Stealing Horses

This note was originally published at 8am on July 18, 2012. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.

“In West Texas in 1871, stealing someone’s horse was often equivalent to a death sentence.”

-S.C. Gwynne


The only thing I don’t like about working on America’s West Coast is that room service doesn’t start until 8AM EST. I’m in San Francisco, California this morning. And, away from no oatmeal in my belly, I am loving it.


What I don’t love is when Chuck Schumer speaks. I get especially irritated when he speaks at people like he did with my good pal Ben Bernanke yesterday, telling him to “get to work” on some more money printing.


As S.C. Gwynne explains in an excellent new book I started reading on the flight down here, “Empire of The Summer Moon: Quanah Parker and the rise and fall of the Comanches, the most powerful tribe in American History”, stealing someone’s most valuable asset (in my case US Dollars) is not cool.


Back to the Global Macro Grind


Admittedly, when it comes to explaining the basic concept of the Purchasing Power of your hard earned currency and how conflicted and compromised politicians are attempting to debauch it for the sake of their short-term career risk, I can’t walk a horse to water.


I can, however, steal away into the night and watch the only thing that matters in scoring the efficacy of what Chucky Schumer wants more of (Qe drugs) – Mr. Global Macro Market.


Mr. Macro has been giving plenty a buy-and-hold Keynesian a performance death sentence since the SP500 was +14.9% higher in October of 2007. While the same ‘growth is good, earnings are great, and stocks are cheap’ crowd still needs the SP500 to rise another +5% to get back to their 2012 break-even, here’s what the rest of the world’s country signals are telling me this morning: 

  1. CHINA – the Shanghai Composite Index remains a rock solid leading indicator for the slope of Chinese economic growth, and it remains in what we call a Bearish Formation (bearish on all 3 of our core risk management durations – TRADE/TREND/TAIL)
  2. JAPAN – the Nikkei225 opened up (after the US closed up) then finished on its lows last night. Its -0.32% loss on the session doesn’t matter as much as the context of its failure to recapture its only remaining line of support (8794)
  3. SOUTH KOREA – the KOSPI got blasted for another -1.5% loss last night after Intel said that they are hoping for +3-5% sales growth in 2012 (vs high single digit growth expected prior); KOSPI is a great leading indicator for Tech/Industrial demand
  4. EUROPE – the EuroStoxx50 looks like the SP500 (better than China, Japan, or KOSPI); that doesn’t mean that it looks good for anything more than what’s in the rear-view mirror off the lows (TRADE support = 2213; TREND resistance = 2282)
  5. SPAIN – the Spanish IBEX looks like the Comanches stole their horses again; leading losers this week and falling right back into crash mode (> 20% peak/tough decline) at -26.5% from March; Bearish Formation
  6. ITALY – the MIB Index looks like it’ll be walking barefoot until the German Parliament votes to ratify more #BailoutBull on September 12th; down again this morning and moving back into crash mode, down -21% from March
  7. BRAZIL – the BOVESPA has had zero bid since the Brazilians cut interest rates last week, so the perma 3-4% Global GDP crowd can talk about the 199 global “easings” all they want, but the BOVESPA is still crashing (down -21% since March 14th)
  8. CANADA – the TSX Composite Index looks a lot like the Eurostoxx50 and the SP500; bullish TRADE (barely) and bearish TREND (with TSX TREND resistance overhead at 11,991); Canada is a great place to live if you have a big hat (and cattle).

Then, of course, we have the good ole United States of America. The home of the 112th Congress, Ben Bernanke, and the brave. Across its big 3 leading market indicators, here’s how she looks:

  1. STOCKS (SP500) – bullish immediate-term TRADE (1351 support); bearish intermediate-term TREND (1365 resistance)
  2. BONDS (10yr) – Bullish Formation for bonds; Bearish Formation for yields; immediate-term risk range = 1.46-1.54%
  3. CURRENCY (USD) – Bullish formation (bullish across all 3 durations) with immediate-term TRADE support = $82.31

So, what does it all mean?

  1. GROWTH – slowing, at an accelerating rate, globally in Q2/Q3 versus where all of Washington/Sell-Side consensus was in Q1
  2. INFLATION – slowing through June, but setting up to re-accelerate where it matters to Global Consumption Growth in July (food and energy prices have v-bottomed since late June)
  3. POLICY – who cares? The manic media continues to scramble for whatever remains of their ratings, but The People are putting this entire thing (including fund flows) on mute. This is a No Trust; No Volume Global Equity market; TREND intact.

So what do you do?

  1. Maintain a large Cash position and keep your gross exposure to equity and commodity markets low
  2. Manage your net exposure to all markets, including the bubbliest of them all (bonds) tight
  3. And Fade Beta (buy red, sell green) –just beat the 93% of hedge funds who have become beta and you’re fine

If all of this is frustrating you, join the club. Global Macro’s interconnected risk (countries, currencies, commodities, etc.) has never been more obvious. Stock pickers are meeting their maker inasmuch as Macro gurus are meeting theirs. As Gwynne reminds us, this was no different in 1836 when different worlds were in collision (Whites and Indians):


“The meaning of their meeting, and the moment itself, became completely clear only in hindsight.” (page 23)


My immediate-term support and resistance risk ranges for Gold, Oil (Brent), US Dollar, EUR/USD, Spain’s IBEX, and the SP500 are now $1559-1583, $100.82-103.68, $82.76-83.98, $1.20-1.23, 6457-6699, and 1351-1365, respectively.


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Stealing Horses - Chart of the Day


Stealing Horses - Virtual Portfolio


TODAY’S S&P 500 SET-UP – August 1, 2012

As we look at today’s set up for the S&P 500, the range is 22 points or -1.11% downside to 1364 and 0.48% upside to 1386. 











  • ADVANCE/DECLINE LINE: on 07/31 NYSE -528
    • Down versus the prior day’s trading of -88
  • VOLUME: on 07/31 NYSE 887.94
    • Increase versus prior day’s trading of 34.83%
  • VIX: as of 07/31 was at 18.93
    • Increase versus most recent day’s trading of 4.99%
    • Year-to-date decrease of -19.10%
  • SPX PUT/CALL RATIO: as of 07/31 closed at 0.97
    • Down from the day prior at 1.00 


GROWTH – take a step back on look at the global growth data in July from the Big 3 Macro – USA’s was as bad as it’s been, China just printed their slowest PMI in 8 months and Germany just tanked a 43 PMI for July (new low vs 45 in June) too. When the entire world’s growth slows at an accelerating rate, bonds are getting this right and for central planners this is getting #TooBigToBail


INFLATION – that little critter was a positive for markets in May/June as commodity prices got hammered. Not anymore – our models are calling for a sequential rise (m/m) in July as food/energy/housing rents just ripped. Indonesia Just printed that rising inflation fact at +4.6% y/y for July and Brazil pops back up to +6.7%. 

  • TED SPREAD: as of this morning 35
  • 3-MONTH T-BILL YIELD: as of this morning 0.10%
  • 10-Year: as of this morning 1.47%
    • Unchanged from prior day’s trading
  • YIELD CURVE: as of this morning 1.27
    • Up from prior day’s trading at 1.26 

MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage Applications, July 27 (prior 0.9%)
  • 8:15am: ADP Employment Change, July, est. 120k (prior 176k)
  • 9am: Markit US PMI Final, July, est. 51.8
  • 10am: ISM Manufacturing, July, est. 50.2 (prior 49.7)
  • 10am: ISM Prices Paid, July, est. 40 (prior 37)
  • 10am: Construction Spending M/m, June, est. 0.4% (prior 0.9%)
  • 10:30am: DoE inventories
  • 2:15pm: FOMC Rate Decision Announced
  • U.S. Treasury announces 3-, 10-, 30-yr auction sizes 


    • Senate Banking Committee holds hearing on HUD rental housing programs for the poor
    • Senate Environment and Public Works Committee hearing on climate-change and local adaptation measures, 10am
    • House Energy and Commerce Committee votes on the No More Solyndras Act, 10am
    • FTC Chairman Gary Gensler testifies before the Senate Agriculture Committee on futures market oversight and the collapse of Peregrine Financial, 9am
    • U.S.-China Economic and Security Review Commission holds 2- day meeting to prepare 2012 annual report to Congress, 10am
    • House Financial Services Capital Markets and Government- Sponsored Enterprises subcommittee marks up H.R. 757, the “Equitable Treatment of Investors Act;” H.R. 2827, which seeks to amend 1934 law to clarify provisions related to regulation of municipal advisers; and H.R. 6161, the “Fostering Innovation Act,” 10:15am
    • House Science, Space and Technology’s subcommittee on Space and Aeronautics hearing on commercial suborbital reusable launch vehicle market, 2pm
    • House Science and Technology Committee hears from representatives of Lockheed Martin and Deere on the relationship between business and research universities, 10 am
    • Regulators from 11 Asia-Pacific nations to discuss carbon trading, smart-grid technologies and market regs, 8:30am
    • CFPB Director Richard Cordray testifies before the House Small Business Cmte on CFPB regulations/small businesses, 1pm
    • Health insurers including UnitedHealth, WellPoint face deadline to send $1.3b in rebates to ~12.8m customers who paid more than the law allows for their 2011 policies
    • U.S. Postal Service will miss a $5.5b payment due to the U.S. Treasury for future retirees’ health care
    • House Armed Services Cmte hearing on defense sequestration, including OMB Dir. Jeff Zients, 10am


  • Fed may extend low-rate pledge beyond 2014: economists
  • Olympus sees violation of laws possible with U.S. disclosure
  • Italy PM Mario Monti is making the rounds of European capitals as his country’s borrowing costs creep higher, pressing leaders for collective action
  • Geithner vows to press for writedowns for underwater home loans
  • Carl Icahn said to sell MGM Holdings stake back to film studio
  • July manufacturing in U.S. probably stagnated as spending cooled
  • Automakers may show annual sales at 14.1m rate, analysts say
  • Apple lawyer tells jury Samsung concluded “it’s easier to copy”
  • MF Global customers eventually will recoup their money, according to trustee overseeing the parent co.’s liquidation
  • Monsanto’s $1b patent claim against DuPont to go to jury
  • China manufacturing teetered close to contraction in July
  • Edison sees possible generation unit bankruptcy, nuclear probes
  • U.K. July manufacturing shrank most in 3+ yrs
  • Australian house prices unexpectedly rise as RBA lowers rates
  • Eloqua offers 50% discount to software-as-service Peers in IPO


    • Burger King Worldwide (BKW) Bef-mkt, $0.14
    • Huntsman (HUN) 6am, $0.54
    • Enterprise Products (EPD) 6am, $0.58
    • Amerigroup (AGP) 6am, $0.70
    • Catamaran (CCT CN) 6am, $0.55
    • Macerich (MAC) 6am, $0.73
    • Dollar Thrifty Automotive Group (DTG) 6am, $1.24
    • El Paso Electric (EE) 6:08am, $0.74
    • SPX (SPW) 6:30am, $0.74
    • RR Donnelley (RRD) 6:30am, $0.43
    • Calumet Specialty Products (CLMT) 6:30am, $0.53
    • Littelfuse (LFUS) 6:30am, $1.00
    • Garmin (GRMN) 6:30am, $0.67
    • Intact Financial (IFC CN) 6:55am, C$1.40
    • DST Systems (DST) 7am, $0.97
    • American Tower (AMT) 7am, $0.77
    • Booz Allen Hamilton (BAH) 7am, $0.42
    • Wisconsin Energy (WEC) 7am, $0.44
    • Avon Products (AVP) 7am, $0.22; Preview
    • Comcast (CMCSA) 7am, $0.48
    • Time Warner (TWX) 7am, $0.58
    • Tronox (TROX) 7am, $0.57
    • Harley-Davidson (HOG) 7am, $1.05
    • Senior Housing Properties Trust (SNH) 7:01am, $0.46
    • AGL Resources (GAS) 7:30am, $0.28
    • Hospira (HSP) 7:30am, $0.49
    • Devon Energy (DVN) 7:30am, $0.82
    • Wright Express (WXS) 7:30am, $0.98
    • Hyatt Hotels (H) 7:30am, $0.22
    • Owens Corning (OC) 7:30, $0.64
    • IntercontinentalExchange 7:30am, $1.32
    • Mastercard (MA) 8am, $5.58
    • Phillips 66 (PSX) 8am, $1.78
    • HSN (HSNI) 8am, $0.61
    • Magellan Midstream (MMP) 8am, $0.90
    • Marathon Oil (MRO) 8:30am, $0.59
    • Allergan (AGN) 9am, $1.06; Preview
    • Cavium (CAVM) 4pm, $0.02
    • Unum Group (UNM) 4pm, $0.76
    • Itron (ITRI) 4pm, $0.97
    • Alexander & Baldwin (ALEX) 4pm, $0.15
    • Matson (MATX) 4pm, $0.36
    • Clear Channel Outdoor Holdings (CCO) 4pm, $(0.01)
    • BioMarin Pharmaceutical (BMRN) 4pm, $(0.21)
    • Portfolio Recovery Associates (PRAA) 4pm, $1.63
    • Walter Energy (WLT) 4pm, $0.39
    • Green Mountain Coffee Roasters (GMCR) 4:01pm, $0.49
    • Amdocs (DOX) 4:01pm, $0.67
    • Williams Partners (WPZ) 4:01pm, $0.49
    • Williams Cos (WMB) 4:01pm, $0.25
    • New Gold (NGD CN) 4:01pm, $0.09
    • DaVita (DVA) 4:01pm, $1.47
    • MetLife (MET) 4:03pm, $1.24
    • Onyx Pharmaceuticals (ONXX) 4:04pm, $(0.91)
    • First Solar (FSLR) 4:05pm, $0.93
    • Hanover Insurance Group (THG) 4:05pm, $0.19
    • Weight Watchers International (WTW) 4:05pm, $1.35
    • Trimble Navigation (TRMB) 4:05pm, $0.70
    • Mako Surgical (MAKO), 4:05pm, ($0.22)
    • Equity One (EQY) 4:07pm, $0.27
    • Prudential Financial (PRU) 4:07pm, $1.54
    • Lincoln National (LNC) 4:08pm, $1.00
    • Boston Beer (SAM), 4:10pm, $1.28
    • Hartford Financial Services Group (HIG) 4:15pm, $0.46
    • Avis Budget Group (CAR) 4:15pm, $0.70
    • Intrepid Potash (IPI) 4:15pm, $0.25
    • Transocean (RIG) 4:15pm, $0.44; Preview
    • Federal Realty Investment Trust (FRT) 4:30pm, $1.04
    • Dominion Resources (D) 4:30pm, $0.60
    • CVR Energy (CVI) 4:35pm, $2.13
    • Chemtura (CHMT) 4:51pm, $0.52
    • First Quantum Minerals (FM CN) 4:59pm, $0.22
    • Home Capital Group (HCG CN) 5pm, C$1.53
    • Tesoro (TSO) 5pm, $2.29
    • Murphy Oil (MUR) 5pm, $1.33
    • Orient-Express Hotels (OEH) 5pm, $0.13
    • General Growth Properties (GGP) 5:19pm, $0.21
    • Rexnord (RXN) Aft-mkt, $0.24
    • Centerra Gold (CG CN), Post-Mkt, ($0.15)



COPPER – the Doctor is checking out of the Bernanke Bailout drug deal early here this morning; not sure what it means or if Gold/Oil will follow – this man has proven he will do anything to keep commodity/stock markets up. Game time decision; regardless he can’t arrest Growth Slowing and Inflation Rising here in July/August.

  • All Markets Gain First Time in Two Years Led by Drought, Draghi
  • South America Readies Record Crop Amid U.S. Drought: Commodities
  • Wheat Drops as European Harvest May Help Offset U.S. Drought Cut
  • Oil Trades Near Two-Week Low on Concern Central Banks Won’t Act
  • Copper Drops as Chinese Manufacturing Unexpectedly Slows Down
  • Cocoa Nears Nine-Month High on West African Sales; Sugar Rises
  • Gold Seen Gaining in London on Speculation About Monetary Easing
  • Sugar Output in India’s Biggest Grower May Climb 10% Next Year
  • Ivory Coast’s Coastal Cocoa Farmers Say Drought Threatens Crop
  • Worst India Outage Highlights 60 Years of Missed Targets: Energy
  • Rain-Scarce India Depends on Record Inventory to Feed People
  • Sweltering Mideast Boosts Diesel as India Wilts: Energy Markets
  • UN CO2 Offsets, EU Permits Lead Commodity Declines in July
  • Palm Oil Gains as Demand Seen Climbing on U.S., India Crop Woes
  • Rubber Drops as China Manufacturing Grows at Slowest in 8 Months
  • Wheat Exports From Pakistan to Plunge as Flood Cuts Harvest

























The Hedgeye Macro Team

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Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

Geithner's Growth

“There’s a lot of things Congress can do, in the near term, not just in the long run, to make growth stronger.”

-Tim Geithner   


Having spent 54% of his born life in government, growing both deficits and debts as far as the eye can see, US Treasury Secretary Timmy Geithner’s Growth has been, if anything, consistent.


As President Obama goes into full campaign mode, his Top 2 central planners take center stage this week. Our almighty overlord of short-term asset price inflation will speak to commoners and journalists alike after his 215PM FOMC decision. Meanwhile, Geithner has been making his American/European media rounds for the last 24 hours.


The Germans in particular don’t care for the bailout policies to inflate inasmuch as they don’t care for Geithner’s economic partisanship. Now that Timmy is interviewing with Global banking outfits, he needs to be careful to not tell the Europeans what to do. Been there, done that – and he’s been mocked. That can be a bummer when negotiating a post Washington, DC employment agreement.


Back to the Global Macro Grind


To paraphrase Geithner’s latest ideas for both Americans and Europeans alike: ‘We need to do more – more of what has not worked. There’s more of that to do – I believe that “deeply.” Do more.’  


By “more”, he means more #BailoutBull policies for delinquent and/or underwater borrowers (US home buyers and Spanish banking conquistadors alike). By more, he means more government spending. By more, he means Big Government Intervention.


To review what doing “more” of that has done to both our economies and said “free” markets”:

  1. Shortened Economic Cycles (#GrowthSlowing)
  2. Amplified Market Volatility

In the very short-term, while No Volume; No Trust stock markets may or may not get this (depending on the latest rumor induced Viagra Rally in the S&P futures), the bond market understands this across intermediate and long-term durations, big time.


Geithner’s Growth (debt and deficits) slows growth. That’s not a rumor. That’s a fact. That’s why:

  1. 10-year US Treasury Yields continue to make lower-lows since #GrowthSlowing picked up on the downside in March
  2. Russell2000 (broad measure of US liquidity risk and equity exposure) stopped going up on March 26th
  3. That’s why US Equity market volatility (VIX) bottomed YTD on the same day that the Russell2000 topped (March 26th)

Bernanke’s Growth (asset price inflations) slows growth too. For July, this is best illustrated by the SP500’s Sector returns:

  1. Energy (inflation expectations) = UP +4.94%
  2. Consumer Discretionary (growth expectations) = DOWN -0.55%

Again, to review – INFLATION IS NOT GROWTH.


US Consumption represents the 71% that I don’t hear the Democrats talking about inasmuch as I didn’t hear the Republicans talking about it under Bush. That’s the 71% of the US Economy (GDP). And it’s been getting jammed by the likes of Bernanke and Geithner since at least 2006. Policies to debauch the Dollar and inflate oil prices at the pump are a colossal failure of Keynesian sense.


And it’s not just US Consumption Growth that slows when food/energy prices grow. Global Growth does too. Today’s reminder from the Big 3 Macro countries that will report gravity (economic data) for July continue support that:

  1. China’s PMI (manufacturing) hits its lowest level in 8 months
  2. Germany’s PMI hits a fresh YTD low of 43 for July (versus 45 in June)
  3. USA’s PMI is due out later this morning and could easily come in the low 50s (versus 52.9 in June) 

In other words, the other side of “growth” that the Keynesians of the 112th Congress are being chastised to “stimulate” (export manufacturing) isn’t growing either. On a net basis (Exports minus Imports), exports were a negative drag on Q2 2012 US GDP.


After all this cochamamy stimuli “growth” talk and defict/debt spending, both US Consumption and Manufacturing Growth are slowing, at the same time. That’s not progress. That’s regressive. That’s why I still think the only real (inflation adjusted) “growth” solution is not doing more – it’s changing the lineup, and getting these failed central planners out of our way.


My immediate-term support and resistance ranges for Gold, Oil (Brent), US Dollar, EUR/USD, and the SP500 are now $1, $102.46-105.49, $82.21-82.92, $1.20-1.23, and 1, respectively.


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Geithner's Growth - Chart of the Day


Geithner's Growth - Virtual Portfolio


The Macau Metro Monitor, August 1, 2012




Macau gross gaming revenues eked out a 1.5% YoY gain to MOP 24.58 billion (23.86 HKD billion, 3.08 USD billion).



Sands China confirmed today that Venetian Macau is being probed by the Macau Office for Personal Data Protection. Sands China said the body has launched an official investigation procedure in relation to the alleged transfer from Macau to the United States of “certain data”, related to the case of Steve Jacobs.

According to a news report from U.S.-based earlier this week, Sands China and LVS moved documents from Macau to the United States in 2010 without the prior authorization of the Macau government.  The information allegedly transferred to the U.S. was stored on Jacobs' office computers in Macau, and was moved to Las Vegas a few days after he was fired, in July 2010.


The Office for Personal Data Protection confirmed it held a meeting with representatives for Venetian Macau in March 2012 to discuss the matter, but it says it never gave the “green light” for any data transfer.



Wynn Macau Ltd said it will borrow up to US$2.3 billion to finance the construction of its Cotai casino resort, and also to refinance the company’s existing debt.  The amended facilities consist of: a US$750 million equivalent fully funded senior secured term loan facility maturing in July 2018; a US$1.55 billion equivalent senior secured revolving credit facility maturing in July 2017; and an option to upsize the total
 senior secured facilities by an additional US$200 million.


Once completed, Wynn Cotai is anticipated to include a casino, a five-star hotel with about 2,000 rooms and suites, as well as convention, retail, entertainment and food and beverage offerings.  The 
total budget for the project is estimated to be in the range of US$3.5 billion to US$4 



For the first time in five quarters, MPEL could miss the Street, but at 7x current year EBITDA, should we really care? 



MPEL could come in just a tad below consensus EBITDA estimates this quarter.  Pretty good performance considering the LVS and WYNN punts.  The stock is down 57% since its 52 week high on April 26th so expectations cannot be too high.  Based on our below consensus estimates, MPEL is trading at just 7x 2012 and 6x 2013 EBITDA – and that’s before we give the company any credit for Macau Studio City or the pending deal partly owned and managed by Belle Grande Manila Bay.  Investors must really be afraid of the Macau VIP outlook.


We estimate hold played a small role in the quarter of around a $4MM EBITDA benefit.  CoD held a little high, while Altira held a little low.  We are projecting $212MM of EBITDA for Q2, which is 3% below consensus of $219MM.  Consensus estimates have factored in hold of 2.94% for CoD (we’re at 2.98%) and 2.8% for Altira (vs. HE at 2.75%).


While most investors are worried about the slowdown that’s been occurring in the VIP market, we would point out that MPEL’s mass/slot business should grow about 28% YoY in 2Q12 and has averaged 49% YoY in the last 3 quarters.  MPEL remains the cheapest concessionaire with operations on Cotai Strip with two large projects in the pipeline and a multiple of just 6x 2013.



2Q Detail


We estimate that City of Dreams will report $704MM of net revenues and $185MM in EBITDA (2% below consensus)

  • Our net casino win projection is $682MM
    • VIP net win of $400MM
      • Assuming 15.5% direct play, we estimate $19.3BN of RC volume (flat YoY) and a hold rate of 2.98%
      • Using CoD’s historical hold rate of 2.87%, EBITDA would be $7MM lower and net revenues would be $18MM lower
    • $243MM of mass win, up 37% YoY
    • $38MM of slot win
  • $23MM of net non gaming revenue
    • $22MM of room revenue
    • $14MM of F&B revenue
    • $23MM of retail, entertainment and other revenue
    • $37MMM of promotional allowances or 63% of gross non-gaming revenue or 5.4% of net gaming revenue
  • $407MM of variable operating expenses
    • $334MM of taxes
    • $61MM of gaming promoter commissions in addition to the rebate rate of 90bps (we assume an all-in commission rate of 1.21% or 40.8% on a rev share basis)
  • $25MM of non-gaming expenses
  • $87MM of fixed operating expenses flat QoQ

We project $216MM of net revenues and $38MM in EBITDA for Altira (5% above consensus)

  • We estimate net casino win $209MM
    • VIP net win of $281MM
      • $10.2BN of RC volume (23% YoY decrease) and a hold rate of 2.75%
      • Using Altira’s historical hold rate of 2.81%, we estimate that EBITDA would be $3MM higher and that net revenues would be $6MM better
    • $26MM of mass win, up 12% YoY
  • $7MM of net non gaming revenue
  • $146MM of variable operating expenses
    • $120MM of taxes
    • $24MM of gaming promoter commissions in addition to the rebate rate of 96bps (we assume an all-in commission rate of 1.19% or 43.3% on a rev share basis)
  • $3MM of non-gaming expenses
  • $29MM of fixed operating expenses in-line with 1Q

Other stuff:

  • Mocha slots revenue and EBITDA of $36MM and $9MM, respectively
  • D&A:  $96MM (guidance of $90-95MM)
  • Interest expense:  $25MM (guidance of $23-25MM)
  • Corporate expense:  $20MM (guidance of $18-20MM)