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NYSE Volume Continues To Fall

Anyone actively participating in US equities will tell you that market volumes have been abysmal lately. Broker-dealers have been getting crushed, including the bulge bracket banks as market volumes continue to drop. When volume isn't there, brokers aren't making money and that puts a strain on any company with a capital markets business.


The year over year chart shows that volume in 3Q12 was down 41% YoY, partly attributable to a tough +12% comp in 3Q11. Nevertheless, this is the largest YoY decline in volume in the last three years. On a sequential basis, volume was down 17% in 3Q12.  


NYSE Volume Continues To Fall - volume QoQ



NYSE Volume Continues To Fall - Volume YoY

Buyem: SP500 Levels, Refreshed

Takeaway: Keep moving – markets are.



Fortunately, I can’t call today’s note by any politician’s name – it’s just another signal that we are tagging the low end of our risk range.


Across our core risk management durations, here are the lines that matter to me most:


  1. Immediate-term TRADE resistance = 1464
  2. Immediate-term TRADE support = 1444
  3. Intermediate-term TREND support = 1419


In other words, keep moving – markets are.



Keith R. McCullough
Chief Executive Officer


Buyem: SP500 Levels, Refreshed - SPX

Golden Week In Macau

Macau’s Golden Week took place last week and put up decent average daily table revenues (ADTR). ADTR fell in September compared to August, but overall, the story is that gaming volumes are solid but comps are tough. For those of you who are unfamiliar with Golden Week, it is a seven day Chinese holiday which attracts lots of tourists; Macau welcomed 390,683 visitors on the first four days alone. Visitation through Golden Week was up 9% year-over-year (that is an apples-to-apples comparison) and we have reports of strong floor traffic. This bodes well for high margin Mass gaming revenues.


Golden Week In Macau  - macau4

Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.


In preparation for HST's 3Q earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.






  • "We continue to be encouraged by the positive trends in group business. Group bookings in the quarter for the remainder of the year increased 9%.... and the average rate on those bookings rose by more than 6%. Total bookings for the remainder of the year are now more than 7.5% ahead of last year's pace, and the overall rate for the third and fourth quarters has increased well over 2%, indicating revenue improvement of 10%. We're also seeing the positive booking activity extend into 2013 in both demand and rate, indicating that our group hotels are benefiting from increased business spending and should continue to perform well for the remainder of this year and next."
  • "On the disposition front, we have one smaller asset under contract, which is expected to close in late summer, and we are also actively marketing several additional properties which we expect to close during the fourth quarter. While the sale market is difficult to predict, the guidance assumes we complete incremental sales in the $300 million to $400 million range by year-end." 
  • "It is worth noting that we are seeing great results at our three recently redeveloped hotels: the Chicago O'Hare Marriott, the Atlanta Perimeter Marriott and the Sheraton Indianapolis, where RevPAR is running better than 35% ahead of pre-renovation levels."  
  • "During the quarter, we completed the renovation of the rooms at the New York Helmsley Hotel as a part of the conversion process of this hotel to the Westin Grand Central and have also decided to renovate the lobby and create a new restaurant/bar outlet in the front of the hotel which should be complete by early fall." 
  • Regional RevPAR outlook:
    • "We expect Philadelphia to be a top performing market in the third quarter due to strong group and transient demand, which should allow us to drive pricing."
    • "We expect our Chicago hotels to underperform our portfolio in the third quarter due to lower levels of citywide and group demand when compared to the third quarter of 2011."
    • "We expect our Boston hotels to have a strong third quarter."
    • "We expect our Atlanta hotels to underperform our portfolio in the third quarter due to renovations at the Ritz-Carlton Buckhead and the Four Seasons."
    • "We expect our San Francisco hotels to continue to perform very well in the third quarter as strong demand will allow us to continue to drive rate."
    • "RevPAR for our New York hotels increased 4.8% due to growth in ADR. Results were negatively impacted by the second and final stage of the rooms renovations at the New York Marriott Marquis and the Sheraton New York and a rooms renovation at the W Union Square....We expect our New York hotels to perform better in the third quarter."
    • "Our Miami and Fort Lauderdale hotels struggled in the quarter as RevPAR declined 20 basis points....The weakness was due to less transient and group demand. We expect our Miami and Fort Lauderdale hotels to perform better in the third quarter due to better group bookings."
  • "We continue to see improvements in catering, meeting room rental and audio-visual revenues, as well as reductions in food and beverage cost as a percentage of revenue."
  • "Looking to the rest of 2012, we expect that comparable hotel RevPAR will be driven more by both occupancy and rate growth, but rate growth should be increasingly more important throughout the year. The additional rate growth should lead to solid rooms' flow through even with growth in wage and benefit cost. We expect the positive trends in group demand to continue which should help drive growth in banquet and audio-visual revenues and good F&B flow through."
  • "We expect unallocated cost to increase more than inflation, particularly for sales and marketing where higher revenues will increase cost. We also expect utilities to decline slightly for the full year."
  • "We expected a property tax increase of roughly 8% to 9% this year. At this point, we expect an increase in the 6% area as we have been successful in reducing some of the assessments."
  • "Taking into consideration the acquisition of the Hyatt DC and the expected term loan and the related use of proceeds from the term loan to repay approximately $400 million of debt, our outstanding debt will increase approximately $100 million to roughly $5.3 billion. We will have approximately $760 million of capacity in our credit facility and approximately $150 million of cash and cash equivalents."
  • "We will certainly be pushing for higher pricing next year to reflect the more competitive market conditions."
  • "If trends hold the way they are now, we would probably do a little bit less in special corporate or have fewer special corporate accounts next year – or at least fewer special corporate accounts with less room availability, because we will be recognizing the fact that, number one, we've got more group business on the books, we have higher occupancy and we really ultimately would like to be able to push even more of our business into those more highly rated corporate and premium categories."
  • "We are starting to see an ability to negotiate better cancellation penalties, better attrition clauses and overall better contracts. But....it depends a lot on the hotel....I think what we're seeing this year is ultimately a slight increase in attrition and cancellation fees on a year-to-date basis compared to what we had last year."
  • [2012 group business booked] "It's slightly north of 90%, maybe... 91%, something like that."
  • [3Q vs 4Q REVPAR growth] "I don't know that we necessarily see a big difference in trends between the quarters right now."
  • [Acquisitions environment]  "I'd say expectations have moderated a bit. But clearly we're seeing more activity, more opportunity right now than we did in the beginning of the year, and I think it doesn't surprise me in some ways that that would happen. I think conditions are better. So we didn't try to predict the number of acquisitions that we would get done, but we certainly still are looking to be active. And I would still say that at the end of the day, for the full-year, it is our intent to be a net acquirer as opposed to a net seller in 2012."
  • "I think what we're finding on wages and benefits right now is that we're probably looking at our overall wages and benefits kind of increasing somewhere a little bit north of 3% over the last quarter."
  • "We'd like to buy existing full-service there, because we still feel very good about the overall opportunity in Brazil. And on the select service side, we think that matches up well with the sort of emerging wealth that's happening within the country of Brazil..... I think we could see some incremental investment in some other select service hotels in a couple of the major markets within Brazil. Nothing necessarily imminent, but we are looking at some opportunities there."
  • "The new supply in India is picking up a bit. It's certainly nowhere near the level of what we've seen in China, but I'd say right now, we have a cautious outlook on India."
  • 2H vs 1H Europe REVPAR:  "We generally would expect it to be in line with what we've seen in the first half of the year."
    • "The one market that's underperformed year-to-date has really been Brussels. But we have a sense that that will do a little bit better in the second half of the year." 
  • "We do intend to be an active seller over the next two and three years. And as we are consistent with what we've described in the past, a number of these suburban assets, both in core and non-core markets and airport locations, leaving out the ones that are sort of directly attached to the airport, those are the hotels that would be high on our priority list in terms of hotels that should be sold."

ENERGY: Insider Buying And Selling

We’ve highlighted insider selling recently in financials, now it’s time to focus on energy. Taking a look at oil and gas companies with the most insider buying and selling transactions over the last six months, you can see that the selling heavily outweighs the buying. The metric is total shares purchased as a percentage of the total shares outstanding in order to capture the relative importance of the transactions.



ENERGY: Insider Buying And Selling  - insidertrades

Putting On Risk







There’s always risk somewhere. Be it in the stock market or voting in an election. Risk is a part of our daily lives. So the IMF coming out this morning and stating that it sees an “alarmingly high risk of a deeper global slump,” is a realization of the risk that has been inherent in global markets for some time now. What does that mean for you? To us, it means more of the same that hasn’t worked. We’re still in a recession and multiple rounds of QE haven’t worked. What’s left to try out at this point? When you run out of bullets, you're at risk of being taken down, just like the market.




Europe continues to watch itself turn into an absolute mess. Italian stocks and Spanish stocks continue to fall lower and people still think that these countries aren’t all that bad. What will it take for them to realize the mess they’ve gotten themselves into? The ECB can buy bonds until it’s blue in the face, but is that going to fix the underlying problem? The U.S. and Greece enjoyed kicking the can down the road; does that mean it’s OK to kick the can to others? These are questions that will soon be answered. And in the mean time, we'll watch stocks fall and bond yields climb.






Cash:                Flat


U.S. Equities:   Flat


Int'l Equities:   Flat   


Commodities: Flat


Fixed Income:  UP


Int'l Currencies: Down  








Remains our top long in casual dining as new sales layers (pizza) and strong-performing remodels (~5% comps) should maintain sales momentum. The company is continuing to enhance returns for shareholders through share buybacks . The stock trades at a discount to DIN (7.7x vs 9.3x EV/EBITDA) and in line with the group at 7.3x.

  • TAIL:      LONG            



Emissions regulations in the US focusing on greenhouse gases should end the disruptive pre-buy cycle and allow PCAR to improve margins. Improved capacity utilization, truck fleet aging, and less volatile used truck prices all should support higher long-run profitability. In the near-term, Paccar may benefit from engine certification issues at Navistar, allowing it to gain market share. Longer-term, Paccar enjos a strong position in a structurally advantaged industry and an attractive valuation.

  • TAIL:      LONG



This company’s on track to post $3Bn in revenues by ’14 – impressive given a $1.5Bn print in 2011. Perhaps more impressive is the breadth of growth drivers that will get it there – women’s, accessories, new underwear platform etc. in addition to footwear. UA is gaining share in both apparel and footwear quarter-to-date. While some may be concerned over the loss of UA’s SVP/Sourcing we’re 8% ahead of the Street in the upcoming quarter and buyers on weakness.

  • TAIL:      LONG







“#Iran Live: Gold prices soar 25% in a week as officials try to "black out" the figures bit.ly/UOLcim | #p2 #tcot#IranElection” -@EANewsFeed




“Forgive your enemies, but never forget their names.” -John F. Kennedy




Iron ore, Shanghai steel near 2-month peak as demand revives




Early Look

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