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European Banking Monitor: Greek CDS Continues Tightening

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 - It was a mixed bag for European swaps this past week. 25 swaps widened and 13 swaps tightened. The Greek banks continue to tighten notably, dropping an average of 33 bps in the past week and 185 bps in the past month. Belgian banks also tightened considerably, dropping an average of 9 bps w/w. Russia’s Sberbank, Germany's IKB, and France's Societe Generale all widened w/w, by 25, 15, and 11 bps, respectively. 

 

European Banking Monitor: Greek CDS Continues Tightening - chart 1 euro financial cds

 

Sovereign CDS – European Sovereign Swaps mostly tightened over last week. French sovereign swaps tightened by -3.9% (-2 bps to 46 ) and Portuguese sovereign swaps widened by 1.8% (3 bps to 173).

 

European Banking Monitor: Greek CDS Continues Tightening - chart 2 sovereign cds

 

European Banking Monitor: Greek CDS Continues Tightening - chart 3 sovereign cds

 

European Banking Monitor: Greek CDS Continues Tightening - 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 did not change from the previous week, remaining at 15 bps.

 

European Banking Monitor: Greek CDS Continues Tightening - chart 5 euribor ois spread

 

Matthew Hedrick

Associate

 

Ben Ryan

Analyst

 

 



Shorting Bill Gross

Client Talking Points

CHINA

The Shanghai Comp is down for the fourth consecutive day (-1.6% to -5.3% year-to-date) as mostly every Asian stock market closed down overnight. Indonesia led the losers down -1.4% and Japan was down another -1% to -11.7% Nikkei YTD.

OIL

WTI crude – starting the week off well – bid up +0.9% to $101.46 and has no immediate-term resistance in our risk range model to $105-106. I’m staying with the long inflation trade via commodities (Food, Oil, Gold, etc.) and TIPs.

US #ConsumerSlowing

We’ll get US GDP slowing (Q1 to be reported with a 1% handle on Wednesday), but no worries, that was just weather, right? Consensus certainly hopes so. This PIMCO call is the consensus call for high 2%, low 3% into the toughest GDP comps of the year (Q3) as inflation heads higher and classic slowing indicators like US Dollar and rates head lower.

Asset Allocation

CASH 32% US EQUITIES 0%
INTL EQUITIES 10% COMMODITIES 18%
FIXED INCOME 20% INTL CURRENCIES 20%

Top Long Ideas

Company Ticker Sector Duration
HOLX

Hologic is emerging from an extremely tough period which has left investors wary of further missteps. In our view, Hologic and its new management are set to show solid growth over the next several years. We have built two survey tools to track and forecast the two critical elements that will drive this acceleration.  The first survey tool measures 3-D Mammography placements every month.  Recently we have detected acceleration in month over month placements.  When Hologic finally receives a reimbursement code from Medicare, placements will accelerate further, perhaps even sooner.  With our survey, we'll see it real time. In addition to our mammography survey. We've been running a monthly survey of OB/GYNs asking them questions to help us forecast the rest of Hologic's businesses, some of which have been faced with significant headwinds.  Based on our survey, we think those headwinds are fading. If the Affordable Care Act actually manages to reduce the number of uninsured, Hologic is one of the best positioned companies.

OC

Construction activity remains cyclically depressed, but has likely begun the long process of recovery.  A large multi-year rebound in construction should provide a tailwind to OC shares that the market appears to be underestimating.  Both residential and nonresidential construction in the U.S. would need to roughly double to reach post-war demographic norms.  As credit returns to the market and government funded construction begins to rebound, construction markets should make steady gains in coming years, quarterly weather aside, supporting OC’s revenue and capacity utilization.

DRI

Darden is the world’s largest full service restaurant company. The company operates +2000 restaurants in the U.S. and Canada, including Olive Garden, Red Lobster, LongHorn and Capital Grille. Management has been under a firestorm of criticism for poor performance. Hedgeye's Howard Penney has been at the forefront of this activist movement since early 2013, when he first identified the potential for unleashing significant value creation for Darden shareholders. Less than a year later, it looks like Penney’s plan is coming to fruition. Penney (who thinks DRI is grossly mismanaged and in need of a major overhaul) believes activists will drive material change at Darden. This would obviously be extremely bullish for shareholders and could happen fairly soon driving shares materially higher.

Three for the Road

TWEET OF THE DAY

CRB Food Index corrected a whopping -0.2% last wk (still inflated by +21.5% YTD) #InflationAccelerating @KeithMcCullough

QUOTE OF THE DAY

"The quality, not the longevity, of one's life is what is important." - Martin Luther King

STAT OF THE DAY

Several current and former cheerleaders are suing their NFL employers over pay. One former cheerleader for the Cincinnati Bengals said she was paid no more than $90 for each game and worked 10 games. Including $75 for a public appearance, she said she was paid $855 for the 2013 season and worked "well over 300 hours a year." Including the games, practices and other events, she calculated her hourly wage at $2.85. (CNN)


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Fund Flows, Refreshed

Takeaway: In the most recent week, while both equity and fixed income flows were very light, equity production emerged as "less bad" of the two.

Editor's Note: This research note was originally sent to subscribers on April 24, 2014 by Hedgeye’s Financials team Jonathan Casteleyn & Josh Steiner. Follow Jonathan & Josh on Twitter @HedgeyeJC and @HedgeyeFIG.

 

Fund Flows, Refreshed - wallstreet1

 

Investment Company Institute Mutual Fund Data & ETF Money Flow

 

In the most recent 5 day period, absolute money flow into both equity and fixed income mutual funds declined week-to-week, although the slack in equity fund flow was less pronounced than fixed income.

 

Total equity mutual fund flow decelerated sequentially week-to-week, producing a tally below the 2014 year-to-date weekly average. The $2.3 billion that came into all equity mutual funds during the most recent five-day period ending April 16th was split between a weak $636 million inflow into United States equity funds and the marginally stronger $1.7 billion that moved into international stock funds. This higher demand for foreign equity products has been consistent over the past two years with international stock fund inflow having averaged $2.9 billion per week this year and $2.6 billion per week last year in 2013 with domestic fund products averaging an inflow of just $1.3 billion thus far in 2014 and a $451 million inflow last year in comparison. The 2014 running weekly average inflow for all equity mutual funds is now $4.1 billion, still an improvement from the $3.0 billion weekly average inflow for 2013. 

 

Fixed income mutual fund flow also decelerated week-to-week, reversing last week's trend lines in the product graphs below, which had displayed improving momentum for bond funds versus equity funds. For the week ending April 16th, $659 million flowed into all fixed income funds, as opposed to last week's $1.6 billion inflow. The worsening of bond fund inflow amounted to $630 million which flowed into taxable products and a mere $29 million inflow into tax-free or municipal products. Still, the inflow into taxable products this week was the 10th consecutive week of positive flow and the inflow into municipal or tax-free products was the 14th consecutive week of positive subscriptions. The 2014 weekly average for fixed income mutual funds now stands at a $1.9 billion weekly inflow, an improvement from 2013's weekly average outflow of $1.5 billion but a far cry from the $5.8 billion weekly average inflow from 2012 (our view of the blow off top in bond fund inflow).

 

Exchange traded funds (ETFs) experienced moderately negative trends during the week, with a notable week of redemption in stock ETFs with $2.2 billion of net outflow. Bond ETFs experienced only a slightly positive inflow of $204 million for the most recent five-day period. The 2014 weekly averages are now a $973 million weekly inflow for equity ETFs and a $931 million weekly inflow for fixed income ETFs. 

 

The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a negative $754 million spread for the week ($109 million of total equity inflow versus the $863 million inflow within fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52 week moving average has been $7.5 billion (more positive money flow to equities), with a 52 week high of $31.0 billion (more positive money flow to equities) and a 52 week low of -$37.5 billion (negative numbers imply more positive money flow to bonds for the week). 

 

Mutual fund flow data is collected weekly from the Investment Company Institute (ICI) and represents a survey of 95% of the investment management industry's mutual fund assets. Mutual fund data largely reflects the actions of retail investors. ETF information is extracted from Bloomberg and is matched to the same weekly reporting schedule as the ICI mutual fund data. According to industry leader Blackrock (BLK), U.S. ETF participation is 60% institutional investors and 40% retail investors.   

 

Fund Flows, Refreshed - 1

 

Most Recent 12 Week Flow in Millions by Mutual Fund Product

 

Fund Flows, Refreshed - 2

 

Fund Flows, Refreshed - 3

 

Fund Flows, Refreshed - 4

 

Fund Flows, Refreshed - 5

 

Fund Flows, Refreshed - 6

 

Most Recent 12 Week Flow Within Equity & Fixed Income Exchange Traded Funds

 

Fund Flows, Refreshed - 7

 

Fund Flows, Refreshed - 8

 

Net Results

 

The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a negative $754 million spread for the week ($109 million of total equity inflow versus the $863 million inflow within fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52 week moving average has been $7.5 billion (more positive money flow to equities), with a 52 week high of $31.0 billion (more positive money flow to equities) and a 52 week low of -$37.5 billion (negative numbers imply more positive money flow to bonds for the week). 

 

Fund Flows, Refreshed - 9 

 

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MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING?

Takeaway: The ongoing compression in the yield curve is the main risk factor we're highlighting this week.

Key Callouts:

The main risk callout this morning is the ongoing compression in the yield spread. The 2-10 yield spread ended 2013 at 265 bps. As of Friday's close it stood at 223 bps, a decline of 42 bps. In the latest week, we saw a further 9 bps of decline. The compression of the yield curve is seemingly at odds with the generally strong labor market data we've seen recently. So, what's causing this? There are two possible explanations.

 

  • First, investors should look back historically at the correlation between the Fed's holdings of treasury and mortgage securities and the level of the 10-year treasury yield. What they will find is that QE1 and QE2 did effectively reduce long-term yields. However, interestingly, rates dropped MORE at the end of QE1 and QE2. Why would yields drop when Fed purchasing ends? The simple answer is concerns around growth slowing. It's possible that the market is following the same playbook, although in slow motion.
  • Second, banks have stepped up their purchases of treasury securities since the start of this year. This is partly a natural response to decelerating loan growth, but also partly driven by liquidity requirements. Interestingly, as per a Bloomberg article out this morning, bank holdings of treasury securities are near their late-2012 highs. In late 2012 the 10-year was at or near its all time low of 150 - 170 bps.

Aside from what's happening in rates, it's generally quiet across the Financials landscape. The following are a few of the key callouts from this week's RM.

 

*2-10 Spread – Last week the 2-10 spread tightened to 223 bps, -9 bps tighter than a week ago. 

 

*U.S. Financial CDS -  Swaps tightened for 25 out of 27 domestic financial institutions. The Global US banks (with the exception of BAC, which saw no change) were tighter, by an average of 2 bps w/w, and 6 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. 

 

*Chinese Steel – Steel prices in China fell 1.3% last week, or 45 yuan/ton, to 3,332 yuan/ton. We use Chinese steel rebar prices to gauge Chinese construction activity, and, by extension, the health of the Chinese economy.

 

Financial Risk Monitor Summary

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

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

 • Long-term(WoW): Positive / 4 of 12 improved / 2 out of 12 worsened / 6 of 12 unchanged

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 15

 

1. U.S. Financial CDS -  Swaps tightened for 25 out of 27 domestic financial institutions. The Global US banks (with the exception of BAC, which saw no change) were tighter, by an average of 2 bps w/w, and 6 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 bond guarantors saw large w/w improvements. Notably improved were AGO, whose swaps tightened by 44 bps w/w, and MBI, whose swaps tightened by 31 bps w/w. 

 

Tightened the most WoW: AGO, MTG, PRU

Tightened the least WoW: HIG, BAC, C

Tightened the most WoW: AIG, GNW, MS

Widened the most MoM: MBI, AGO, JPM

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 1

 

2. European Financial CDS - It was a mixed bag for European swaps this past week. 25 swaps widened and 13 swaps tightened. The Greek banks continue to tighten notably, dropping an average of 33 bps in the past week and 185 bps in the past month. Belgian banks also tightened considerably, dropping an average of 9 bps w/w. Russia’s Sberbank, Germany's IKB, and France's Societe Generale all widened w/w, by 25, 15, and 11 bps, respectively. 

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 2

 

3. Asian Financial CDS – Last week Chinese and Indian banks widened nominally, while Japanese financials tightened by an average of 1.3 bps w/w.

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 17

 

4. Sovereign CDS – European Sovereign Swaps mostly tightened over last week. French sovereign swaps tightened by -3.9% (-2 bps to 46 ) and Portuguese sovereign swaps widened by 1.8% (3 bps to 173).

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 18

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 3

 

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5. High Yield (YTM) Monitor – High Yield rates fell 0.8 bps last week, ending the week at 5.62% versus 5.63% the prior week.

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 5

 

6. Leveraged Loan Index Monitor – The Leveraged Loan Index rose 1.0 points last week, ending at 1854.

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 6

 

7. TED Spread Monitor – The TED spread rose 1.3 basis points last week, ending the week at 21.4 bps this week versus last week’s print of 20.09 bps.

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 7

 

8. CRB Commodity Price Index – The CRB index rose 0.3%, ending the week at 311 versus 310 the prior week. As compared with the prior month, commodity prices have increased 2.2% We generally regard changes in commodity prices on the margin as having meaningful consumption implications.

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 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 did not change from the previous week, remaining at 15 bps.

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 9

 

10. Chinese Interbank Rate (Shifon Index) – The Shifon Index rose 30 basis points last week, ending the week at 2.3% versus last week’s print of 2.0%. 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: WHY ARE LONG-TERM RATES FALLING? - 10

 

11. Chinese Steel – Steel prices in China fell 1.3% last week, or 45 yuan/ton, to 3332 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: WHY ARE LONG-TERM RATES FALLING? - 12

 

12. 2-10 Spread – Last week the 2-10 spread tightened to 223 bps, -9 bps tighter than a week ago. We track the 2-10 spread as an indicator of bank margin pressure.

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 13

 

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

 

MONDAY MORNING RISK MONITOR: WHY ARE LONG-TERM RATES FALLING? - 14

 

Joshua Steiner, CFA

 

Jonathan Casteleyn, CFA, CMT


LEISURE LETTER (04/28/2014)

Tickers:  PENN, PNK, MGM, WYNN, OEH, 200.HK

EVENTS TO WATCH

Monday, April 28

  • CHH Q1 EPS – 10am , Passcode: 70683172

Tuesday, April 29

  • Las Vegas March revenues out
  • NCLH Q1 EPS – 10am , Passcode: 22334128
  • VAC Q1 earnings – 10am , Passcode: 4679876
  • MGM Q1 earnings – 11am , Passcode: 20455736

Wednesday, April 30

  • PNK Q1 earnings – 8am , Passcode: 27759612
  • GLPI Q1 earnings – 9am
  • MAR Q1 earnings – 10am , Passcode: 10575194
  • H Q1 earnings – 11:30am , Passcode:  11561402
  • BYD Q1 earnings – 5pm , Passcode:  44440004

Thursday, May 1

  • GENTING Q1 earnings  
  • HST Q1 earnings – 10 a.m.
  • OEH Q1 earnings – 10 a.m. , Passcode: 22074904
  • FCH Q1 earnings – 12 p.m. , Passcode: 28469900
  • BYI FQ3 earnings – 4:30 p.m.
  • EXPE Q1 earnings – 4:30 p.m .

Friday, May 2

  • April Employment Report
  • HT Q1 earnings – 9 a.m. , Passcode: 1398938

COMPANY NEWS

200.HK – signed a memorandum of understanding with Veremonte Espana S.L. of Spain to hold talks for the management of at least one casino to be developed as part of the BCN Dream resort being developed by Veremonte near Barcelona.

Takeaway:  Given the press releases during 2013, we believed this had already occurred - so we don't consider this "new" news.

 

PENN – filed an appeal with the Iowa Racing & Gaming Decision regarding the IRGC's April 17 decision to close the Argosy Casino.  The IRGC has 20 calendar days from the April 22 appeal filing date or Monday, May 12.  The IRGC has three options: deny the appeal; accept the appeal and proceed to another hearing (similar to the hearing held at the end of March); or do nothing (in which case the appeal would be considered denied). 

Takeaway:  We give 3:2 odds the IRGC either denies or does nothing. Given the events at the March hearing, it seems unlikely the IRGC would opt for another hearing - especially given PENN's commentary last week on the Company's Q1 2014 earnings call. 


PNK - the $300 million Belterra Park will open Thursday, May 1 with 1,500 slot machines, a rebuilt thoroughbred race track, three sit-down restaurants, another three snack or beverage outlets and space for events.

Takeaway:  100 less slots than previously guided.  Increased competition for gaming dollars around Cincinnati.


MGM & WYNN – have indicated they want Massachusetts to repeal a provision requiring gambling facilities to report and withhold 5 percent for state income tax on certain winnings over $600.

Takeaway:  MA may prove to be a tough place to do business... 

 

OEH - the iconic Belmond Hotel Cipriani in Venice, Italy has reopened for the 2014 season with a stylish new restaurant, called Oro.  Oro seats 40 patrons and overlooks the the lagoon.  Summer 2014 rates at the Hotel Cipriani start from US$1,025, including taxes and breakfast, based on two sharing a Double Garden View Room with Balcony

Takeaway:  What is old is new, how about a new ticker symbol for the new brand name? May we suggest NYSE "BMD" or "BHG" 


MSC - Agents can earn more selling MSC Divina in the Med next summer Seatrade Insider 

The decision to send Miami-based MSC Divina back to the Mediterranean during summer 2015 will help US travel agents entice their clients to Europe for higher-ticket cruises while taking ship out of the competitive Caribbean, said Rick Sasso, president and CEO of MSC Cruises USA.  The move is a change from the line's original deployment plan, which would have seen Divina based in Miami year-round during 2015.  "Travel agents can make much more money in the Mediterranean than the Caribbean in June and July," Sasso said.

Takeaway:   This is cruisetalk for an exec telling folks we made a mistake to overcrowd the Caribbean market.  Cruise companies seem to a step behind in gauging where strong demand lies - this year's Europe, last year's North America. 

INDUSTRY NEWS

Macau Unemployment Rate Jan 2014 - Mar 2014 DSEC

Macau's unemployment rate (1.7%) for Jan-Mar 2014 was unchanged from the December 2013-February 2014 period.  Gaming employment fell 2.6% from the previous period to 85,600. 

Takeaway:  We're more worried about labor supply and labor inflation when the new Cotai properties add to the table supply.

 

Large junkets credit - According to a UBS report, a junket operator is reporting some larger junkets may be running tight in issuing credit because of a rise in the cost of capital.  Credit VIP volume is not growing, but cash VIP play is, said a junket operator.  Cash VIP, meaning agents lending cash to players vs. players using credit from a junket operator, now accounts for 50% of VIP business.  


A junket operator added that because of collection concerns, agents are being tighter with credit extension, so that while the number of players is up, they are gambling less.

Takeaway: Whether this is an isolated comment from a junket, we don't know.  We haven't heard this from any of our contacts.  May might provide an indication as we are expecting a very strong month.

 

G2E Asia - May 20-22, 2014 at the Venetian Macau announced the Keynote Address speaker will be Pansy Ho.  Other high profile speakers include: Gamal Aziz, president, Wynn Macau Ltd.; Edward Bowers, senior vice president, Global Gaming Development, MGM Resorts International; Grant Bowie, chief executive officer, MGM Resorts China Holdings Limited; Grant Chum, senior vice president, Global Gaming Strategy, Sands Corporation; Mike Mecca, president and CEO, Galaxy Entertainment Group Limited; Jorge Sarmiento, president and COO, The Philippine Amusement and Gaming Corporation; Kelvin Tan, chief of international marketing and executive vice president, Melco Crown Entertainment Ltd.; Will Shen, Vice President of Asia Development, Caesars Entertainment.

 

Florida Gaming Expansion - Gov. Rick Scott and the Seminole Tribe of Florida are close to reaching a new deal that could force legislators to once again consider the future of gambling in Florida.  The Scott administration is considering a May special session (beginning May 19) to consider a new compact with the tribe.  Florida legislators are scheduled to end their annual session on May 2.  The Seminoles and Florida reached a deal in 2010 to give the Seminole exclusive rights to have blackjack and other table games at three Broward County casinos and others in Immokalee and Tampa. Part of that deal expires in 2015. 

Takeway:  Expect more commentary from LVS, WYNN and Genting Singapore in the days ahead.  We all agree that Florida has destination type potential.

 

Saipan Gaming Expansion - the Lottery Commission must review applications from two investor groups looking to develop an integrated casino resort on the island country. Marianas Stars Entertainment Inc. and Best Sunshine International Ltd. each have until May 5 to deposit $30 million in an escrow to be further considered for a grant of an exclusive casino license. 

Takeaway:  As we highlighted in our March 3 and March 25 Leisure Letters, we remain very skeptical and doubt such integrated resorts will get buitd because the current annual visitation of approximately 450,000 (comprised of 40% from Japan and 20% from China), would only fill a small percentage of the total 730,000 room nights at a 2,000 room hotel. Thus, we remain skeptical of the casinos profitability and viability given the isolated location.  Additional airlift is required to ensure casino visitation.

 

Sri Lanka rejects gaming bill - the Sri Lankan government refused to allow casinos at three super-luxury resorts planned in the capital after opponents said they would lead to prostitution.

Takeaway:  Prostitution at casinos? Say it isn't so...

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.


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