prev

SEC: Worried About a Bond Bubble?

Takeaway: If the SEC is tweeting this out now, we guess they are belting themselves in for higher rates.

By Moshe Silver

 

This just in: When interest rates go up, bond prices go down.

 

In case you didn’t know, now you know – courtesy of an SEC Investor Education tweet.

 

If the SEC is tweeting this out now, we guess they are belting themselves in for higher rates, and the near-certainty that retail investors are in for the shock of their life as they see the value of their bond funds erode. 

 

SEC: Worried About a Bond Bubble? - bub2

 

You Mean There’s Risk?


Media reports about “chasing yield” and the “bond bubble” warn about possible declines in bond prices if interest rates rise.  The Investor Bulletin says this interest rate risk is common to bonds, especially those with fixed payment rates (“coupons”) – including Treasury bonds.

 

After explaining the basic definition of “interest rate risk” – that bond prices rise as interest rates fall, and vice versa – the Bulletin explores the severity of a bond’s price movement associated with moves in interest rates (see Hedgeye’s Investing Ideas of last week, 2 August – Sector Spotlight: Financials – for a discussion of “duration”).  The lower the bond’s coupon rate, the greater the volatility in the price of the bond as interest rates change.

 

Using the Commission’s own example, if ten-year interest rates move from 4% to 5%, a Treasury bond with a 4% coupon rate will have to decline in price to adjust its current yield to the higher rate.  But a Treasury bond with a 2% coupon will have to decline much more in price to achieve that same 5% yield.

 

On the other side, the longer the maturity, the greater the price volatility in response to interest rate changes.  Conversely, shorter maturities are associated with lower volatility.  Thus, a 30-year bond will have much greater price volatility than a 2-year note. 

 

Finally, the Commission emphasizes that all bonds are subject to interest rate risk, even those guaranteed by the government.  The coupon payments are guaranteed, as is the final payment at maturity, but not to the price of the bond in the marketplace.

 

SEC: Worried About a Bond Bubble? - bub1

 

Your Tax Dollars Still At Work… Just Not As Many Of Them Any More


Fed Chairman Bernanke says he will continue buying tens of billions of dollars’ worth of mortgage securities every month to ease the burden on the nation’s banks by helping them offload debt.  But Bernanke’s jawboning has been increasingly ineffectual and the bond markets are moving on without him, counteracting the impact of the Fed’s ongoing QE efforts.

 

On July 31st the Chicago Tribune reported “bank portfolios have lost more than $36 billion of their value since the end of the first quarter, according to Fed data.”  Some banks have seen the paper profits on their mortgage-bond holdings drop by two-thirds in the second quarter alone, but “because of accounting rules, losses on mortgage bonds that banks hold in their securities portfolios do not affect their quarterly profits.”

 

Hedgeye pointed out in our Q3 Macro Themes that there is a massive supply / demand mismatch globally, with only about one-third of the world’s investment money in equities.  This is a historic low.  We think investors will continue to bid up equity prices while, in a mad dash for the exit, bond prices could be crushed beyond recognition. 

The lesson appears to be really simple: if you haven’t already sold your bonds, what are you waiting for?

 

What Are We Gonna Do With All Those Bonds? 

 

As bond prices decline, banks are not required to take a mark to market charge against earnings.  Still, the deterioration of their bond portfolios cuts into the banks’ net worth, which ends up affecting stock prices over the long term. 

 

Like other banks, the Fed carries its bonds at face value and doesn’t mark its portfolio to market.  But unlike other banks, the Fed doesn’t have to take a reserve against the billions of Treasurys and Fannie Maes – and other less savory securities – on its books.  The Fed doesn’t have a stock price to keep an eye on, or shareholders to worry about.  And the Fed itself, with its massive printing press, is the reserve.  (Well actually, the taxpayer is the reserve, as recent history continues to demonstrate.  If you want to see the Buyer of Last Resort, look in the mirror.)

 

The market value of the Fed’s massive holdings – currently over $3.3 trillion – could decline sharply in a rising rates environment.  This could turn into a boon for the incoming Fed chief.  (President Obama appears to have already “pre-fired” Bernanke, telling TV interviewer Charlie Rose in June that “he’s already stayed a lot longer than he wanted or he was supposed to.”)  Bernanke has said that, even after they stop the massive bond buying program, the Fed will continue to hold these bonds and not sell them back into the market.  Maybe the goal is for Bernanke’s replacement to coordinate with Treasury to retire billions of dollars’ worth of bonds at lower prices, covering them with newly-issued bonds at higher yields. 

 

Is this the Geithner-at-Treasury-Summers-at-Fed scenario?  Stranger things have happened in Washington, and will certainly continue to do so.  This would actually not be a great deal for Treasury, which would have to fund higher annual debt service.  And even though that bill would come due in some future, as-yet-undreamed-of Administration, we are already terrified at the thought that the new Masters of the Financial Universe will come up with a solution.  In the Orwellian world of Washington, this will be presented as “a win for the taxpayer.”  And no, you will not receive a check.

 

Fore-tweeted is fore-armed.

 

Moshe Silver is a Managing Director at Hedgeye Risk Management and author of Fixing a Broken Wall Street.


UA Nailed The Q, But Don't Chase It

Takeaway: In line with our view that UA would beat because of revs and gross margins. But we definitely would not chase it here.

This note was originally published July 25, 2013 at 12:44 in Retail

UA's beat was in line with our comments from earlier this week that revenue trends were looking strong, and the favorable spread between sell-in and sell-though on top of a lean inventory base headed into the quarter suggested a favorable gross margin set-up (see comments below). Lo and behold, UA came out and beat on revenue and printed its biggest gross margin improvement in three years. Simply put, UA continues to achieve its growth goals with impressive consistency. We've got to give credit where it's due.

 

UA Nailed The Q, But Don't Chase It - ua

Despite the solid numbers, there were a few things that bugged us.

1) Inventories were high -- +29% vs revenue growth of 23%. This reverses the positive sales/inventory trend we've seen for the past three quarters. Granted, it is consistent with the company's guidance that inventories would build to ensure that they have sufficient product headed into back-to-school and Holiday. But the dynamic is notable.


2) With all the talk about International opportunity on the conference call, you'd think that UA was knocking the cover off the ball outside the US. Yes, sales were respectable at 22%, but it grew modestly below the rate of the US business. UA made it clear that 2014 would be the year for Int'l to really accelerate. But the reality is that UA's Int'l success is kind of like Bigfoot -- lots of hype, but we have yet to actually see it.

  
3) Footwear surprised us on the downside. While 21% growth is respectable, we think it should be at least 2x that rate for a company with UA's growth runway. On one hand, we like that it is being very deliberate and cautious with the launch of Speedform -- and not flooding the market with product. But we balance that with the simple fact that UA has 1% share of an industry that is absolutely begging for someone to step up and become a viable alternative to Nike.

 

When all is said and done, we like the TAIL call on UA -- as there are not many companies that we think can grow top line in excess of 20% for 5+ years. On the flip side, this is absolutely not a margin story. What you get in top line is what you get in EPS growth. That's all, and  nothing else. That's not half bad given that the company can feasably triple in size.  But there are other names like RH, FNP, (and to a lesser extent) WWW that have similar Blue Sky opportunity but with significant margin and return upside as a kicker. We can justify the higher multiples with those stories more easily than with UA. We'd prefer to step in and buy UA when there's more controversy on the name, or  when the company is hitting a near-term speed bump in one of its new business initiatives. That's certainly not what we have today.

 

UA Nailed The Q, But Don't Chase It - mcg1

 

 

 

07/22/13

UA: OUR THOUGHTS HEADED INTO THE PRINT

Takeaway: Expectations aren't low into UA's print, but based on trends we're seeing, they shouldn't be. If we were forced to bet, it'd be positive.

 

CONCLUSION: UnderArmour footwear and apparel trends look solid headed into Thursday's print, especially in comparing wholesale sell-in versus retail sell-through. Retail inventory implications are bullish, and combined with a positive sales/inventory spread trend at UA, it's left with a particularly positive Gross Margin set-up. That's a big plus, because at 35x EPS it needs to beat, and expectations aren't low. If we had to make a bet one way or another (which we don't), we'd come out with an upwards bias.

 

DETAILS 

We think that UA's trends look quite positive headed into its print on Thursday.  Our analysis shows that a) sell-through of apparel continues to outstrip sell-in, b) footwear is doing so at even a greater rate (and the Speedform launch is gaining traction), and c) the Gross Margin set-up is bullish given easing product costs and a favorable sales/inventory spread.  All that said, we think that these trends are necessary to materially beat consensus estimates (a beat is critical for a 35x p/e growth stock). The good news is that our sentiment monitor suggests that this name remains extremely hated, which is a bullish stock setup.

 

One of the few risks we'd point to is if UA comes out and takes up SG&A requirements to grow the business as initiatives into Footwear and International markets become more important. This had been a concern of ours for a while, but after the company's analyst meeting last month we threw in the towel and altered our view (and our model) such that it could attain 20% top line growth without having to take the margin levels of the company sub-10%.  But if it nudges up spending rates again after just having the investment community in Baltimore to sell its strategy -- then there are going to be credibility issues. We'd be surprised if this turns out to be the case.

 

So when we put it all together, we think that this is one of times where the consensus has it about right,  but if we had to make a bet one way or another (which we don't), we'd have an upward bias. 

 

UNDERARMOUR'S APPAREL RETAIL SALES HAVE BEEN GROWING AT A RATE FASTER THAN ITS WHOLESALE SELL-IN

UA Nailed The Q, But Don't Chase It - ua app sellin

Source: SportscanINFO and Hedgeye

 

UNDERARMOUR'S FOOTWEAR BUSINESS HAS BEEN OUTSTANDING -- AGAIN, WITH RETAIL OUTSTRIPPING WHOLESALE

UA Nailed The Q, But Don't Chase It - fwsellin

Source: NPD and Hedgeye

 

SPEEDFORM HAS BEEN A RECENT DRIVER FOR THE FOOTWEAR BUSINESS. THIS IS THE MOST COMMERCIAL LAUNCH UA HAS HAD TO DATE

UA Nailed The Q, But Don't Chase It - uafast

Source: UnderArmour

 

THE GROSS MARGIN SET-UP IS SOLID THANKS TO AND EXTREMELY FAVORABLE SALES/INVENTORY SPREAD AND FAVORABLE PRODUCT COSTS

UA Nailed The Q, But Don't Chase It - uagmsis

Source: Company Reports and Hedgeye

 

OUR SENTIMENT MONITOR SHOWS THAT THIS STOCK REMAINS VERY HATED

UA Nailed The Q, But Don't Chase It - uasentiment

Source: Hedgeye


WILL THE INDIAN RUPEE MEET ITS [NEW] MAKER?

Takeaway: The Indian rupee may finally catch a bid in a way that is negative for Indian equities and INR-denominated fixed income (HINT: rate hikes).

SUMMARY BULLETS:

 

  • We believe future RBI Governor Dr. Raghuram Rajan will be more committed to arresting the rupee’s decline(s) to new all-time lows given that he helped architect a government push to combat rupee weakness largely through deregulation-induced FDI flows over the TTM.
  • No doubt, the new RBI leadership will have the same reservations about aggressively hiking rates as was consistently noted under Subbarao’s leadership: in the most recently reported quarter (1Q and 2Q, respectively), India’s real GDP growth came in at a full standard deviation below the trailing 3Y average; India’s benchmark WPI inflation reading came in at -2.3x standard deviations below its 3Y mean.  A blasphemous time to hike rates indeed…
  • Still it would appear to us that Indian policymakers are increasingly cognizant of the dangers to future growth posed by an increasingly-hawkish cost-push inflation outlook (via wholesale prices AND the cost of foreign debt capital). Thus, we think the probability of rate hikes in 2H13 is rising at an accelerating pace, which, if materialized, should continue to weigh on India’s beleaguered equity market (down -3.9% MoM vs. a regional median delta of +1.6%) and its local currency fixed income markets over the intermediate term.
  • All told, a counter-trend rebound in the rupee appears increasingly likely, though nothing sustainable enough to get excited about as a core long idea – especially in the context of our top-down #EmergingOutflows and #AsianContagion theses (email us if you'd like to get up to speed on either view).

 

DR. RAJAN TO THE [RUPEE'S] RESCUE?

Today it was announced that the current chief economic advisor to India’s Finance Ministry, Raghuram Rajan, will succeed Governor Duvvuri Subbarao atop the RBI when the latter steps down next month.

 

Dr. Rajan (MIT PhD), who is a former chief economist with the IMF and a former professor at the University of Chicago Booth School of Business, will no doubt further the Western academic economist bent at the RBI. That said, however, we do believe he will be more committed to arresting the rupee’s decline(s) to new all-time lows given that he helped architect a government push to combat pervasive rupee weakness (down -10.9% over the past 3M; 2nd worst among all EMs) largely through deregulation-induced FDI flows over the TTM.

 

WILL THE INDIAN RUPEE MEET ITS [NEW] MAKER? - 1

 

WILL THE INDIAN RUPEE MEET ITS [NEW] MAKER? - 2

 

To accomplish what are likely to be his stated goals on the currency front, Dr. Rajan must be committed to using the RBI’s monetary policy toolkit more aggressively than the outgoing Subbarao has been willing to do thus far. To date, the RBI has favored capital account tinkering in the form of regulating banks’ FX positions and current account tinkering in the form of gold import reductions – both in lieu of hiking interest rates.

 

In fact, the RBI has been on a clear easing bias since APR ’12, having lowered its benchmark repo rate a cumulative 175bps since then, with 75bps of the aforementioned sum coming in calendar 2013. We’d argue that their easy monetary policy, in large part, perpetuated India’s bloated current account deficit, which has recently widened to record levels and weighed on the rupee.

 

WILL THE INDIAN RUPEE MEET ITS [NEW] MAKER? - 3

 

WILL THE INDIAN RUPEE MEET ITS [NEW] MAKER? - 4

 

SHORT-TERM PAIN FOR LONG-TERM GAIN?

No doubt, the new RBI leadership will have the same reservations about aggressively hiking rates as was consistently noted under Subbarao’s leadership: in the most recently reported quarter (1Q and 2Q, respectively), India’s real GDP growth came in at a full standard deviation below the trailing 3Y average; India’s benchmark WPI inflation reading came in at -2.3x standard deviations below its 3Y mean.  A blasphemous time to hike rates indeed…

 

WILL THE INDIAN RUPEE MEET ITS [NEW] MAKER? - 5

 

Still it would appear to us that Indian policymakers are increasingly cognizant of the dangers to future growth posed by an increasingly-hawkish cost-push inflation outlook (via wholesale prices AND the cost of foreign debt capital). Thus, we think the probability of rate hikes in 2H13 is rising at an accelerating pace, which, if materialized, should continue to weigh on India’s beleaguered equity market (down -3.9% MoM vs. a regional median delta of +1.6%) and its local currency fixed income markets over the intermediate term.

 

WILL THE INDIAN RUPEE MEET ITS [NEW] MAKER? - 6

 

All told, a counter-trend rebound in the rupee appears increasingly likely, though nothing sustainable enough to get excited about as a core long idea – especially in the context of our top-down #EmergingOutflows and #AsianContagion theses (email us if you'd like to get up to speed on either view).

 

The reflexive interplay between growth, inflation, policy and macro market prices continues...

 

Darius Dale

Senior Analyst


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

[PODCAST] KEITH ON "THE LARRY KUDLOW SHOW"

Hedgeye Risk Management CEO Keith McCullough joined Larry Kudlow on his nationally syndicated radio show this past weekend to discuss his latest thoughts on the market and the economy. Click below to listen to the interview.

 


MGM 2Q 2013 REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance

 

 

OVERALL

  • BETTER:  While MGM missed our Street high estimates, the company beat consensus even before considering low hold.  We estimate low hold cost the wholly owned properties $20-25 million in EBITDA and Aria $10-15 million. Forward commentary was positive.

 

MGM COTAI OPENING

  • BETTER:  Nicely ahead of schedule with excavation largely completed. Target opening date of early 2016.
  • PREVIOUSLY:  "Remains on schedule for opening in the first half of 2016."

MD/MA/TORONTO

  • SAME:  Public presentation of the Prince George casino will be in late Sept/Oct.  The final decision for MD will be given by year end.  The final decision for Massachusetts will be April 2014.
  • PREVIOUSLY:  
    • "In Maryland, we have been preparing our RFP for Prince George's County, which we will submit by the end of next week." 
    • "In Massachusetts, we are honored by Mayor Sarno's confidence in selecting MGM to bring a world-class urban resort to Springfield. This is an important milestone in the process as the project now seeks City Council approval after which a referendum is possible as early as July, and then ultimately, we will compete at the state level for the Western Region license."
    • "In Toronto, we and our partner, Cadillac Fairview, believe in our vision for an integrated resort in Toronto and we continue to work towards that development opportunity."

STRIP TRENDS

  • BETTER:  Las Vegas recovery continues, led by the luxury properties.  Monte Carlo also had a good quarter. 
  • PREVIOUSLY:
    • "Visitation to Las Vegas remained strong and macro trends are improving here helping to drive the recovery."
    • "It appears to us that Las Vegas, the market hit hardest by the recession, is nicely recovering and that its performance will likely outstrip the existing regional markets for the foreseeable future."
    • "Our luxury properties continue to lead the way in the market, driven by increased convention room nights and the continued success of the high-end casino business."
    • "Organizational changes were made to streamline international and national marketing teams to better service our customers and drive profitability."

STRIP REVPAR

  • BETTER:  2Q REVPAR came in at 2.5%.  3Q REVPAR guidance is 3%. Aria had the best REVPAR in its history at $194. 
  • PREVIOUSLY:  
    • "We expect a strong convention calendar, which will drive RevPAR to be up approximately 2% year over year."
    • "Room revenues and ADRs increased by about 2% in the quarter. While occupancy was down slightly, occupied room nights increased by 1% at our Strip properties as the remodeled rooms at the MGM Grand are now on line."
    • "We are seeing strong returns on our room remodel investments as evidenced by Bellagio and MGM Grand where we were able to maintain high occupancy levels and drive increased room rates."
    • "We always knew the second quarter would be a little bit easier comp."

CONVENTION OUTLOOK

  • BETTER:  2013 convention room nights ADR is up YoY.  ADR pace for 2014 is up mid single digits.  Mgmt mentioned that 51% of forward bookings have been in the corporate/incentive segment, which has higher margins - double the pace historically. 
  • PREVIOUSLY:  
    • "The convention business in Las Vegas this year will be okay. It won't be great citywide, but next year is a big year citywide. So, when you have the kind of citywides we're predicting in 2014, that will accrue to the benefit of, of course, Mandalay, but also to the properties that need Mandalay to have that business Luxor, Excalibur and also because of the LVCBA Circus Circus. So the cores this year are doing well, but I would expect next year with a better convention business citywide that they will do better."
    • "On the convention side, of course, our leisure properties with significant convention space mainly sold out in peak season have a much easier time at raising rates."

MGM CHINA DIVIDENDS

  • SAME:  Board will continue to consider a special dividend from time to time.
  • PREVIOUSLY:  "MGM China also put in place a regular dividend distribution policy for up to 35% of its annual profits to be paid semi-annually. The board will also consider, going forward, special dividends from time to time."

ARIA

  • WORSE:  Low table hold (-$10MM EBITDA impact) hurt results.  2Q also had a difficult comp. 
  • PREVIOUSLY:  "We continue to see growth in the food and beverage with a very strong quarter in catering and banquets driven by growth in the convention segment and recent dining enhancements to the property such as Javier's Mexican restaurant."

MANDARIN

  • BETTER:  Sold 45 units in June and 21 units in July. Currently, they have 89 units left in their inventory.
  • PREVIOUSLY:  "We've actually seen in the last few months some pickup particularly in the remaining Mandarin inventory in terms of sales."

MGM CHINA MASS

  • SAME:  Mass segment performed well across all customer classes.
  • PREVIOUSLY:  "We're encouraged to see not only our premium area such as our supreme and platinum lounges continue to perform well but also our general main floor product produced record results."

LV SEAT CAPACITY

  • SAME:  Flight capacities are trending higher. Mgmt hopes this will bring more international visitors.
  • PREVIOUSLY:  "The seat capacities and especially in the summer is going to be up a few percent, which is very positive for us. Anything looking beyond two to three months, it's really hard to look at since the airlines are constantly changing their programs."

    MGM 2Q 2013 CONFERENCE CALL

    Strong quarter even stronger considering low hold likely reduced wholly owned EBITDA by $20-25 million and Aria EBITDA by $10-15 million.

     

     

    "We continue to see broad-based Las Vegas improvement as our Strip EBITDA increased 15%, driven by a 7% increase in casino revenues and a 5% increase in hotel revenues. A strong performance at MGM China led to another quarter of record results, driven by higher volumes in both mass market and VIP."

     

    -Jim Murren, MGM Resorts International Chairman and CEO. 

     

    CONF CALL

    • Continuation of the LV recovery
    • MGM and Bellagio yielding high cash flows; Mandalay Bay will be the next beneficiary with new nightclubs and shows
    • Next year, New York New York and Monte Carlo will benefit from new retail offerings
    • Significant growth in database; higher bookings 
    • MGM Cotai - well underway; excavation largely completed; nicely ahead of schedule
    • Will develop an Asian Mansion at MGM Cotai
    • Prince George casino:  date for public presentation will be in late Sept/Oct; final decision by year end.
    • Massachusetts:  final decision in April 2014
    • Very active in Japan; growing consensus that gaming will be expanded there
    • Korea:  view is becoming more favorable
    • Regional:  highly competitive, increasingly crowded
    • Believes Vegas will outperform regional markets
    • Convention remain in-line; mix grew slightly rate grew mid single digits
    • 3Q LV REVPAR guidance:  +3%
    • 2Q Strip convention bookings:  2nd highest in history for future bookings
    • 2014 and beyond bookings are getting stronger; 2014 pace remains up double digits
    • Up at least high single digits each quarter next year when you're looking at the non-CON/AGG piece of the business.
    • MGM China Board will consider special dividend from time to time
    • CityCenter:  $1.85 BN in senior notes; $365MM cash; $72MM cash remaining from condo units
    • 2Q corp expense:  above guidance due to ongoing developments 
    • 3Q Corp expense guidance:  $45-50MM
    • 3Q stock comp:  $6-7MM
    • 3Q depreciation will be consistent with 2Q
    • 3Q gross interest expense:  $210MM ($5MM- MGM China, $9MM non-cash amortization)
    • Aria:  -$10MM EBITDA impact by low hold; best REVPAR ever at $194
    • Crystals:  up 21% YoY, best quarter ever
    • LV real estate market improving; 45 units at Mandarin Oriental, 7 units at Veer; sold another 21 units at Mandarin Oriental
    • MGM China:  New VIP operator in April and new 2nd floor benefiting results
      • Slot handle up 11%
      • Capex: $80MM ($78MM - MGM Cotai); 2013 forecast of $290MM for Cotai
        • Expect early 2016 opening
    • Airlines are adding more seats to Las Vegas 
    • Trying to increase international visitation
    • Growing Las Vegas market share
    • Mayweather/Alvarez fight in September
    • Watching costs very aggressively
    • Reduced debt by $500MM in Q2 

     

    Q & A

    • Vegas vs other markets for 2014 bookings:  Las Vegas (80-90% contracted room nights before coming into the year; in other words, do not rely much on in the year for the year room bookings)
    • 51% bookings booked have been in the corporate/incentive segment (higher margin segment) - historically, it was around 25%; had lost 30% of business from peak and starting to recover
    • Interest is high on potentially selling Crystals; cap rates are still pretty low
    • Margins:  smarter on promotions; M-Life helping with marketing strategy; room remodels have been generating cash flow; FTEs flat YoY
    • Lot of FIT/leisure international customers are bookings through Expedia and Bookings.com
    • International customers:  are spending more on F&B, entertainment venues; worth 15% more than domestic leisure customer
    • CityCenter:  trailing 12-month cash flow $300MM
    • MGM Grand:  expects better performance; Sleeping Lion exhibit will be redone; 
    • Vegas Smoking bill?  Govt process ongoing
    • 2013 convention room nights mix:  14.5%-15%, ADR up YoY
    • 2014 ADR pace:  mid single digits
    • MGM China:  strong across all mass segments; 
    • Strip core/retail properties:  minimal growth; few of the properties had nice shocks of excitement e.g. Monte Carlo (new show), Luxor (new show); not expecting too much growth in 2013
      • But a significant increase in cash flow in 2H 2014 (New York, New York, Monte Carlo, Citywides)
    • Hold
      • Mirage:  poor hold (10%)
      • Bellagio:  down YoY, below normal range
      • Grand:  up YoY
    • Disruptions at MGM China:  not signifcant but may move some business from 3Q to 4Q
    • M-Life helped MGM build slot share
    • Strong domestic table play hints signs of US recovery
    • Cotai budget:  $2.6BN - includes pre-opening, excludes land concession and cap interest
    • Baccarat margins are flat/ slightly up
    • Ex Aria, more table win on international side;  Aria was challenging because of difficult comps
    • LV baccarat volume was slightly down but win was up
    • Post-July:  Unsold condos - 4 units at Veer and 89 units at Mandarin
    • Detroit bankruptcy:  have not seen any impact
    • Relicensing in NJ:  9-12 month process
    • Macau EBITDA margins:  revenue mix impacted results; lower hold in direct play; branding fee up YoY
    • FTEs:  expect to remain flat 
    • Few million impact from union wage inflation
    • Healthcare costs:  flat YoY; expect little inflation on healthcare costs

    the macro show

    what smart investors watch to win

    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.

    next