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European Banking Monitor: CDS Widen

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:

  

* Nearly all European Bank CDS widened last week.  Two of the four big French banks are now trading above 300 bps on CDS, while the major Spanish banks we track are all above 400 bps.  European Sovereign CDS all widened last week as well, with Spanish CDS rising 11.5% to 541 bps. 

 

If you’d like to discuss recent developments in Europe, from the political to financial to social, please let me know and we can set up a call.

 

Matthew Hedrick

Senior Analyst

 

(o)

 

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European Financials CDS Monitor – Bank swaps were wider in Europe last week for 37 of the 39 reference entities. The average widening was 5.4% while the median widening was 4.9%. 

 

European Banking Monitor: CDS Widen - AA. BANKS

 

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 3 bps to 35 bps.

 

European Banking Monitor: CDS Widen - AA. 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.  The latest overnight reading is €763.12B.

 

European Banking Monitor: CDS Widen - AA. ECB

 

Security Market Program – For a ninth straight week the ECB's secondary sovereign bond purchasing program, the Securities Market Program (SMP), purchased no sovereign paper for the latest week ended 5/11, to take the total program to €214 Billion.

 

European Banking Monitor: CDS Widen - AA. SMP

 

Matthew Hedrick

Senior Analyst


APRIL KNAPP TRACK

The Knapp Track numbers for April suggest a slight sequential improvement in casual dining sales trends from March. 

 

Malcolm Knapp released his Knapp Track casual dining sales numbers for April this weekend.  This release was a departure from Knapp’s usual release, which comes in the form of a longer text report offering different insights into consumer trends during the month concerned; this weekend Knapp released the numbers alone with the text report, presumably, to follow in the coming days.

 

Estimated Knapp Track casual dining comparable restaurant sales grew 0.8% in April versus an estimated -0.7% in March.  The sequential change from March to April, in terms of the two-year average trend, was 30 bps.  While this is an improvement, the two year average trend is still well below the strength we saw in December through February. 

 

Estimated Knapp Track casual dining guest counts declined -1.9% in April versus an estimated -3.4% in March.  The sequential change from March to April, in terms of the two-year average trend, was +50 bps.  This is an improvement but the decline in March was so substantial that a more sustained move higher will be necessary to convince investors that traffic can get back to positive territory. 

 

 

Takeaways

 

Besides the broader casual dining group, for Darden and Brinker this result is especially meaningful since those companies’ systems represent a large portion of the unit base from which the numbers are calculated.

 

Traffic trends remain disappointing; it seems likely that weather was supporting traffic trends for much of 1Q.  Now that the weather impact has dissipated, we are seeing numbers more representative of the true traffic trends in casual dining.

 

The price action is confirming our CASUAL DINING CAUTION stance we took ahead of 1Q earnings season.  The group’s performance versus the broader market is slowing markedly.  BWLD, however, remains a volatile name and outperformed the market last week by 4%.  We still like BWLD on the short side but there are no catalysts until the company reports earnings on July 26th.  The stock has not been performing very strongly relative to its peers over the last three months; we think consensus is too bullish on FY12 EPS.

 

APRIL KNAPP TRACK - cd rel spx

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


Gnarly: SP500 Levels, Refreshed

POSITIONS: Long Healthcare (XLV), Short Industrials (XLI)

 

Friday morning’s bounce was a Selling Opportunity (see 11:44AM EST note 5/11). Today is a wait and watch.

 

There is no immediate-term support to 1329 and, over the intermediate-term, the mean reversion zone we have been focused on is the long-term TAIL of support down at 1282.

 

Here are the lines across risk management durations that I am focused on: 

  1. Intermediate-term TREND resistance = 1369
  2. Immediate-term TRADE support = 1329
  3. Long-term TAIL support = 1282 

I see zero irony in this market giving back essentially its entire gain from the January 25thPolicy To Inflate day (where Bernanke arbitrarily pushed 0% policy to 2014).

 

Quantitative Easing, from here, only spikes oil and slows real consumption growth further. The only way out of this is to Deflate The Inflation in food, energy, etc. so that the 71% (US Consumption as a % of US GDP) can stop slowing and solidify itself (like it did in December and January).

 

Letting free-market prices clear – I know – the horror of the idea.

KM

 

Keith R. McCullough
Chief Executive Officer

 

Gnarly: SP500 Levels, Refreshed - SPX


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MACAU: A SLOW WEEK FOLLOWING GOLDEN WEEK

We are lowering the top end of our May forecast range from HK$29 billion to HK$28 billion. 

 

Our new range of HK$27-28 billion would represent YoY growth of 14-19%.  This could be seen as a disappointment by investors. 

 

Average daily table revenues (ADTR) declined to HK$714 million from HK$975 million last week and was below the April rate of HK$773 million.  However, ADTR was 35% above the comparable week last year. 

 

MACAU: A SLOW WEEK FOLLOWING GOLDEN WEEK - macau333

 

Sands China had another disappointing week with MTD market share dropping back down to the mid 17s%, in-line with pre-Sands Cotai Central levels.  Obviously, share should be much higher considering that SCC added about 4% to table market share.  Galaxy and SJM are trending above recent share while Wynn and MGM are below.

 

MACAU: A SLOW WEEK FOLLOWING GOLDEN WEEK - macau444


SINGAPORE Q1 2012 REVIEW

A new quarterly record 

 

 

Singapore gross gaming revenues rose 11% YoY and 9% QoQ to a new quarterly high in Q1 2012.  GGR crossed the S$2 billion mark to S$2.093 billion.  For comparison, Macau GGR grew 1% QoQ and 27% YoY in Q1.  Singapore property EBITDA rose 3% QoQ to S$985MM, also setting a new record.  

 

VIP RC grew QoQ by 22%, but was down slightly YoY at S$31.7BN and 14% below the market high set in 3Q11. Mass drop and slot handle were up YoY by 4% and 31%, respectively to S$2.8BN and S$6.8BN, however, both categories were down QoQ.  YoY we have seen the number of slots and ETG's expand by 20% to 4,919 and the number of VIP tables expand 15% to 315, while Mass table growth has only been 2% to 855. 

 

Q1 hold was 3.49%, slightly lower than Q4’s 3.58% but higher than Q1 2011's hold of 3.25%.  Average hold for the 2 IR’s since 1Q10 has been close to 3.09%. 

 

Q1 MARKET SHARES

 

GGR:

  • MBS:  52.3%
  • RWS:  47.7%

Net Revenue:

  • MBS:  57.5%
  • RWS:  42.5%

Property EBITDA:

  • MBS:  60.7%
  • RWS:  39.3%

Mass Table Revenue:

  • MBS:  52.7%
  • RWS:  47.3%

Mass Table Drop:

  • MBS:  53.4%
  • RWS:  46.6%

VIP Table Revenue:

  • MBS:  52.3%
  • RWS:  47.7%

VIP RC:

  • MBS:  51.1%
  • RWS:  48.9%

Slot Revenue:

  • MBS:  51.2%
  • RWS:  48.8%

Slot Handle:

  • MBS:  45.7%
  • RWS:  54.3% 

 

SINGAPORE Q1 2012 REVIEW - PROP

 

SINGAPORE Q1 2012 REVIEW - s pore0

 

SINGAPORE Q1 2012 REVIEW - s pore2

 

SINGAPORE Q1 2012 REVIEW - spore10

 

SINGAPORE Q1 2012 REVIEW - mass rev

 

SINGAPORE Q1 2012 REVIEW - mass drop 

 

SINGAPORE Q1 2012 REVIEW - vip rin

 

SINGAPORE Q1 2012 REVIEW - vip rc

 

SINGAPORE Q1 2012 REVIEW - 1

 

SINGAPORE Q1 2012 REVIEW - 2 

 


THE M3: MACAU TOUR AND HOTEL DATA; CHINA RRR CUT

The Macau Metro Monitor, May 14, 2012

 

 

PACKAGE TOURS AND HOTEL OCCUPANCY RATE FOR MARCH 2012 DSEC

Visitor arrivals in package tours surged by 51.1% YoY to 754,163 in March 2012.  Visitors from Mainland China (531,096) increased by 45.8%, with 174,477 coming from Guangdong Province; besides, those from Taiwan (70,556); Hong Kong (35,765); the Republic of Korea (28,449); and Japan (23,402) soared by 163.7%, 87.0%, 42.9% and 20.3% YoY respectively.

 

In the first quarter of 2012, visitors in package tours totaled 2,050,476, up by 45.6% YoY to account for 29.5% of the total visitor arrivals, higher than the 21.9% from the same period of 2011.

 

Number of available guest rooms of the 95 hotels and guest-houses totaled 22,272 at the end of March 2012, an increase of 2,143 rooms (+10.6 YoY), with those of the 5-star hotels accounting for 63.7% of the total.  The average length of stay decreased by 0.08 night to 1.4 nights.

 

PEOPLE'S BANK OF CHINA CUTS BANKS' RESERVE REQUIREMENT RATIOS 50 BPS, EFFECTIVE 18-MAY Reuters

On May 18, for large banks, the required reserve ratio will be cut to 20.0% from 20.5%.


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 80.65%
  • SHORT SIGNALS 78.64%
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