The two Cotai powers colluding to control runaway commission expenses sounds good on the surface.  Cotai versus the peninsula is a battle that started with the opening of City of Dreams on June 1st.  It does make sense for Venetian and CoD to continue to work together and commissions are an obvious place to start.  After looking at the June data and July so far, Cotai is clearly winning the battle.

One issue with self-regulating commission rates is that the other players probably won't follow the cut.  Is Jack Lam going to reduce his commission at the Mandarin from a very lucrative 1.40-1.45%?  I doubt it.  Given the competitiveness in the VIP segment, pricing is a key variable.  Junkets can easily bring their customers to the higher commission casinos.  The second problem is the lack of transparency in junket commission rates.  It's good PR to announce a commission reduction, but will CoD know that Venetian is cheating and vice versa?  Will Venetian know if CoD is making other concessions to the junkets that don't show up in the official junket rate?

Even a government enacted commission cap would be difficult to enforce.  The operators have been expecting government action since late last year and still nothing has been enacted.  We are skeptical of any government action until at least late 2009 when the new Chief Executive takes over.

We continue to believe there is upside in both MPEL and LVS for different reasons, none of which involve commission caps.  For MPEL, the incremental news flow should be positive as CoD continues to ramp.  For LVS, Macau margins could look much better than expected as drastic headcount reductions and numerous one-time expenses will improve "ongoing" margins.

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more