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THE M3: DEC VISITATION; WENZHOU BAD LOAN RATIO DECLINES; LEVEN

The Macau Metro Monitor, January 23, 2013

 

 

MACAU VISITOR ARRIVALS DSEC

Visitor arrivals totaled 2,495,851 in December 2012, down by 2.0% YoY.  For the whole year of 2012, visitor arrivals increased slightly by 0.3% YoY to 28,082,292.  In December 2012, the average length of stay of visitors stood at 1.0 day, up by 0.1 day YoY.  Visitors from Mainland China increased slightly by 0.9% YoY to 1,495,316, with those traveling to Macao under the Individual Visit Scheme rising by 5.4% to 603,904.

 

THE M3: DEC VISITATION; WENZHOU BAD LOAN RATIO DECLINES; LEVEN - visitation1

 

WENZHOU BAD LOAN RATIO DECLINES, ENDING 17-MONTH RISING STREAK Bloomberg 

According to the Oriental Morning Post, the non-performing loan ratio at banks in Wenzhou, the eastern Chinese city hit hardest by the collapse of private lending, dropped for the first time since June 2011.  The ratio fell to 3.43% at the end of November, down 0.01% MoM.  Still, the total amount of soured debt climbed to 24 billion yuan in November, an increase of 87 million yuan from October and up 15.3 billion yuan from the beginning of the year.


In Wenzhou, an export hub where almost 90% of families have taken part in underground lending, more than 100 people fled, committed suicide or declared bankruptcy from August 2011 through last May, and at least 800 lending brokers went bankrupt, Xinhua News Agency reported.

 

The State Council, China's cabinet, announced a trial plan in March aimed at easing funding for small companies and monitoring underground loans.

 

MACAU GAMING MARKET COULD HIT MOP800 BILLION: LEVEN Macau Business

The president and COO of Las Vegas Sands Corp, Michael Leven, says Macau’s gaming market could grow to MOP800 billion (US$100 billion) in revenue per year.  In 2012, Macau’s casinos reported gross gaming revenue of MOP304.1 billion.

Leven said, “It will continue to grow, because as income grows in the mainland, it’s going to continue to feed people into Macau. There’s no risk that they won’t have considerable growth.”  He also confirmed of the possible sale of Sands Bethlehem.  “If we get our price, we think it may not fit in the long run for our company. It’s a smaller product. We’ll probably look to sell it. However, somebody’s got to pay the price.  We’re just as happy to keep it,” Leven said.


COH: Coming Clean That Model Is Unsustainable

Takeaway: COH's Sales growth and 30%+ Margin model can no longer coexist. This won’t be the last ‘investment year’, which creates a value trap.

  • Coach is hardly flying in on the wings of glory with its 2Q13 results and a $1.23 print versus consensus of $1.29. No surprises here, as this is in-line with our model, and has been on our short list for a while given our concerns over the levels of spending needed to maintain market share. But the question to ask here is whether this miss is an event to buy into, or one to press. Our sense is that it is the latter.

 

  • Our rationale is that we’re hearing Coach talk about the promotional cadence and competitive landscape for the first time in – well, ever. Ever is a long time. We get it that China and Men both represent sizable opportunities, but the US Handbag market is one that represents 70% of Coach’s business. If it can’t grow profitably, then nor can Coach.

 

  • The reality is that when we see a miss like this – for the reasons we’re seeing – it is usually not the last miss. We think that it’s more likely than not that COH is locked in a multi-year period where it grows its top line at the expense of a draw-down in EBIT margin, or it holds margins steady with top line remaining stagnant. We’d bet on the former.

 

  • Either way, it suggests that FY13 is not the last ‘investment year’ that Coach will see. We think that value investors risk getting stuck in a value trap on this one. This name is cheap, built to stay that way, and lacking earnings growth to move the stock higher.

 

 

COH: Coming Clean That Model Is Unsustainable - COH S

 

 








    Morning Reads From Our Sector Heads

    Note: Each morning we'll post what stories Hedgeye's various sector heads and analysts are reading. 

     

    Josh Steiner (Financials):

     

    -Bank security study highlights vulnerabilities

     

    -Morgan Stanley’s Pay Later Plan

     

    Todd Jordan (GLL):

     

    -Wenzhou Bad Loan Ratio Declines, Ending 17-Month Rising Streak

     

    Kevin Kaiser (Energy):

     

    -WPX ENERGY MAKES DISCOVERY IN NIOBRARA FORMATION

     

    -Baker Hughes Announces Fourth Quarter and Annual Results

     

    Howard Penney (Restaurants):

     

    -Taco Bell provides sneak peak of Super Bowl commercial


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    THE HEDGEYE DAILY OUTLOOK

    TODAY’S S&P 500 SET-UP – January 23, 2013


    As we look at today's setup for the S&P 500, the range is 21 points or 1.18% downside to 1475 and 0.23% upside to 1496.        

                                                                                                                           

    SECTOR AND GLOBAL PERFORMANCE

     

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    THE HEDGEYE DAILY OUTLOOK - 3

     

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    EQUITY SENTIMENT:


    THE HEDGEYE DAILY OUTLOOK - 10


    CREDIT/ECONOMIC MARKET LOOK:

    • YIELD CURVE: 1.60 from 1.60
    • VIX  closed at 12.43 1 day percent change of -0.24%

    MACRO DATA POINTS (Bloomberg Estimates):

    • 7am: MBA Mortgage Applications (prior 15.2%)
    • 7:45am: ICSC/Goldman weekly sales
    • 8:55am: Johnson/Redbook weekly sales
    • 9am: FHFA House Price Index MoM Nov. est. 0.7% (prior 0.5%)
    • 9:45am: Revision of Chicago Purchasing Managers Index
    • 10am: IMF releases World Economic Outlook update
    • 11am: U.S. to purchase $1.25b-$1.75b notes
    • 11:30am: U.S. to sell $30b 4-week bills
    • 4:30pm: API energy inventories

    GOVERNMENT:

      • IMF issues update to 2013 World Economic Outlook, 10am
      • Congressional Gun Violence Prevention Task Force holds
      • meeting, 1pm
      • Sec. of State Clinton testifies on Benghazi before Senate
      • Foreign Relations, 9am; House Foreign Affairs, 2pm
      • ITC scheduled to announce decision to uphold/review a trade
      • judge’s finding that Samsung infringed on 4 Apple patents, 5pm

    WHAT TO WATCH

    • Apple reports earnings after close; 47.8m iPhones expected
    • Allergan to buy Map Pharma for $958 million in cash
    • Google profit tops ests. on year-end advertising gains
    • IBM 2013 EPS beats estimates as software boosts profit
    • Texas Instruments forecasts sales that miss some estimates
    • McDonald’s qtr global comp sales may drop; first since 2003
    • Siemens profit beats estimates on energy, health-care units
    • Unilever sales growth beats estimates on emerging markets
    • Draghi says ‘Darkest Clouds’ over euro area have lifted
    • Netanyahu vows broad coalition as Lapid surprises in vote
    • U.K.’s Cameron promises to hold referendum on EU by 2017
    • U.S. budget discord is top threat to global economy: poll
    • Microsoft said to weigh Dell investment in buyout
    • World Economic Forum in Davos continues

    EARNINGS:

      • Wellpoint (WLP) 6:00am, $0.94
      • Air Products & Chemicals (APD) 6:00am, $1.29
      • Baker Hughes (BHI) 6:00am, $0.61
      • TE Connectivity (TEL) 6:00am, $0.64
      • Praxair (PX) 6:05am, $1.38
      • Textron (TXT) 6:30am, $0.56
      • Quest Diagnostics (DGX) 6:30am, $1.04
      • Coach (COH) 7:00am, $1.29
      • Motorola Solutions (MSI) 7:00am, $1.02
      • United Technologies (UTX) 7:00am, $1.03
      • RPC (RES) 7:15am, $0.25
      • Rollins (ROL) 7:30am, $0.17
      • First Niagara Financial (FNFG) 7:30am, $0.18
      • Molex (MOLX) 7:30am, $0.39
      • St Jude Medical (STJ) 7:30am, $0.89
      • Allegheny Technologies (ATI) 7:35am, $0.15
      • Abbott Laboratories (ABT) 7:44am, $0.46
      • McDonald’s (MCD) 7:58am, $1.33
      • US Airways Group (LCC) 8:00am, $0.19
      • General Dynamics (GD) Pre-Mkt, $1.89
      • Texas Capital Bancshares (TCBI) 4:00pm, $0.83
      • Bancorp South (BXS) 4:00pm, $0.24
      • RLI (RLI) 4:00pm, $0.45
      • Swift Transportation (SWFT) 4:00pm, $0.26
      • Cubist Pharmaceuticals (CBST) 4:00pm, $0.48
      • Stryker (SYK) 4:00pm, $1.13
      • Varian Medical Systems (VAR) 4:00pm, $0.87
      • Greenhill & Co (GHL) 4:01pm, $0.72
      • Amgen (AMGN) 4:01pm, $1.38
      • Crown Castle International (CCI) 4:01pm, $0.13
      • LSI (LSI) 4:01pm, $0.14
      • Hexcel (HXL) 4:03pm, $0.38
      • Umpqua Holdings (UMPQ) 4:05pm, $0.23
      • InvenSense (INVN) 4:05pm, $0.17
      • Polycom (PLCM) 4:05pm, $0.15
      • F5 Networks (FFIV) 4:05pm, $1.15
      • Netflix (NFLX) 4:05pm, $(0.13)
      • SanDisk (SNDK) 4:05pm, $0.75
      • Symantec (SYMC) 4:05pm, $0.38
      • Lam Research (LRCX) 4:05pm, $0.44
      • United Rentals (URI) 4:15pm, $1.05
      • Altera (ALTR) 4:15pm, $0.39
      • Western Digital (WDC) 4:15pm, $1.82
      • Raymond James (RJF) 4:19pm, $0.67
      • Cathay General Bancorp (CATY) 4:30pm, $0.33
      • Cohen & Steers (CNS) 4:30pm, $0.42
      • Susquehanna Bancshares (SUSQ) 4:30pm, $0.23
      • Apple (AAPL) 4:30pm, $13.56
      • FNB /PA (FNB) 4:35pm, $0.21
      • East West Bancorp (EWBC) 4:45pm, $0.48
      • Hill-Rom Holdings (HRC) 5:00pm, $0.44
      • Noble (NE) 5:00pm, $0.67
      • Parametric Technology (PMTC) 5:25pm, $0.33
      • Teradyne (TER) 6:00pm, $0.01
      • Jacobs Engineering (JEC) Late PM, $0.75

    COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

     

    OIL – Both Brent and WTIC have re-captured their respective long-term TAIL risk lines of $92.04 and $111.48 support. There’s as important a difference b/t global growth slowing and stabilizing as there is stabilizing and accelerating – and it’s real tough to see consumption accelerate if food/oil prices reflate (from here); something to noodle over w/ Energy (XLE) +6.7% YTD.

    • Gold Near One-Month High Before Lawmakers Vote on Debt Ceiling
    • Leon Black Follows Denham in Buyout Firm Mine Push: Commodities
    • Physical Gold Purchases Seen by Standard Bank as Unusually High
    • Copper Trades Near One-Week High Before U.S. Debt-Ceiling Vote
    • Oil Trades Near Four-Month High Before Vote on U.S. Debt Ceiling
    • Soybeans Gain as Brazil Dryness May Cut Crop Amid Rising Demand
    • Rice Exports From Thailand Drop to Decade Low, Losing Top Spot
    • Cocoa Swings as Ivory Coast’s Crop Spared Damage; Coffee Gains
    • Galena Energy Hedge Fund Chief Lixi Said to Leave Company
    • Algeria Attack No Outlier as Oil Targeted 3 Times a Week: Energy
    • Chile Billionaires Propel CSAV to First From Worst: Freight
    • Traders Plan Gasoline, Diesel Freight Swaps as U.S. Drives Rally
    • Rubber Drops for Third Day as Delayed Stimulus May Curb Demand
    • Rebar Futures Rise for Second Day on Optimism Demand to Improve

    THE HEDGEYE DAILY OUTLOOK - 5

     

    CURRENCIES

     

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    EUROPEAN MARKETS


    RUSSIA - +0.8% leads European majors this morning and is more of the same on the reflation point. Treasury Bond Yields don’t like Oil ripping either, down a few bps d/d to 1.84%. Always interesting to study macro moves on the margin.

     

    THE HEDGEYE DAILY OUTLOOK - 7

     

    ASIAN MARKETS


    KOSPI – a leading indicator in our model works both ways and its interesting that the KOSPI (down -0.81% last night) just broke my immediate-term TRADE line (1985) out of nowhere (despite “Tech” news being solid after the US close). Nikkei punishing the Johnny come lately consensus crowd who came into the short Yen/long Nikkei trade late, down -2.1% through 10,733 TRADE support.

     

    THE HEDGEYE DAILY OUTLOOK - 8

     

    MIDDLE EAST


    THE HEDGEYE DAILY OUTLOOK - 9

     

     

    The Hedgeye Macro Team

     

     

     



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