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Takeaway: Sep continued the trend of sequential accleration in Macau. While Oct will likely end that trend (difficult comparison) Nov should be strong

Mass strength offsets weaker than expected VIP volumes 



As we already knew, September GGR grew 12.3% (in US$), on the softer side, but still in-line with our expectations and above the growth in July and August.  After looking through the data, it appears that VIP was weaker than the headline suggests, as VIP volumes were worse than we expected and hold was higher.  However, higher margin Mass was srong.  We believe that October growth will slow to 4-9% YoY due to a very difficult comparison but then pick up again in November and December and 2013.  


We estimate that total direct play this month accounted for 6.6% of the market, compared with 6.9% in September 2011.  The total VIP market held at 2.97% vs. 2.77% in September 2011.  Adjusting for direct play and theoretical hold of 2.85% in both months, September revenues would have only increased 8% YoY.


The good news is that Mass revenues continue to come in strong, posting 31%YoY growth.  The bad news, albeit less bad than the last few months, is that VIP volume was up just 40bps even with the addition of Sands Cotai Central Phase 2.  Prior to September, VIP volumes generated 3 months of consecutive YoY declines.  LVS was the only concessionaire to produce YoY growth in Junket RC volume for the 2nd month in a row.


Here are some company property observations:

  • As expected, LVS held very poorly on VIP.  However, with help from the opening of Phase 2 of Sands Cotai Central, Sands achieved Rolling Chip volume share of 15.9%, which was the company’s best share since December 2009.  LVS’s Mass revenues grew 54% and Mass share increased 50 bps sequentially.  Overall, a much better month for LVS than implied by the market share number. Interestingly, Junket RC share at SCC grew to 4.6%, surpassing Venetian’s share of 4.0% in September.
  • Wynn’s share increased 60bps sequentially, well above trend.  However, the property held much higher than normal and last year, the property held well below normal.  Wynn’s Rolling Chip and Mass share were below the recent trend.  Rolling Chip volume experienced its 5th straight month of declines.
  • MPEL generated its highest GGR share since December driven by its highest Rolling Chip volume share since November.  MPEL’s Mass revenues were up 40% YoY but VIP revs fell 8%.  Obviously, this trade off is better for the company’s profitability.
  • Galaxy’s share fell to the lowest in 7 months.  Hold was 3.03% for its 2 owned properties but much lower than the very high hold experienced in August (3.51%).  Galaxy Macau’s RC share fell 40bps to 10.8%, marking the 4th consecutive month of share declines.
  • SJM gained the most share in September but the watermark set in August was a low bar to beat – i.e. the companies lowest share since July 2009. 



Total table revenues grew 13% in September, an acceleration over the July and August growth rates.  Mass revenue growth was strong at 31%, just a little below the 6M trailing average of 33%.  VIP revenues posted a month of 7% YoY growth after 2 months of declines and Junket RC also broke the 3 months negative streak, eking out growth of 0.4%.  While we expect October’s growth to moderate to a rate of 4-9%, we do expect that the VIP revenues to keep their head above water for the rest of 2012.



Table revenues grew 50% YoY (Mass +54%; VIP+47%), garnering the best growth in the market despite low hold across their portfolio.  That said, Sands China’s hold in September 2011 was also quite weak, making the comparison easier.  We estimate that the Sands portfolio of properties held at 2.26%, vs 2.37% last September, adjusted for direct play.  For the second month in a row, Sands was the only concessionaire to produce YoY growth in Junket RC volume.

  • In a big reversal of 5 months of declines, Sands table revenue grew 51% YoY.  The good news is that VIP Junket RC and Mass revenues increased YoY.  The bad news is that the strong YoY print was given a huge boost by an easy hold comparison and high hold this year.
    • Mass grew 11%
    • VIP grew 92% YoY.  Hold was high and the comparison was very easy.  We estimate that Sands held at 3.12% in September compared to 1.76% in the same period last year.  We assume 9% direct play in August vs. 15% in September 2011 (in-line with what we saw in 2Q12 and 3Q11).
    • Junket RC was increased 12%, reversing 9 preceding months of consecutive YoY declines in VIP RC at the property
    • We understand that LVS removed some tables from SCC and moved a few back to Sands Macau where they get better utilization
  • Venetian table fell 1% YoY.  Weak September performance was driven by a drop in VIP Junket RC and exacerbated by a difficult hold comparison and lowish hold in September.  On the bright side, strong Mass offset some of the weakness on VIP.
    • Mass increased 39%
    • VIP fell 26%
    • Junket VIP RC fell 17%, marking the 8th consecutive month of declines at Venetian.  In the 12 month period spanning from September 2008-2009, Venetian saw 10 months where junket RC volumes fell.
    • Assuming 28% direct play, hold was 2.75% compared to 3.08% in September 2011, assuming 24% direct play (in-line with 3Q11)
  • Four Seasons continued to perform well, growing 102% YoY
    • Mass revenues dropped 27%
    • VIP soared 219% and Junket VIP RC rose 184% YoY
    • If we assume direct play of 16%, in-line with 1Q12 and 2Q12, hold in September was 1.83% vs. 1.26% in September 2011 when direct play was 38% (in-line with 3Q11)
  • Sands Cotai Central produced $91MM in September, below an average of run rate of $123MM/month over the last 4 months. The drop-off is a result of bad luck in September.
    • Mass revenue expanded to $43MM, $3MM higher MoM.  Interestingly, Mass revenues have been increasing $3MM/month since June
    • VIP revenue of $48MM was the lowest VIP output, post opening
    • Junket RC volume of $2,978MM, increased 11% MoM, setting a record for the property
    • If we assume that direct play was 10%, hold would have been just 1.44% - the lowest since the property opened in April.   As a point of reference, direct play in 2Q12 was 12%.


At +30% YoY, Wynn table revenues had the second best growth in the market in September.  September also broke a 4 month streak of YoY declines and was the best growth month for WYNN in 11 months.  Most of the growth was driven by high hold and an easy comparison.

  • Mass grew 9%
  • VIP revenues grew 37%
  • Junket RC declined 6%, marking the 5th consecutive month of declines
  • Assuming 8% of total VIP play was direct (in-line with 2Q12), we estimate that hold was 3.35% compared to 2.30% last year (assuming 10% direct play – in-line with 3Q11)


MPEL table revenue fell 1%, having the worst concessionaire performance for the 2nd month in a row.  Hold across MPEL’s 2 properties was comparable YoY - 3.15% vs. 3.20% last year.

  • Altira revenues fell 6% due to a 7% decrease in VIP.  Mass grew 5%.  Results would have been much worse if not for good luck and an easy hold comparison.
    • VIP RC decreased 21%, marking the 10th consecutive month of declines which have averaged -19%
    • We estimate that hold was 3.34% compared to 2.86% in the prior year
  • CoD table revenue grew 2%, negatively impacted by a difficult hold comparison
    • Mass revenue grew an impressive 46%, while VIP revenue fell 9%
    • RC grew 3%
    • Assuming a 15% direct play level, hold was 3.05% in September compared to 3.43% last year (assuming 15.7% direct play levels in-line with 3Q11)


Table revenue grew 6%, breaking a 4 month streak of consecutive declines

  • Mass revenue was up 14% and VIP revenue grew 3%
  • Junket RC fell 5%, marking the 8th month of consecutive declines for VIP volume across SJM’s portfolio.
  • Hold was 3.09%, compared with 2.86% last September


Galaxy’s table revenue grew just 4%, taking the spot of 2nd worst growth among the 6 concessionaires.  Mass growth still led the market with growth of 57% which was offset by a 6% decline in VIP growth.  Galaxy's hold at its 2 owned properties was 3.03% vs. 3.25% in September 2011.

  • StarWorld table revenues fell 17%, marking the 3rdconsecutive month of declines
    • Mass grew 43%, offset by a 22% drop in VIP
    • Junket RC fell 18%, marking the 4th month of consecutive declines
    • Hold was normal at 2.91% but the comp was difficult at 3.06% last September
  • Galaxy Macau's table revenues grew 22%
    • Mass grew 66%
    • VIP grew 12%, while RC declined 0.6%
    • Hold was high in September at 3.13%,  but the comp was more difficult at 3.46%


MGM’s table revenue grew 8% in September

  • Mass revenue grew 24%
  • VIP revenue grew 4% while VIP RC declined 1%, marking the 5th consecutive month of declines (although the last 3 months of declines have been mild)
  • If direct play was 9%, then September hold was 3.12% compared to 2.96% last year





Despite producing the best YoY growth, LVS was the second biggest share loser in September, closing the month at 17.7%, -1.2% MoM.  September’s share was worse than its 6 month trailing market share of 18.6% but better than Sands’ 2011 average share of 15.7%.

  • Sands' share was 4.6%, up 1% MoM.  For comparison purposes, 2011 share was 4.6% and 6M trailing average share was 3.7%.
    • Mass share was 5.9%
    • VIP rev share jumped to 4.0%
    • RC share was 3.5%, 60bps better than its 6M average
  • Venetian’s share fell 1.1% to 8.5%.  2011 share was 8.4% and 6 month trailing share was 7.6%.
    • Mass share fell 50bps to 13.7%
    • VIP share decreased 1.5% to 4.8%
    • Junket RC share increased 10bps to 4.0%
  • FS decreased 90bps to 2.2%.  This compares to 2011 share of 2.2% and 6M trailing average share of 3.3%.
    • VIP share decreased 1.2% to 2.6%. 
    • Mass ticked up 20bps to 1.3%
    • Junket RC was flat at 3.7%
  • Sands Cotai Central's table market share fell to 3.2% in September from 3.4% in August.
    • Mass share of 5.2%, marking a property record
    • VIP share of 2.3%
    • Junket RC share grew to 4.6%, surpassing Venetian’s share of 4.0% in September


Wynn gained 50bps of market share in September, rising to 12.9% due to high hold.  While its September share was far below Wynn’s 2011 average of 14.1%, it was better than their 6-month trailing average of 12.1%.  We expect Wynn’s share to struggle in the face of a ramping Sands Cotai Central.

  • Mass market share was flat MoM at 8.7%
  • VIP market share rose 80bps to 14.5%
  • Junket RC share increased 40bps to 12.6%


MPEL’s gained 1.2% in September to 14.3%, above their 6 month trailing share of 13.3% and but below their 2011 share of 14.8%. 

  • Altira’s share grew 160bps to 4.4%, above its 6M trailing share of 3.6% but below their 2011 share of 5.3%.  Much of the MoM recovery was due to high hold in September following low hold in August.
    • Mass share fell 20bps to 1.3%
    • VIP surged 2.4% to 5.7%
    • VIP RC share was flat at 5.2%
  • CoD’s share fell 50bps to 9.6%.  September’s share was above the property’s 2011 and and 6M trailing share of 9.3% and 9.4%, respectively.
    • Mass market share dropped 1.5%to 8.9%
    • VIP share fell 10bps to 9.9%
    • Junket RC grew 30bps to 8.7%


SJM was the biggest share gainer in September.  SJM’s share grew 2.1% to 27.2%.  September’s share compares to their 2011 average of 29.2% and its 6M trailing average of 26.4%.

  • Mass market share improved 1.4% to 32.0%
  • VIP share increased 2.6% to 26.1%
  • Junket RC share fell 70bps to 26.9%


Galaxy was the biggest share donor in September, dropped 210bps to 18.1% in September, below its 6M trailing share average of 19.9%

  • Galaxy Macau share dropped 2.3% to 10.3%.  Last month’s share was inflated due to record hold of 4%.  September’s hold was 3.13%.
    • Mass share fell 50bps to 9.2%
    • VIP share plunged 3% to 10.7%
    • RC share fell 40bps to 10.8%, marking the 4th consecutive month of share declines
  • Starworld share grew 50bps to 7.1%
    • Mass share increased 20bps to 3.2%
    • VIP share grew 70bps to 8.7%
    • RC share inched up 20bps to 9.3%


MGM lost 60bps of share to 9.8% in September, in-line with their 6M average of 9.8% but below 2011 share of 10.5%.

  • Mass share increased 20bps to 7.7%
  • VIP share fell 80bps to 10.3%
  • Junket RC fell 1.2% to 9.6%


Slot Revenue


Slot revenue grew just 4% YoY to $121MM in September; the slowest growth for slots since June 2009 when growth turned negative.  Needless to say there were no records set for slots in September.  September had the absolute lowest print since November 2011.

  • MGM took the top prize for YoY growth with  +29% to $19MM.  Interestingly, this is the 4th consecutive month MGM has had the best slot growth.
  • Galaxy had the second best growth YoY at 19% to $16MM
  • MPEL grew 17% YoY to $23MM
  • LVS’s slot revenue only grew 6% to $33MM
  • SJM fell 15% to $14MM
  • WYNN had the worst YoY performance in slots with a 21% YoY decline to $16MM; the worst slot revenue month on record in 22 months and 50% below their record of $32MM set in May 2011.  








The Hedgeye Macro Team, led by CEO Keith McCullough and DOR Daryl Jones, hosts our Q4 2012 Macro Themes Call.  This video includes the audio of the call synchronized with the slides.


To listen to the Q4 2012 Macro Themes Conference Call hosted earlier today by the Hedgeye Macro Team, led by CEO Keith McCullough and DOR Daryl Jones, please follow the link below:


Q4 2012 Macro Themes Call Replay (Please note in order to access the replay you will need your hedgeye.com login information.) 


To view the presentation follow the link below:


Q4 2012 Macro Themes Presentation


If you are having trouble accessing this replay or would like more information please contact .







  1. #EarningsSlowing - Corporate margins are stretched on numerous metrics. Even with financial engineering we suggest there's limited upside in the results from here.  We expect the gravity of global growth slowing and inflation accelerating to impact consumer and corporate P&Ls alike.
  2. Bubble #3 - Following the tech and housing bubbles, the charts of Bernanke's Commodity Bubble could not be more crystal clear. So when does this bubble pop?  We'll continue to take our cues from the U.S. Dollar and weigh the influence of policy and fundamentals across the complex.
  3. Keynesian Cliff - We wrap together an analysis of the U.S. Presidential  race with the nearing US fiscal  cliff. We discuss the impact of investors potentially shifting their attention away from  Europe and back to the U.S.'s ugly imbalances.



Prior to founding Hedgeye Risk Management, Keith built a track record as a successful hedge fund manager at the Carlyle-Blue Wave Partners hedge fund, Magnetar Capital, Falconhenge Partners, and Dawson-Herman Capital Management. He got his start as an institutional equity sales analyst at Credit Suisse First Boston after earning his Bachelor of Arts in Economics from Yale University, where he captained the Yale Varsity Hockey Team to a Division I Ivy League Championship. Keith is also a Contributing Editor to CNBC TV, Fortune Magazine and author of Diary of a Hedge Fund Manager (Wiley 2010). 



Prior to joining Hedgeye Risk Management, Daryl was the Sector Head for Basic Materials at HIG Capital's hedge fund, Brightpoint Capital. Earlier, Daryl founded the public investment effort at Onex Corporation, a leading private equity firm. At Hedgeye, Daryl covers commodities, geo-politics and major asset classes outside of equities. 



Hedgeye Risk Management is a leading independent provider of real-time investment research. Focused exclusively on generating and delivering actionable investment ideas, the firm combines quantitative, bottom-up and macro analysis with an emphasis on timing. The Hedgeye team features some of the world's most regarded research analysts - united around a vision of independent, uncompromised real-time investment research as a service.


the macro show

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Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

Notes From Our Q4 Macro Themes Call

We held our Q4 2012 Macro Themes call today for clients and subscribers. Hedgeye CEO Keith McCullough and Director of Research Daryl Jones covered three major themes: Earnings Slowing, Bubbles and The Keynesian Cliff. 


Below are highlights from the call, including some images from our 45-page slide deck included on the call. For those who are interested in gaining access to future calls, which include a Q&A session with our team, please email sales@hedgeye.com or click here.


Theme 1: Earnings Slowing



Notes From Our Q4 Macro Themes Call  - theme1 pic



-You’re now seeing negative sell-side estimates on a YoY basis. Companies are lowering forward guidance. Look at FedEx, Caterpillar and Staples for examples of this.


-The Fed is running out of bullets; their balance sheet is going down and doesn’t have any juice left on a YoY basis and will be hard to continue as long as we keep printing into infinity and beyond.


-The S&P 500 is up, but durable goods are down on a YoY basis. The divergence between the two won’t hold. Either the S&P 500 will head down or durable goods will head higher.



Theme 2: Bubbles



Notes From Our Q4 Macro Themes Call  - theme2 pic



-Bubbles will continue. We saw the Tech Bubble in the 200s, then the Housing Bubble in 2007 and now we have the Commodities Bubble coming in 2012/2013. Check out 10-year charts of copper, oil, gold and the CRB Commodities Index.


-China’s growth over the past 10 years really helped fuel the commodity bubble. Keep in mind that China’s demand for commodities is decreasing. Chinese rebar demand has fallen off a cliff in the past six months. 


-Everyone loves investing at the peak of a bubble; speculators are betting on things like gold and that they’ll go higher. Eventually that bubble will pop, leaving many investors with frowns on their faces.


Theme 3: The Keynesian Cliff



Notes From Our Q4 Macro Themes Call  - theme3 pic



-The implications of the cliff are slowing short term growth. Republicans and the Tea Party want to get tough on fiscal reform. The cliff could reasonable equate to a 1-2% drag on growth in 2013, relative to consensus expectations.


-QE3 has been a positive for both stocks and President Obama’s reelection chances (according to the Hedgeye Election Indicator).


-Three scenarios could occur: Obama is reelected and Congress remains split: Weak Dollar / Obama is reelected and Democrats take back both houses: Weak Dollar / Romney wins and the Republicans take control of Congress: Stronger dollar?

Copper Meets The USD

Copper and China tell a story of decelerating growth among other things. But looking at the performance of the US dollar and copper, you can plainly see the effects of the Federal Reserve’s continued policy of devaluing our currency and ramping commodities higher. If Romney continues to win debates and the election in November, the US dollar will grow stronger and copper will likely fall lower.


Copper Meets The USD  - coppervsDOLLAR

Metals: The Effects Of QE

We've examined the year-to-date performance of several different metals, including gold, silver, platinum, copper and palladium. Although each metal is independent in terms of the moves in performance over this year, you can easily see the effects of the US dollar being devalued by the Federal Reserve in late August through September. Until the dollar can make significant moves to the upside, expect more of the same courtesy of Ben Bernanke.


Metals: The Effects Of QE - QE metals

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