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Monday Mashup: CMG, WEN and More

The table below lists our current Investment Ideas as well as our Watch List – a list of potential ideas that we are in the process of evaluating.  We intend to update this table regularly and will provide detail on any material changes.

 

Monday Mashup: CMG, WEN and More - 4 21 2014 9 10 59 AM

 

EAT – We're pulling Brinker from our long list.  The stock has acted well for us over the past year, but the departure of CFO Guy Constant, declining traffic trends and rising food costs are beginning to concern us. 

 

MCD – We’re relegating McDonald’s to the short watch list.  We removed it from our Best Ideas list back in mid-February amid concerns of a potential financial engineering event.  It could be through refranchising or a leverage event, we’re not quite sure, but we don’t want to be in the way.  We still believe the McDonald’s business is in secular decline, but there are several reasons, including easy comparisons and an attractive dividend, that give us reason to believe the stock has support.

 

BWLD – We’re relegating Buffalo Wild Wings to the short watch list.  While we believe the stock is fully valued, we see very few short-term catalysts that suggest near-term downside.  Declining new unit sales performance, ROIIC, and CFFO/Net Income are three metrics that make us bearish, but we believe the company has enough near-term drivers to support the stock.

Recent Notes

04/14/14  Monday Mashup: DRI Comes Under Fire

04/14/14  The Casual Dining Dilemma

04/15/14  Investment Ideas: Longs

04/16/14  Investment Ideas: Shorts

04/18/14  CMG: Building Market Share

Events This Week

04/22/14  MCD earnings call 11:00am EST

04/23/14  YUM earnings call 9:15am EST

04/23/14  EAT earnings call 10:00am EST

04/23/14  CAKE earnings call 5:00pm EST

04/24/14  DNKN earnings call 8:00am EST

04/24/14  DAVE earnings call 11:00am EST

04/24/14  SBUX earnings call 5:00pm EST

Chart of the Day

WEN trades at a discount to BKW and YUM and in-line with a market-saturated MCD despite having significantly more runway to improve revenues, margins and returns.  Despite strong performance in 2013, Wendy’s continues to be an out of favor name giving value-oriented investors a compelling opportunity.  We expect to see meaningful multiple expansion as Wendy’s continues to reimage its restaurants, rebalance its franchise mix and generate stronger returns.

 

Monday Mashup: CMG, WEN and More - 2

Recent News Flow

Monday, April 14

  • PLKI announced the resignation of CFO Melville Hope, who plans to depart in May to pursue opportunities.  The company has begun a search for his successor.    

Tuesday, April 15

  • SBUX announced the relocation of its European headquarters from the Netherlands to the UK
  • SONC upgraded to buy at Sterne Agee with a $25 PT

Wednesday, April 16

  • TAST announced it will hold a secondary stock offering to raise $60 million.  The proceeds are expected to be primarily used to accelerate the 20/20 restaurant reimage program and acquire franchised restaurants.  

Thursday, April 17

  • CMG reported a strong quarter with same-store sales up 13.4%, primarily driven by traffic.  Despite this, the company is seeing margin compression from rising food costs and announced plans to take mid-single digit price beginning at the end of 2Q14.  Chipotle continues to take market share in an increasingly competitive environment.

XLY Quantitative Setup

The XLY (+1.0%) underperformed the SPX (+1.7%) last week, as both casual dining and quick service stocks, in aggregate, underperformed the broader XLY benchmark.  From a quantitative setup, the sector remains bearish on an intermediate-term TREND duration.

 

Monday Mashup: CMG, WEN and More - 3 

Casual Dining Restaurants

Monday Mashup: CMG, WEN and More - 4

Monday Mashup: CMG, WEN and More - 5

Quick Service Restaurants

Monday Mashup: CMG, WEN and More - 6

Monday Mashup: CMG, WEN and More - 7

 

 

 

Howard Penney

Managing Director

 

Fred Masotta

Analyst

 


European Banking Monitor: Swaps Tighten Marginally

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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European Financial CDS – Most swaps tightened marginally in Europe last week. The Greek banks continue to tighten notably, dropping an average of 15 bps in the past week and 195 bps in the past month. Russia’s Sberbank widened by 20 bps this past week; however, the bank remains tighter on the month by 24 bps.

European Banking Monitor: Swaps Tighten Marginally - chart 1 financials cds

 

Sovereign CDS – Sovereign Swaps either tightened or remained the same over the past week. Japanese sovereign swaps tightened by 4.9% (2 bps to 46) and US sovereign swaps tightened by 4.8% (1 bp to 17).

 

European Banking Monitor: Swaps Tighten Marginally - chart 2 sovereign cds

European Banking Monitor: Swaps Tighten Marginally - chart 3 sovereign cds

European Banking Monitor: Swaps Tighten Marginally - chart 4 sovereign cds

 

Euribor-OIS Spread – 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. The Euribor-OIS spread widened by 2 bps to 15 bps.

European Banking Monitor: Swaps Tighten Marginally - chart 5 euribor OIS spread

 

Matthew Hedrick

Associate

 

Ben Ryan

Analyst

 

 

 


10 Scary US Charts; 5 Not-So-Scary Chinese Charts

Takeaway: Expectations should weigh on the growth style factor in the US. Chinese growth is bottoming out – on both a reported and prospective basis.

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 2

CONCLUSIONS (United states)

  • While we’re likely to see post-winter optical strength in the March/April timeframe, we continue to believe that the trend in domestic economic growth is decelerating and will continue to decelerate over the intermediate term. An acceleration in reported inflation coupled with a slowdown in both house price appreciation and housing sector activity remain our primary catalysts for the aforementioned deceleration in the consumption-heavy US economy.
     
  • This is especially true in the context of consensus expectations that continue to bake in our team’s 2013 bull case as the base case scenario for 2014 and beyond.
     
  • The likelihood that US economic growth continues to slow relative to those expectations should perpetuate what we have been appropriately signaling as a regime change in market leadership that is likely to be supported by the introduction of easier monetary policy (both on an absolute basis and relative to existing expectations) over the intermediate term.
     
  • As such, we continue to favor high-yielding assets (i.e. Treasuries, REITs, Utes), carry trading strategies (i.e. emerging markets) and inflation hedges (i.e. TIPS and commodities) in lieu of consumer exposure and high-growth/high-beta names, at the margins.
     
  • The biggest near-term risk to our view is that likely sequential strength in reported economic data over the next 1-2 months is extrapolated as confirming evidence of a consensus bias towards favoring the growth style factor in domestic capital markets. The biggest long-term risk to our view is a Federal Reserve that openly supports a #StrongDollar = #StrongAmerica economic policy. For now, neither risk appears particularly probable.

CONCLUSIONS (CHINA)

  • Chinese real GDP growth slowed in 1Q14, coming in roughly in line with our and the Street’s expectations. There were some bright spots in the higher-frequency data, but the general trend in Chinese economic growth remains negative.
     
  • That being said, we are of the ilk to side with the now-consistent rhetoric of Chinese policymakers in anticipating that Chinese economic growth is at/near a cyclical bottom from a rate-of-change perspective.
     
  • Specifically, either said policymakers have visibility into the Chinese economy that we lack as investors/analysts or they are effectively signing off on a plan to provide meaningful stimulus if growth continues to slow from here.
     
  • Our favorite leading indicator for the slope of Chinese economic growth (i.e. the slope of the average year-over-year percent change in rebar, iron ore and coal prices) is supportive of the former outcome; the dramatic easing of Chinese monetary conditions and sharp tightening of credit spreads in recent months is supportive of the latter outcome.
     
  • We are currently doing the work to re-quantify the risks embedded in the Chinese financial sector in order to appropriately handicap the probability of a severe and prolonged crisis (conference call date TBD). To the extent we find those risks are priced in, consensus expectations for Chinese economic growth are depressed enough to warrant bargain hunting on the long side of CNY/CNH-denominated capital markets.  

US GROWTH CHARTS

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 1

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 2

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 3

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 4

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 5

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 6

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 7

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 8

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 9

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - 10

CHINESE GROWTH CHARTS

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - China GDP Growth

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - China Iron Ore  Rebar and Coal YoY

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - China 7 day Repo Rate Monthly Avg

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - China 5Y AAA Spread.tif

 

10 Scary US Charts; 5 Not-So-Scary Chinese Charts - China GDP Expectations

 

*   *   *   *   *   *   *

 

Editor's Note: This is an excerpt of a research note that was originally provided to subscribers on April 16, 2014 by Hedgeye Macro Analyst Darius Dale. Follow Darius on Twitter @HedgeyeDDale.

SUBSCRIBE TO HEDGEYE.

 


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MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE

Takeaway: Last week saw modest widening in interbank risk measures domestically and in Europe as well as further upward commodity inflation pressure.

Key Callouts:

Looking at the Risk Monitor, we see tightening in US, European, and Sovereign swaps, a change from the slight widening seen in the previous week. On the interbank risk front, the US TED Spread rose 1 bp, Euribor-OIS rose 2 bps and China's Shifon Index fell 57 basis points. Overall, none of those datapoints are terribly exciting, but the +2 bps move in Euribor bears watching going forward.

 

* U.S. Financial CDS - Swaps tightened for 18 out of 27 domestic financial institutions. The Global US banks were all tighter, by an average of 4 bps w/w, as well as 4 bps on a m/m basis. The specialty finance companies we track were tighter on the week and on the month with the biggest moves coming from the mortgage insurers, MTG & RDN and Sallie Mae. The US insurers were little changed aside from the bond guarantor MBIA, where swaps widened out 20 bps w/w and 126 bps m/m.

 

* European Financial CDS – Most swaps tightened marginally in Europe last week. The Greek banks continue to tighten notably, dropping an average of 15 bps in the past week and 195 bps in the past month. Russia’s Sberbank widened by 20 bps this past week; however, the bank remains tighter on the month by 24 bps.

 

* Sovereign CDS – Sovereign swaps either tightened or remained the same over the past week. Japanese sovereign swaps tightened by 4.9% (2 bps to 46) and US sovereign swaps tightened by 4.8% (1 bps to 17).

 

* Chinese Interbank Rate (Shifon Index) –  The Shifon Index fell 57 basis points last week, ending the week at 2.18% versus last week’s print of 2.75%. The Shifon Index measures banks’ overnight lending rates to one another, a gauge of systemic stress in the Chinese banking system.

 

Financial Risk Monitor Summary

 • Short-term(WoW): Positive / 3 of 12 improved / 1 out of 12 worsened / 8 of 12 unchanged

 • Intermediate-term(WoW): Positive / 7 of 12 improved / 3 out of 12 worsened / 2 of 12 unchanged

 • Long-term(WoW): Positive / 4 of 12 improved / 1 out of 12 worsened / 7 of 12 unchanged

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 15 2

 

1. U.S. Financial CDS -  Swaps tightened for 18 out of 27 domestic financial institutions. The Global US banks were all tighter, by an average of 4 bps w/w, and 5 bps on a m/m basis. The specialty finance companies we track were tighter on the week and on the month with the biggest moves coming from the mortgage insurers, MTG & RDN and Sallie Mae. The US insurers were little changed aside from the bond guarantor MBIA, where swaps widened out 20 bps w/w and 126 bps m/m.

 

Tightened the most WoW: C, XL, MS

Widened the most WoW: MBI, CB, ACE

Tightened the most WoW: MS, GNW, AIG

Widened the most MoM: MBI, TRV, SLM

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 1

 

2. European Financial CDS – Most swaps tightened marginally in Europe last week. The Greek banks continue to tighten notably, dropping an average of 15 bps in the past week and 195 bps in the past month. Russia’s Sberbank widened by 20 bps this past week; however, the bank remains tighter on the month by 24 bps.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 2

 

3. Asian Financial CDS – It was a mixed bag for Asian financials last week as Chinese and Indian banks widened nominally, while Japanese financials tightened by an average of 1.75 bps w/w.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 17

 

4. Sovereign CDS – Sovereign Swaps either tightened or remained the same over the past week. Japanese sovereign swaps tightened by 4.9% (2 bps to 46) and US sovereign swaps tightened by 4.8% (1 bps to 17).

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 18

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 3

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 4

 

5. High Yield (YTM) Monitor – High Yield rates fell 1.4 bps last week, ending the week at 5.63% versus 5.65% the prior week.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 5

 

6. Leveraged Loan Index Monitor – The Leveraged Loan Index was unchanged last week at 1855.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 6

 

7. TED Spread Monitor – The TED spread rose 1.3 basis points last week, ending the week at 20.1 bps this week versus last week’s print of 18.85 bps.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 7

 

8. CRB Commodity Price Index – The CRB index rose 0.6%, ending the week at 311 versus 310 the prior week. As compared with the prior month, commodity prices have increased 2.8% We generally regard changes in commodity prices on the margin as having meaningful consumption implications.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 8

 

9. Euribor-OIS Spread – 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. The Euribor-OIS spread widened by 2 bps to 15 bps.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 9

 

10. Chinese Interbank Rate (Shifon Index) –  The Shifon Index fell 45 basis points last week, ending the week at 2.298% versus last week’s print of 2.75%. The Shifon Index measures banks’ overnight lending rates to one another, a gauge of systemic stress in the Chinese banking system.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 10

 

11. Chinese Steel – Steel prices in China rose 0.5% last week, or 16 yuan/ton, to 3383 yuan/ton. We use Chinese steel rebar prices to gauge Chinese construction activity, and, by extension, the health of the Chinese economy.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 12

 

12. 2-10 Spread – Last week the 2-10 spread widened to 233 bps, 6 bps wider than a week ago. We track the 2-10 spread as an indicator of bank margin pressure.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 13

 

13. XLF Macro Quantitative Setup – Our Macro team’s quantitative setup in the XLF shows 1.6% upside to TRADE resistance and 2.8% downside to TRADE support.

 

MONDAY MORNING RISK MONITOR: COMMODITIES & INTERBANK RISK MEASURES RISE - 14

 

Joshua Steiner, CFA

 

Jonathan Casteleyn, CFA, CMT

 

 



LEISURE LETTER (04/21/2014)

TICKERS:  PENN, MPEL, MGM, IGT, RHP, CCL, RCL

EVENTS TO WATCH

Tuesday, April 22

  • IGT FQ2 earnings:  5 p.m. Conf Call   , Passcode: IGT

Thursday, April 24

  • WYN Q1 earnings - 8:30 a.m. , Passcode: Wyndham
  • LHO Q1 earnings - 9:30 a.m.
  • PENN Q1 earnings - 10 a.m.
  • RCL Q1 earnings - 10 a.m.
  • HOT Q1 earnings - 10:30 a.m. , Passcode: 12049644
  • LVS Q1 earnings - 4:30 p.m. ; PW: 18236529
  • LA March revenues out

Friday, April 25

  • PEB Q1 earnings – 9:00 a.m.

Monday, April 28

  • CHH Q1 earnings – 10:00 a.m. , Passcode: 70683172

Tuesday, April 29

  • VAC Q1 earnings – 10:00 a.m. , Passcode: 4679876
  • MGM Q1 earnings – 11:00 a.m. , Passcode: 20455736 

COMPANY

Macau Legend - Targets high rollers Macau Business Daily 

Macau Legend Development Ltd has done a deal, increasing to 42% from 2% its share of the gross gaming revenue from junket operator New Legend VIP Club Ltd’s gaming tables in its Pharaoh’s Palace casino.  In a HKSE filing, Macau Legend's wholly-owned subsidiary, Hong Hock Development Co Ltd, had formed a variable-interest-entity (VIE) agreement with New Legend.

 

Macau Legend said, “The company believes that the demand for VIP gaming will continue to increase, and therefore it intends to capitalise on the overall growth in VIP gaming in Macau by engaging in the gaming promotion business.”

 

PENN / GLPI - Last Thursday, the Iowa Racing & Gaming Commission ruled Argosy Sioux City must shut down by July 1 because the floating casino's state gaming license has lapsed.   Then on Friday, the Argosy Sioux City officially notified the Iowa Workforce Development agency that the 300-employee floating casino likely will close by July 1. PENN, however, has vowed to ask a judge to suspend the commission action, which would allow the boat to remain open while the company pursues a series of legal challenges against the gaming commission.

 

Hard Rock & Warner Gaming indicate construction of the Hard Rock Hotel and Casino is right on track.  Contractors are working seven-days-a-week to make ensure they meet their scheduled opening this summer.

 

TAKEAWAY:  We estimate PENN EPS dilution of $0.07/share on an annual basis and about $0.80/share of asset value and GLPI NAV dilution of about $0.50/share.  While PENN's Q1 looks fine, we're not sure enough analysts have taken Sioux City out of their estimates. Discontinued Operations?

 

MPEL - (Inquirer) CoD Manila, is expected to open its doors on Oct. 1 this year instead of the earlier announced mid-year opening, in time for Golden Week.  CoD Manila will feature a 950 rooms hotel and 20,000 square meters of gaming space with up to 365 gaming tables and 3,300 slot machines. 

TAKEAWAY:  Delays are almost never a good sign.

 

MGM - Prince George's County approve zoning changes to allow the casino to operate at National Harbor.  In about two weeks, another bill will come up that will focus on the actual development plan – and that ruling will include language dealing with jobs/hiring of minorities. MGM’s casino will feature 3,600 slots, 140 live gaming tables, a 300-room hotel, restaurants, and retail and meeting space.

TAKEAWAY:  Another step in the progress toward ground breaking. 

 

IGT - completed its first multi-state wide area progressive network, linking Deadwood, SD, casinos with Borgata and Caesars properties in Atlantic City.

TAKEAWAY:  This is probably an under appreciated event by investors that could boost play and yields with bigger jackpots.

 

IGT - announced that it has licensed the popular Tokidoki brand to develop compelling, casino slot machine content.  IGT will launch new tokidoki-themed games starting in 2015 at select casino properties in Singapore and Macau, and worldwide thereafter.

TAKEAWAY:  Better late than never to expand in Asia. 

 

RHP - City of Aurora this week will ask Arapahoe County District Court Judge Charles Pratt to lift a stay placed on a countersuit Aurora filed against 11 mostly Denver hotels seeking to block tax incentives awarded to the massive Gaylord hotel project.  If the stay is lifted, Aurora may review communication between the hotels involved in the lawsuit. 

TAKEAWAY:  RHP looks poised to become a development, growth story.

 

CCL - canceled various Alaska port calls by Carnival Miracle previously scheduled for this summer due to a "technical issue" impacting the ship's cruising speed.  The cancelled port callings include Skagway and Ketchikan.  Additionally, several Hawaii cruises will also see itinerary modifications, though no canceled ports.  Repairs to the propulsion unit will not be completed until a scheduled dry dock in early 2015.

TAKEAWAY:  At least this didn't happen in the Caribbean

 

RCL - Azamara Club Cruises is offering Vacation.com members a High Value Guest Incentive Commission where vacation.com members can earn as much as 5% over their preexisting Royal Caribbean Cruise Line family commission level and up to 21% for a high value guest booking

TAKEAWAY:  Aggressive commission policy

 

CCL - Seatrade Insider Princess 'Summer Clearance Sale', up to 40% off fares 

Receive as much as $200 onboard spend for Caribbean, Alaska, and Europe itineraries.  Promotion ends on April 30.

TAKEAWAY:  More onboard coupons but less price cuts compared with last summer's Princess promotion.  Last year's Princess summer clearance sale (May 1-8, 2013) offered up to 50% price cut for Alaska and Europe and up to $100 off onboard spend.  

  

INDUSTRY

Chinese cancelling visits to Singapore as well after MH370 incident Strait Times

Travel agencies in Singapore have been getting fewer bookings from Chinese tourists in the aftermath of Flight MH370's disappearance.  The National Association of Travel Agents Singapore (Natas) said current bookings for packages which include Singapore as a stopover have fallen by more than 50% at some agencies.

 

Anita Tan, COO of Natas, which represents more than 300 firms, added that the industry is hopeful that bookings will recover by the July school holidays, which is a peak period for Chinese travellers.

TAKEAWAY:   There were fears several weeks ago that a backlash may happen.  Well, it has.  Not great for LVS and Genting Singapore.

 

No China headwinds for Macau Macau Business Daily 

“I don’t think the recent slowdown in China will affect Macau in the near future. Only in a scenario where the disposable income of Chinese families drops more than 5% could we talk about an impact on the territory’s economy”, said the economist, José João Pãozinho.

 

Despite worrying January-March figures - housing sales dropped 7.7%, construction starts fell 25% and retail sales trailed estimates- the backbone of China’s economic peace, the growing middle class, is still intact.  Urban per capita income rose 7.2% in the first quarter and 3.44 million jobs were created in this period, 40,000 more than compared to a year ago, Beijing’s statistic’s bureau reveals.

TAKEAWAY:  We tend to agree.  Look for a May bounce back.

 

Cotai stores require 20,000 workers Macau Daily News

Retail spaces in the new mega casino resorts opening in Cotai from 2015-17 will require as many as 20,000 workers to man the operation, says Terry Sio Yuen Yee, founder and CEO of a Macau-based distributor and agency of luxury branded products, Rainbow Group. 

 

Proposed monthly rents, however, have already increased to about 300-450 patacas (US$37.5-56.3) a square foot, compared to 100-150 patacas when the first slew of resorts opened in 2007, said Sio.  Nevertheless, her company still aims to invest some 500 million patacas in opening 30 new stores in the new resorts within the next five years, said Sio.

TAKEAWAY:  Retail positions are easier to fill than dealers.  We continue to worry about dealer wage inflation and the supply of dealers to support the Cotai growth.  Remember that dealers are required to be Macau citizens. 

 

Massachusetts Gaming – Boston Mayor Martin J. Walsh's administration is calling on the state's top gambling regulator to recuse himself from the casino licensing process in eastern Massachusetts.  The Walsh administration accused Massachusetts Gaming Commission Chairman Stephen Crosby of making "prejudicial" statements critical of the city's request to be declared a host community for proposed casinos in nearby Everett and Revere.  If granted host community status, Boston residents would have an opportunity to vote on casino proposals by Mohegan Sun in Revere and Wynn in Everett.

TAKEAWAY:  Feels to us like Wynn should walk away and let the Mayor take the blame for failing to create jobs and increase state tax revenues.

MACRO

Hedgeye remains negative on consumer spending and believes in more inflation.  Following  a great call on rising housing prices, the Hedgeye Macro/Financials team is turning decidedly less positive.

TAKEAWAY:  We’ve found housing prices to be the single most significant factor in driving gaming revenues over the past 20 years in virtually all gaming markets across the US.

 


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.28%
  • SHORT SIGNALS 78.51%
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