to down dollar doing the same.

 

KM

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: SBUX, DNKN, CMG, PZZA - subsector

 

 

QUICK SERVICE

 

SBUX: Starbucks topped the Restaurant Social Media Index for 4Q11 once again.  The complete rankings are below.

 

THE HBM: SBUX, DNKN, CMG, PZZA - restaurant social media index

 

 

DNKN: Dunkin’ Brands is planning to open another 100 stores in China over the next two to three years and will use LeBron James to promote its image in Asia, having announced a multi-year marketing agreement with the NBA star today.

 

CMG: During the month of March, Chipotle is offering a free order of chips and salsa to entrée-purchasing customers that “check in” at Chipotle on foursquare.

 

PZZA: Papa John’s has been holding the line on discounting, instead sticking with its long-held premium-products-at-premium-prices message, according to a story on adage.com

 

THI, YUM, DPZ, CMG, WEN, SONC, JACK: All speaking at conferences this week.

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

BAGL: Einstein Noah traded higher on accelerating volume following stronger-than-expected earnings.

 

 

CASUAL DINING

 

DIN, TXRH, RRGB, CAKE, RUTH, EAT, PFCB, RT, BOBE: All speaking at conferences this week.

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

DIN: Dine Equity traded down -5.6% on accelerating volume Friday following disappointing earnings.  

 

THE HBM: SBUX, DNKN, CMG, PZZA - stocks

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


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THE M3: SCC PHASE 2; NEPTUNE; AMAX

The Macau Metro Monitor, March 5, 2012

 

 

SANDS COTAI CENTRAL PHASE TWO TO OPEN IN OCTOBER Macau Business

Sands China CEO Edward Tracy said the second phase of Sands Cotai Central is planned to open in October.  He also reconfirmed that Sands Cotai Central’s first phase will open in April, which includes the Conrad and Holiday Inn hotels and the casino.  The property’s casino is to include about 140 VIP gaming tables, as well as 200 mass market gaming tables. Sands China plans to add 200 mass market gaming tables by 3Q 2012, Mr Tracy said.

 

NEPTUNE PROFIT UP Macau Business

Junket operator Neptune Group Ltd. announced a profit of MOP229.7MM for the six month period ended December 2011. The company’s board says this will be a challenging year and that revenue growth may slow down depending on the mainland’s economic performance.  “Importantly we will continue to invest in our business, continuing to acquire more VIP room operators’ business in Macau and in other Asian countries,” says Neptune.  Previous media reports have stated that Neptune promotes nearly 200 VIP tables across 10 venues in Macau.

AMAX GOES AHEAD WITH GREEK MYTHOLOGY IPO Macau Business

Amax Holdings shareholders voted last week in favor of an IPO of its associate company Greek Mythology (Macau) Entertainment Group Corp Ltd. that controls Macau's Greek Mythology casino.  A new holding company, Greek Mythology Holdings Ltd., is to be listed in Hong Kong within two years.  Amax Holdings will control a minimum 49.9% interest in the new holding company.  The IPO was the course decided on by the board of Amax Holdings in order to recover a disputed stake in Greek Mythology (Macau) Entertainment Group Corp Ltd.


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – March 5, 2012


As we look at today’s set up for the S&P 500, the range is 20 points or -1.00% downside to 1356 and 0.47% upside to 1376. 

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -1013 (-2046) 
  • VOLUME: NYSE 699.91 (-14.07%)
  • VIX:  17.29 0.17% YTD PERFORMANCE: -26.11%
  • SPX PUT/CALL RATIO: 2.05 from 2.29 (-10.48%)

CREDIT/ECONOMIC MARKET LOOK:


USD – after a +1.3% week, finally attempting to stabilize above critical $79.03 support – Romney solidifying the Republican base has had a high correlation to a more stable dollar than the Newt/Santorum thing. Super Tuesday could be another bullish USD catalyst inasmuch as winning Michigan was. 

  • TED SPREAD: 41.48
  • 3-MONTH T-BILL YIELD: 0.06%
  • 10-Year: 1.98 from 1.97
  • YIELD CURVE: 1.70 from 1.70 

MACRO DATA POINTS (Bloomberg Estimates):

  • 10:00am: ISM Non-Manf. Comp, Feb., est. 56.2 (prior 56.8)
  • 10:00am: Factory Orders, Jan., est. -1.5% (prior 1.1%)
  • 11:30am: U.S. to sell $33b 3-mo., $31b 6-mo. bills
  • 1:20pm: Fed’s Fisher speaks in Dallas on state of economy
  • 7:30pm: Fed’s Fisher speaks in Houston on state of economy 

GOVERNMENT:

  • Quinnipiac Univ. releases poll of likely Ohio voters
  • VP Joe Biden Meets Mexico President Felipe Calderon
  • Defense Secretary Leon Panetta meets with Chile Defense Minister Andres Allamand at Pentagon, 10am
  • White House cybersecurity coordinator Howard Schmidt unveils report on protecting electronic health records, 10am
  • Treasury Secretary Tim Geithner speaks on national security at Northwestern Law School, 4:30pm
  • House, Senate in session:
    • Senate Minority Leader Mitch McConnell, R-Ky., House Minority Leader Nancy Pelosi, D-Calif., speak to AIPAC
    • FTC Chairman Jon Leibowitz, Commissioner Thomas Rosch testify on agency’s budget before House Appropriations, 3pm
    • House Energy and Commerce marks up Medicare Decisions Accountability Act, 4pm 

WHAT TO WATCH: 

  • BP reached a $7.8b settlement with businesses, individuals over the 2010 Deepwater Horizon oil rig disaster; U.K. shrs up as much as 3.1%; watch HAL, RIG
  • Israeli PM Benjamin Netanyahu visits White House amid questions over how to confront Iran’s nuclear program
  • China cut its eco. growth target to 7.5% from 8% in place since 2005
  • AIG sells $6b of AIA shrs to pay back U.S. govt.
  • “Dr. Seuss’s The Lorax” was top weekend film in North America, taking in $70.7m in the biggest opening weekend this yr
  • Deutsche Bank appoints James Ratigan joint head of Americas M&A
  • Polls show virtual tie between Rick Santorum, Mitt Romney in Ohio ahead of Super Tuesday primary
  • Vladimir Putin wins Russia presidency; opponents say vote marred by fraud
  • European services, manufacturing declined more then est. in Feb.
  • No IPOs expected to price today: Bloomberg data

 EARNINGS:

    • Vermilion Energy (VET CN) 6:55am, C$0.72
    • Casey’s General Stores (CASY) 4pm., $0.44
    • VeriFone Systems (PAY) 4:01pm, $0.52
    • Giant Interactive (GA) 4:30pm, $0.17
    • ABM Industries (ABM) 5pm, $0.22
    • Uranium One (UUU CN) 5:01pm, $0.05
    • First Majestic Silver (FR CN) Post-Mkt, $0.24
    • Flint Energy Services Ltd (FES CN) Post-Mkt, C$0.34    

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Speculative Wagers on Crops Reach Five-Month High: Commodities
  • Gold Drops in London on Stronger Dollar, China Growth Target Cut
  • Crude Oil Falls in New York After China Lowers Economic Target
  • India Bans Cotton Exports Until Further Notice; Futures Gain
  • Copper Falls for Second Day as China Lowers Target for Growth
  • Wheat Declines as Former Soviet Nations May Increase Exports
  • Sugar Falls as Slowing Economies May Dent Demand; Coffee Slides
  • Palm Oil Seen Climbing 7.8% to Year High as Inventories Drop
  • Glencore CEO a ‘Little Lost’ at Calls for Higher Xstrata Bid
  • Hedge Funds Cut Bullish Gas Bets Most Since June: Energy Markets
  • Coffee Crop in Indonesia Poised for Highest in Three Years
  • Goodman Fielder Takeover Seen With Wilmar Instant 31%: Real M&A
  • Car-Sales Rebound Boosting Platinum, Palladium: Chart of the Day
  • Wagers on Crops Surge to Five-Month High
  • Freeport Union to Resist Move to Resume Grasberg Output Today
  • Sixth Supertanker of North Sea Crude Heads to Asia, Data Show
  • Clean-Energy Mandate for Utilities Seen Benefiting Natural Gas

 THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES


THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS


THE HEDGEYE DAILY OUTLOOK - 6

 


ASIAN MARKETS


CHINA – Growth Slowing has been plainly obvious in just about every high frequency economic data point in Jan-Feb – plenty shrugged that off as being all about the Lunar calendar, but this morning’s Services PMI print out of China is a 48 and that’s more inline with what Wen’s guiding to in a 7.5% GDP Growth rate (vs the 9-12% China has been tracking since 2009).

 

YEN – President of Japan’s Credit Rating Agency Inc said the BOJ is “damned if they do, damned if they don’t” (buy bonds) with this massive debt maturity spike in 2012. Them be fighting words in Japan as the Yen continues to be in a Bearish Formation (bearish TRADE, TREND, and TAIL) with an immediate-term oversold level of $81.96 USD/JPY.

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

The Hedgeye Macro Team

 

 

 



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