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C&B: BANG UP Q3 IN SINGAPORE

Charts & Bullets:  Some trends from Singapore gaming in Q3


  • Singapore gross gaming revenues rose 28% YoY in Q3 2013 to S$2.0 BN.  Adjusted for high hold in both periods, GGR still gained 12%.
  • Market VIP rolling chip volume grew 34% YoY in 3Q, 4th consecutive quarter of high double digit gains - Genting did particularly well in this segment, exploding 52% higher YoY, while MBS RC volume gained a respectable 19%.
  • Because of the huge VIP quarter, Genting is inching closer to market share parity with MBS on overall gaming revenues
  • As for the mass segment, MBS widened its share lead over Genting to 56%.  Flat market mass volumes were disappointing in the midst of continued government restrictions on local players and players with political influence. 

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November 5, 2013

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BULLISH TRENDS

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BEARISH TRENDS

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Information Revolution

“The mechanization of ginning, spinning, and weaving the cotton launched the industrial revolution.”

-Jack Weatherford

 

The cotton gin was 1793. Twitter was 2006. Eli Whitney and Jack Dorsey had more than a few things in common. One was their age (Whitney was a 28 yr old teacher and Dorsey was a 29 yr old web developer/failed shoe salesman). That’s where revolutions come from, baby. As my man Brandon Flowers wrote in “Only The Young” (great tune):

 

“Look back in silence; the cradle of your whole life. There in the distance, losing its greatest prize. Nothing is easy, nothing is sacred. Why? Where did the bough break? It happened before your time. Only the young can break away, break away…“

 

And so it continues to begin – the unearthing of every single Western academic dogma about economics and markets ever spun. The unraveling of a weave of storytellers that only my God can be smiling down upon as stronger currencies lead new peoples to the promise land of purchasing power. Behold, the Information Revolution in financial markets is here!

 

Back to the Global Macro Grind

 

Tomorrow at 11AM EST, Hedgeye veteran blue-liner, Daryl Jones, and Hesham Shaaban will host a Black Book conference call on the Twitter IPO (if you’d like information on how to access the call, ping ). It’s a fascinating story within the history we are building here @Hedgeye. I see it as our Trojan Horse in taking down the #OldWall of aforementioned dogmas.

 

Mr. Market, take down that #OldWall!

 

How is that going to work? Let’s just look at what we did using Twitter yesterday in order to front-run a ridiculous #OldWall financial media meme that the Fed being on taper-hold is a “good” thing for growth:

  1. All research starts with asking the right question – our clients often ask, “Isn’t #RatesRising Bad for Growth?”
  2. So we created a video answering that simple question with a simple answer @HedgeyeTV:  http://www.youtube.com/watch?v=BthNo_F6yvQ
  3. And we went on to answer two more big client questions we have been getting, then tweeted it (and re-tweeted it)

In the stone age of perceived financial market and economic wisdoms, you didn’t have Twitter, Videostreaming, YouTube, etc. So you actually had to take the government’s (and the banks they bail out) word for it on these economic history matters.

 

Ginning, spinning, and weaving, these academic dudes (and dudettes) who have never risk managed markets can get really creative. So was Karl Marx in introducing the adored Obama concept of #ClassWarfare in the first sentence of the Communist Manifesto.

 

And who the heck am I to call these people out? Sometimes I feel like a modern day version of some Iroquois or Creek Indian who is sitting here creating things (like cotton and rubber - you know, the stuff all the white dudes actually started to use). But what do I know?

 

What do you know?

 

The more I read, the less I know. So, admittedly, I do get a little frustrated to see central planning bureaucrats like Jim Bullard @FederalReserve on Big Government Intervention TV spewing economic forecasts that are rarely right, but never in doubt.

 

At one point yesterday @CNBC, Bullard actually said that it’s time Americans see QE (money printing, Dollar Devaluation, and 0% rates of return on your hard earned savings accounts) as a “normal policy position.”

 

Normal?

 

Go back to that Iroquois style @HedgeyeTV video Darius Dale and I did and see the next popular client question: “How Concerned Are You About A Major Dislocation in the Credit Markets?”

 

Bullard, dude, there is nothing normal about credit markets that go no-bid when a bond ticks down half a point. Wake up man. You and your boy Bernanke have a “new normal” alright. It’s called a MBS bond bubble that people can’t get out of!

 

In other counter-Keynesian-consensus-dogma-economic-news this morning:

 

BREAKING: UK Services PMI for OCT hits a 16yr high at 62.5

 

Huh? With austerity and a #StrongerCurrency (we’re long the British Pound) the United Kingdom is seeing #GrowthAccelerating? You bet your Danny Blanchflower (Dartmouth Dogma professor of Currency Devaluation and Big Government Spending) it’s accelerating.

 

This morning, to be sure on my historical account, I went back to the time period I reviewed with my kids this weekend in the movie “Free-Birds” (where turkeys try to turn back the clocks on being slaughtered for Thanksgiving), and the replay still shows that there has never been a country that has devalued its way to long-term economic prosperity. Danny, you can’t turn back the clock. Gobble, gobble.

 

#StrongCurrency = Deflates The Inflation and real (inflation adjusted) consumption #GrowthAccelerating.

 

On the margin, that’s Europe now (not the USA –it was the USA 10 months ago):

  1. Swiss Consumer Prices (CPI) drop to -0.3% y/y in OCT = consumption tax cut for consumers
  2. Eurozone PPI (producer prices) drop -0.9% y/y in SEP = cost of goods tax cut for producers (good for margins)

And on what planet are Old World pundits allowed to fear-monger you that Deflating The Inflation is a bad thing? I guess maybe Pluto, Dartmouth (sorry guys, I’m picking on Blanchflower), or one that doesn’t have Twitter. Good luck keeping that one alive. As another revered American revolutionary, Martin Luther King Jr. reminded us, “a lie cannot live” forever.

 

Our immediate-term Risk Ranges are now:

 

SPX 1

DAX 8

Swiss Market Index 8159-8232

USD 80.17-80.98

Euro 1.34-1.36

Pound 1.60-1.62

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Information Revolution - Chart of the Day

 

Information Revolution - Virtual Portfolio


C&B: STRIP SLOT VOLUME ROLLING OVER

Chart & Bullets:  While MGM has successfully set the Street’s focus on Q1 RevPAR, our favorite metric is taking a turn for the worse.

 

  • We liked MGM for most of this year – one of the reasons was the upturn in Strip slot volume
  • The MGM story has centered around RevPAR gains, particularly in Q1 2014 as a few big conventions cycle through.  However, we still view slot volume as the most important metric and volume is likely moving lower through the end of the year.
  • The Q1 focus sets up the MGM story for disappointment as investors lose sight of the slot (and earnings?) issue going forward. 

C&B: STRIP SLOT VOLUME ROLLING OVER - ll


PNK 2Q YOUTUBE

In preparation for PNK's F3Q 2013 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.

 

 

PNK INTRODUCES BELTERRA PARK GAMING & ENTERTAINMENT CENTER Oct 23

  • $300MM Entertainment Destination to open in May 2014

RIVER CITY CASINO UNVEILS 200-ROOM HOTEL; COMPLETES $82MM EXPANSION Sept 16

 

ASCA SYNERGIES

  • We still believe that we are going to be able to not only meet the goal of $40 million in synergies, but we believe that, from what we've had exposure to up to this point, we're going to be able to exceed that.
  • There is a large portion of that that is entirely driven by combination of public company costs, i.e., one board, one set of financials, as well as integrating the teams in effectively, mostly down in Las Vegas. We have done an enormous amount of work on this, and while there is some effect on the margin by virtue of Lumiere, the reality is that the scale of the company and our ability to realize savings through better procurements, a better marketing program that will look to do best practices, really remains largely unchanged.

CUSTOMER TRENDS

  • In terms of guest behavior, in the second quarter, we saw trips decline at a greater rate than spend per trip. Meaning that people came less often, but their spend per trip was pretty much in line with historical levels.
    • Midwest it is a little bit more pronounced than down South, but nonetheless it's softness that we're seeing pretty much across the portfolio.
    • The impact has been more pronounced at the lower tiers

L'AUBERGE BATON ROUGE

  • We continue to see strong guest acquisition and growing loyalty among our guests. Repeat visitation is very strong, with over 55% of our guests returning for multiple trips. The hotel continues to be a good story, with occupancy now in the mid-90s consistently. And our regional high end business continues to grow every month, although at a lower pace than we had originally anticipated.

L'AUBERGE LAKE CHARLES RENOVATION

  • The second phase of the renovation will begin this fall after the busy summer season.

HORSESHOE CINCINNATI IMPACT

  • The impact of Horseshoe Cincinnati has been less than anticipated so far.

BOOMTOWN NEW ORLEANS

  • Finally, in New Orleans, we continue to see an improvement in the operating performance of this property

RIVER DOWNS

  • The facility is well underway and we're excited about bringing the property into our portfolio in the second quarter of 2014.

CORPORATE EXPENSE RUN RATE

  • We've been running right around $5 million or so, call it mid-$5 millions on the current set of portfolio, and that's the set we have that clearly we're working through that as it relates to the combined company.
  • So while I don't expect if we were to, without the acquisition, that that number will change in any material way in that $5 million to $5.5 million per quarter, certainly we'll recalibrate that and give you some parameters once we complete the acquisition.

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