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REPLAY: Q3 2013 MACRO THEMES CALL

Earlier today the Hedgeye Macro Team, led by CEO Keith McCullough, hosted their quarterly Macro Themes conference call in which they detailed their Top 3 Global Macro Investment themes for 3Q13.  The Replay and Presentation Materials can be accessed via the links below.

 

REPLAY:  CLICK HERE 

MATERIALS:  CLICK HERE

 

Q3 THEMES:

1. #RatesRising: The 30Y bull cycle in bonds is over.  We discuss the cross-asset class implications of the reversal and how to be positioned for the ongoing deflation of Bernanke's last (and largest) bubble.

  

2. #DebtDeflation: With total outstanding debt equal to three times equity, we give caution to the impact of debt deflating and offer investment vehicles to play this theme.


3. #AsianContagion: China sneezes and the rest of Asia catches the flu. #RisingRates and #StrongDollar continue to perpetuate #EmergingOutflows across the developing Asia region while a likely resurgence of positive sentiment surrounding the Abenomics agenda and continued yen weakness should help Japanese equities continue to outperform the region.  

 

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


FOUR FOR FOUR!

That’s a good stat for baseball but not so good when it comes to regional gaming operators missing estimates.

 

 

Estimates keep coming down yet regional gamers keep missing.  Q2 should be a rerun.  The following table details our EBITDA estimates.  Contact us if you would like to see our models.  

 

FOUR FOR FOUR! - H11

 

Note that we expect same-store EBITDA to fall for each of the four regional operators for the 2nd straight quarter.  With the exception of PENN, it should be 3 quarters in a row.  The economy is doing better and housing prices have improved.  What’s going?  We think oversupply and lack of demand are the problems.  As we illustrated in our 05/17/13 note “CHART DU JOUR: ADMITTING THE PROBLEM,’ the positive macro hasn’t overcome the long-term secular headwind of a declining slot customer base.

 

FOUR FOR FOUR! - B2


European Banking Monitor: Portugal, Portugal, Portugal

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 .

 

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Key Takeaways:

Portuguese sovereign swaps rose 83 bps last week to 556 bps, and are up 185 bps in the last month (+50%). Since 5/22, Portuguese swaps have doubled off their lows of 274 bps. By comparison, the rest of Europe is up 7-12% MoM. 

 

The CDS increases last week from Spanish, Portuguese, and Italian banks reflect heightened political instability at the country level.  Spain's corruption scandal of slush kickbacks to PM Rajoy's ruling party are reverberating even louder as new sources confirm the payments. Portugal's government remains on the precipice of snap elections over pushback on austerity and the fall-out from the resignations of the finance and foreign ministers in the first week of July.  Finally, Italy's coalition government remains fractured with persistent threats based on impending court rulings on Silvio Berlusconi.

 

We expect this political risk to carry through much of the summer. Despite calls from Portugal's President that an agreement with the main opposition will be reached shortly, we caution that underlying popular tensions in Portugal (but also across much of the periphery) are here to say given deep structural imbalances that fuel unrest. 

 

 

European Financial CDS - Most of Europe's banking system was uneventful last week. Spanish, Portuguese and some Italian banks posted noteworthy increases, however.

 

European Banking Monitor: Portugal, Portugal, Portugal - vv.banks

 

Sovereign CDS – Sovereign swaps were almost universally tighter last week, with one major exception. Portuguese swaps widened 83 bps WoW to 556. In the past month, Portuguese swaps have widened out 185 bps. This is a significant negative divergence from the rest of Europe. Is it too soon to begin asking whether Portugal is beginning to fulfill its destiny as Greece II? The data is starting to suggest that.

 

European Banking Monitor: Portugal, Portugal, Portugal - vv.sov 1png

 

European Banking Monitor: Portugal, Portugal, Portugal - vv. sov2

 

European Banking Monitor: Portugal, Portugal, Portugal - vv.sov 3

 

Euribor-OIS Spread – The Euribor-OIS spread tightened by 1 bps to 12 bps. 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. 

 

European Banking Monitor: Portugal, Portugal, Portugal - vv.euribor

 

ECB Liquidity Recourse to the Deposit Facility – Deposits fell by 17 billion Euros last week. 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.  

 

European Banking Monitor: Portugal, Portugal, Portugal - vv.facility


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.

Morning Reads on Our Radar Screen

Takeaway: A look at some stories on Hedgeye's radar screen.

Keith McCullough – CEO

China's economic growth at 7.5% in April to June period (via BBC)

U.K. House Prices Climb as Rightmove Doubles Forecast (via Bloomberg)

India Inflation Reaches Three-Month High as Rupee Fans Costs (via Bloomberg)

 

Morning Reads on Our Radar Screen - earth2

 

Kevin Kaiser – Energy

The Erstwhile Hedge Fund King of Akron, Ohio’s Very Difficult Summer (via SIRF)

Charting the effect of China's cooldown (via BBC)

 

Tom Tobin – Healthcare

Will Obamacare take bite out of dental coverage? (via MarketWatch)

UnitedHealth opts out of Illinois insurance exchange (via Crain’s Chicago Business)

Sebelius announces ACA funding aid in Phoenix (via trivalleycentral.com)

The hospital as hotel -- Affordable Care Act drives new medical-center amenities (via The Journal Times)

 

Josh Steiner – Financials

Citigroup Profit Beats Estimates as Stock Trading Gains (via Bloomberg)

30 Year Fixed National Avg now 4.48% (via Bloomberg)


Jonathan Casteleyn - Financials

Goldman Sachs’s Fabulous Fab Faces SEC Fraud Trial Today (via Bloomberg)

 

 


Dial-In and Materials: 3Q 2013 Macro Themes Call

Dial-In and Materials: 3Q 2013 Macro Themes Call - 3Q13themesdialb

 

REMINDER: Hedgeye's Macro Team, led by CEO Keith McCullough and DOR Daryl Jones, is hosting its highly anticipated Quarterly Macro Themes conference call with a presentation and a live Q&A session for participants. The presentation highlights the THREE MOST IMPORTANT MACRO TRENDS that our team has identified for the quarter, analyzing potential impacts across multiple scenarios and identifying investment opportunities. The Q3 2013 Macro Themes Call will be held TODAY, July 15th at 11:00am EDT.              

 

CALL DETAILS 

  • Toll Free Number: 
  • Direct Dial Number: 
  • Conference Code: 317583#
  • Materials: CLICK HERE 

Q3 THEMES INCLUDES:

  1. #RatesRising: The 30Y bull cycle in bonds is over.  We'll discuss the cross-asset class implications of the reversal and how to be positioned for the ongoing deflation of Bernanke's last (and largest) bubble.  
  2. #DebtDeflation:With total outstanding debt equal to three times equity, we give caution to the impact of debt deflating and offer investment vehicles to play this theme.
  3. #AsianContagion: China sneezes and the rest of Asia catches the flu. #RisingRates and #StrongDollar continue to perpetuate #EmergingOutflows across the developing Asia region while a likely resurgence of positive sentiment surrounding the Abenomics agenda and continued yen weakness should help Japanese equities continue to outperform the region.  

CONTACT

Please email if you have any questions. 

 


MACAU REMAINS ON TRACK FOR 18-22% GROWTH

Average daily table revenues (ADTR) fell 7% week over week, in-line with our expectations, and leaving Macau on track for another strong month.  This past week’s ADTR was +20% YoY, which is in-line with our full month YoY projection of +18-22% growth.

 

In terms of market share, Galaxy, LVS, and SJM are above trend so far this month, at the expense of MPEL, MGM, and WYNN.  For the most part, market share variances appear to be hold-related.  We continue to like the Macau stocks in general, and MPEL and MGM specifically.

 

MACAU REMAINS ON TRACK FOR 18-22% GROWTH - ma

 

MACAU REMAINS ON TRACK FOR 18-22% GROWTH - maa


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