• run with the bulls

    get your first month

    of hedgeye free


Buy In May, And Pray?

“Basically, I’m for anything that gets you through the night – be it prayer, tranquilizers, or a bottle of Jack.”

-Frank Sinatra


Sinatra was a beauty, but he wasn’t a risk manager. And prayer isn’t a risk management process either.


I get it. There’s no need to bring our respective religions into this discussion…


So every time you hear a consensus Old Wall economist tell you to ignore the 0.11% US GDP bomb for Q1 (and that this sucker is going to magically accelerate to 3-4% growth from here), drink.


Buy In May, And Pray? - sinatra


Back to the Global Macro Grind


Imagine being me for a second… This morning I’ll be doing Institutional Investor meetings in my 4th state in 4 days (IN, MN, CT, and NY), and I get to hear all of it. I’ll hear about what all of our competitors selling macro research think. I’ll hear how all these sell side economists knew it was “all about the weather” (but they didn’t know the number would be so bad)… and how everything is really ramping (even though the data isn’t) …


On and on and on it goes…


Empathize with me people! I’ll be like the US Dollar (on its YTD lows post Q1 GDP disaster) and get down on my bloody knees and pray for your forgiveness for having my team think for itself. I must repent!


Serious question - should I, like the bond market (yields falling to 2.66% on the 10yr as growth slows), beg thy overlord at The Fed for an un-taper too? Or will that have to wait until the weather stops being the weather in Alabama this morning?


Enough questions already. Time to show you the wood (US GDP data for Q114):

  1. As inflation accelerated in Q114, US GDP growth slowed, big time, to 0.11% (from 4.12% in Q3 of 2013 – that’s not just weather)
  2. Consumer Growth (focus of our bear #ConsumerSlowing call) slowed from 1.03% in Q313 to 0.08% in Q114
  3. Retail Sales Growth slowed from 2.45% in Q313 (when we were bullish on US growth) to 0.68% in Q114
  4. Fixed Investment (capex) got smoked back into its hole of negative -0.44% (vs +0.89% in Q313)
  5. Exports (which are supposed to magically rise when you burn your currency) dropped -1.07% (vs. +0.52% in Q313)

Pardon? (says the ragingly linear economist who missed last year’s US #GrowthAccelerating as both the US Dollar and rates rose too). Pardon the data, I guess – because it’s not cooperating with Keynesian academic dogma!


Before I get into more of the good stuff (data), consider the following relationships that are driving David (Blanchflower) @Dartmouth right batty right now:

  1. As the UK currency rips to new highs, UK manufacturing PMI (57.3 in APR vs 55.2 MAR) is accelerating
  2. As the US currency gets devalued to YTD lows, US Export demand is falling

Oh, and there’s this other thing going on in US Housing that Janet refuses to address:

  1. As rates fall, US Housing Demand is falling to fresh YTD lows (MBA weekly mortgage demand down another -5.9% this past week)
  2. But let’s not talk or write about that any further, because that’s a Q2 reality and it doesn’t fit the February weather excuse

Back to the tasty data that is both the US government and Fed’s definition of “inflation”:

  1. Allegedly, the GDP Deflator for Q1 was 1.3% (you subtract that from nominal GDP to get a real GDP #)
  2. But MIT’s Billion Prices Project read on inflation (much closer to ours) ripped to +3.9%

So, do the math. If America was using anything in the area code of a real world cost of living proxy (let’s say MIT academic thought is acceptable to a Princeton or Yale economist) US GDP for Q1 of 2014 would have been DOWN over 2%.


But since we’re not going to play a game of gotcha with conflicted and compromised US government data, let’s pretend for a second that it’s the 16th century again and we haven’t learned a damn thing about economic gravity.


Yep, let’s go all Copernicus on the Catholics of Wall Street forecasting, and suggest there is a solar system!

  1. Even if we use the Fed’s definition of CPI or PCE, inflation is going to accelerate against the easiest comps of the last 3 years (Q2 and Q3)
  2. When #inflationAccelerating happens in the data series, there’s a structural headwind to reported GDP (its math)
  3. So, there’s pretty much no way on this side of hell that 2014 GDP is going to be 3-4%, real

To get real, or nominal, remains the question. And as long as we can monitor all of our proxy baskets for US inflation (food, rents, energy, education, wages, etc.) in real-time, even a Mucker can model this in the 21st century.


Buy In May, And Pray? - Chart of the Day


But you don’t need to take my or a dead Polish dude’s (Nicholas Copernicus died in 1543) word for it. You can ask Mr. Macro Market:

  1. Currency market (USD Dollar) says growth continues to slow
  2. Bond market (long-end of the curve) says growth continues to slow
  3. Stock market (Russell 2000 as a proxy for growth expectations) remains down YTD

If you’re going to buy in May, please do more of what you should have been doing since January 1st – be it inflation protection (TIP), food commodities (DBA), or slow-growth-yield-chasers (XLU), it’s all working. If you have been buying Twitter (TWTR) the whole way down on the weather thing, drink.


Our immediate-term Global Macro Risk Ranges are now as follows:


UST 10yr Yield 2.63-2.73%

Russell 1109-1155

USD 79.47-79.95

Pound 1.67-1.69

Natural Gas 4.61-4.85

Corn 5.06-5.20


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer

Noble Growth

This note was originally published at 8am on April 17, 2014 for Hedgeye subscribers.

“Ambition is the germ from which all growth of nobleness proceeds.”

-Oscar Wilde


As an equity investor if you are early on growth in owning a stock, that is usually a very good thing.  Parabolic growth can propel a stock to, as they say, “infinity and beyond.”  On a macro level the same lesson applies.  We’ve obviously been vocal and early on our view of growth slowing this year and the sub-sector performance of the SP500 has reflected that in spades.


On a more micro level, we’ve also been pretty negative on social media stocks, in particular Twitter (TWTR) and Yelp (YELP).  Admittedly on Twitter, we were early as we were literally negative from the IPO, but as TWTR’s first earnings report showed us, expectations will eventually meet the gravity of reality.


In adding YELP to our Best Ideas list as a short, our timing has been much better.  The key tenets of the short thesis on YELP are that customer attrition is a major issue, which no one is focused on, and also that the addressable market is much smaller than the management team is pitching to investors.  The combination of attrition and a smaller market makes us believe that revenue growth will eventually disappoint. (If you’d like to get on the distribution list of Hesham Shabaan, who runs our Internet research team, please email sales@hedgeye.com.)


Even as we believe that certain social media stocks are getting ahead of themselves, it is hard to deny their ambitious growth.  The boot strapping startup stories of the likes of Twitter and Facebook are worthy of admiration.  In what direction these business models evolve will be the true test of longevity, but it is hard to deny the potential of a company like Facebook where 1/8 of the planet uses the application and 64% of users visit the site daily.


Another growth area we have been focused on has been electronic cigarettes, or e-Cigs.  This has been reflected on our Best Ideas list with a long in Lorillard (LO).  For the most part, LO is a boring tobacco stock, but has an underlying growth engine in its e-Cig business, which makes its growth prospects much more exciting.  Although, admittedly, it is hard to call this noble growth. 


The research on e-cigs naturally led us to also look at the burgeoning medical marijuana market.  In states that have recently legalized marijuana it has been a boon to state tax coffers and to the extent that this legalizing expands, it is likely that tobacco companies enter the field.  But before we dive into research and start doing calls on the topic, we’d like to get your view.


In our poll of the day that will circulate later today, we will be asking the question: Would you invest in a company that produces medical marijuana? We look forward to your responses and in getting the crowds view on whether medical marijuana is noble growth.


Back to the Global Macro Grind . . .


Heading into the long weekend, many business people and investors will be taking stock of the score in the year-to-date. In the chart of the day, we have attached one of a number of the quant screens that we circulate internally daily that show relative asset class performance.


One interesting chart looks at P/Es for countries versus their 3-year mean.  Based on that metric the three most overvalued countries are Mexico, Argentina, and Saudi Arabia.  Meanwhile, the three most undervalued are Russia, China, and Japan.  There is some global macro performance to be found in that group to be sure!


Speaking of performance, it likely has not been a great year for the average long only fund as the SP500 is up a dreary +0.75% (certainly much different than what the Barron’s round table projected to start the year) and the hedge fund industry hasn’t fared much better.  According to data from Preqin, the average hedge fund returned 1.23% in Q1, which is the worst start since 2008.


Interestingly, the one strategy that has worked well is activist investing.  According to the same data, activist funds on average were up 3.3% in Q1.  We have also been very vocal on one major activist name, the restaurant behemoth Darden (DRI).   And this may fall in the category of growth that isn’t noble as well, but you should expect to see more activist ideas come from us as the year continues. 


As we noted earlier, based on a comparison to the 3-year mean in forward P/E, Japanese equities are screening as cheap.  The question that arises is whether Japan is cheap for a reason.  Certainly, one potential negative catalyst for Japan is the VAT tax.  March department store sales were up an astonishing 25.4% year-over-year in March ahead of the VAT tax that was implemented on April 1st


Meanwhile, despite buying a lot, the confidence of consumers in Japan actually declined in March.  According to the Japanese consumer confidence index, confidence declined to 37.5 in March from 38.5 in February.  Clearly not an earth shattering breakdown in confidence, but likely a leading indicator of future declines now that the VAT tax is in place.


Clearly, the Japanese policy makers are going to have some interesting decisions to make in coming months and most of them are unlikely to bode well for the Yen.  Japanese leadership may be wise to consider the words of Nascar legend Dale Earnhardt:


You win some, lose some, and wreck some”

Ultimately, Japanese policy makers will have to decide whether growth by devaluation is truly noble growth.


Our immediate-term Global Macro Risk Ranges are now:


SPX 1811-1881

Nasdaq 3959-4203

Nikkei 13699-14598

USD 79.11-80.03

EUR/USD 1.37-1.39

Nat Gas 4.49-4.72 


Keep your head up and stick on the ice,


Daryl G. Jones

Director of Research


Noble Growth - chartoftheday


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.


TODAY’S S&P 500 SET-UP – May 1, 2014

As we look at today's setup for the S&P 500, the range is 28 points or 1.27% downside to 1860 and 0.21% upside to 1888.                                                       













  • YIELD CURVE: 2.24 from 2.24
  • VIX closed at 13.41 1 day percent change of -2.19%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:30am: Challenger Job Cuts y/y, April (prior -30.2%)
  • 7:30am: RBC Consumer Outlook Index, May (prior 50)
  • 8:30am: Fed’s Yellen speaks in Washington
  • 8:30am: Initial Jobless Claims, April 26, est. 320k (prior 329k)
  • Continuing Claims, April 19, est. 2.7m (prior 2.680m)
  • 8:30am: Personal Income, March, est. 0.4% (prior 0.3%)
  • Personal Spending, March, est. 0.6% (prior 0.3%)
  • 8:30am: PCE Deflator m/m, March, est. 0.2% (prior 0.1%)
  • PCE Deflator y/y, March, est. 1.1% (prior 0.9%)
  • PCE Core m/m, March, est. 0.2% (prior 0.1%)
  • PCE Core y/y, March, est. 1.2% (prior 1.1%)
  • 9:45am: Bloomberg Consumer Comfort, April 27 (prior -25.4)
  • 9:45am: Markit US Manufacturing PMI, April final est. 55.4 (prior 55.4)
  • 10am: ISM Manufacturing, April, est. 54.3 (prior 53.7)
  • ISM Prices Paid, April, est. 59.5 (prior 59)
  • 10am: Construction Spending m/m, March, est. 0.5% (prior 0.1%)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural-gas storage change


  • House, Senate in Session
  • U.S. Trade Representative Michael Froman testifies on agenda
  • German Chancellor Angela Merkel arrives for mtgs with Obama
  • Independent Community Bankers of America holds 2nd day of Washington Policy Summit, with speakers including Yellen
  • 12pm: Freddie Mac Chief Economist Frank Nothaft speaks at Natl Economists Club
  • U.S. ELECTION WRAP: Establishment Republicans Lead; N.C. Primary


  • U.S. signals Putin that any move against NATO nations risks war
  • Sprint said to plan T-Mobile bid as banks pushed for funds
  • Pfizer CEO meets w/large AstraZeneca holders, Osborne: FT
  • AT&T approached DirecTV about possible acquisition: WSJ
  • Abercrombie bows to activist by replacing 4 of its directors
  • Viacom said acquiring U.K.’s Channel 5 from Northern & Shell
  • Chesapeake cleared by U.S. prosecutors in Michigan shale probe
  • Ares seeks higher IPO value than buyout peers on stable rev.
  • Google unveils new advertising tools for marketers on YouTube
  • Musk’s SpaceX wins temporary order blocking rocket engine buys
  • Medicines Co.’s Cangrelor denied approval by FDA
  • April U.S. auto sales: Chrysler seen extending 48-month streak
  • U.K. manufacturing grows more than forecast as exports up
  • Fed Chair Janet Yellen speaks to community bankers conference


  • Airgas (ARG) 7:30am, $1.20
  • Alliant Energy (LNT) 6am, $0.79
  • Alpha Natural Resources (ANR) 7am, ($0.57) - Preview
  • American Tower (AMT) 7am, $0.50- Preview
  • AmTrust Financial Services (AFSI) 7am, $0.92
  • ANSYS (ANSS) 7:09am, $0.76
  • Avon Products (AVP) 7:01am, $0.21- Preview
  • Ball (BLL) 6am, $0.67
  • Baytex Energy (BTE CN) 8am, C$0.52
  • Becton Dickinson and Co (BDX) 6am, $1.50
  • BGC Partners (BGCP) 8am, $0.13
  • Bombardier (BBD/B CN) 6am, $0.08 - Preview
  • BorgWarner (BWA) 8am, $0.80
  • Bunge (BG) 6:30am, $1.40
  • Calpine (CPN) 6am, ($0.06)
  • Cardinal Health (CAH) 8am, $1.01 - Preview
  • CenterPoint Energy (CNP) 8:15am, $0.32
  • Church & Dwight Co (CHD) 7am, $0.73
  • Cigna (CI) 6am, $1.54
  • Clorox Co/The (CLX) 8:30am, $1.08 - Preview
  • CME Group (CME) 7am, $0.83
  • Cobalt International Energy (CIE) 7am, ($0.17)
  • ConocoPhillips (COP) 7am, $1.55- Preview
  • Domino’s Pizza (DPZ) 7:30am, $0.68
  • Endo International PLC (ENDP) 6:32am, $0.83
  • Enterprise Products Partners (EPD) 6am, $0.75
  • Exxon Mobil (XOM) 8am, $1.88 - Preview
  • Fidelity National Information (FIS) 7am, $0.68
  • Fortress Investment Group LLC (FIG) 7am, $0.15
  • Gartner (IT) 7am, $0.37
  • Generac Holdings (GNRC) 5:59am, $0.69
  • Goldcorp (G CN) 8am, $0.14 - Preview
  • Harman International (HAR) 8am, $1.01
  • Host Hotels & Resorts (HST) 6am, $0.15
  • Incyte (INCY) 7am, ($0.17)
  • Invesco (IVZ) 7:30am, $0.55
  • Iron Mountain (IRM) 6am, $0.26
  • ITT (ITT) 7am, $0.52
  • Jarden (JAH) 6:50am, $0.16
  • Kellogg Co (K) 8am, $0.97 - Preview
  • L-3 Communications Holdings (LLL) 7am, $1.95
  • Lazard (LAZ) 7am, $0.54
  • Legg Mason (LM) 7am, $0.58
  • Linn Energy LLC (LINE) 6:50am, $0.38
  • Manulife Financial (MFC CN) 6am, C$0.37 - Preview
  • Maple Leaf Foods (MFI CN) 7am, (C$0.16)
  • Marathon Petroleum (MPC) 7:06am, $1.06 - Preview
  • MasterCard (MA) 8am, $0.72
  • Motorola Solutions (MSI) 7am, $0.50
  • Mylan (MYL) 6:30am, $0.63 - Preview
  • Ocwen Financial (OCN) 7:30am, $1.02 - Preview
  • OGE Energy (OGE) 7am, $0.25
  • Penn West Petroleum (PWT CN) 6:31am, C$0.11
  • PG&E (PCG) 9:02am, $0.63
  • PPL (PPL) 6:57am, $0.71
  • Public Service Enterprise Group (PEG) 7:30am, $0.96
  • Realty Income (O) 9:15am, $0.23
  • Royal Gold (RGLD) 8am, $0.23
  • Sally Beauty Holdings (SBH) 7:30am, $0.39
  • Starz (STRZA) 7:30am, $0.53
  • Stillwater Mining Co (SWC) 8am, $0.09
  • Teva Pharmaceutical Industries (TEVA) 7am, $1.20 - Preview
  • Textron (TXT) 6:30am, $0.34 - Preview
  • T-Mobile (TMUS) 6am, ($0.11)
  • Viacom (VIAB) 6:45am, $1.05 - Preview
  • Vonage Holdings (VG) 8am, $0.03
  • Xcel Energy (XEL) 6am, $0.50


  • Agnico Eagle Mines (AEM CN) 5pm, $0.24 - Preview
  • Akamai Technologies (AKAM) 4:01pm, $0.53
  • AlonA Energy (ALJ) 6pm, $0.05
  • Arch Capital Group (ACGL) 4:01pm, $1.06
  • BioMarin Pharmaceutical (BMRN) 4pm, ($0.46)
  • Covance (CVD) 4:01pm, $0.90
  • DaVita HealthCare Partners (DVA) 4:01pm, $0.86
  • Eldorado Gold (ELD CN) 5:48pm, $0.05 - Preview
  • Expedia (EXPE) 4pm, $0.15
  • First Quantum Minerals (FM CN) 5pm, $0.24 - Preview
  • FleetCor Technologies (FLT) 4:01pm, $1.07
  • Fluor (FLR) 4:05pm, $0.97
  • Integrys Energy Group (TEG) 5:08pm, $1.75
  • InvenSense (INVN) 4:05pm, $0.11
  • Kodiak Oil & Gas (KOG) 4:01pm, $0.18
  • Kraft Foods Group (KRFT) 4pm, $0.76 - Preview
  • LinkedIn (LNKD) 4:05pm, $0.34
  • Manitowoc Co/The (MTW) 4:25pm, $0.20
  • Mohawk Industries (MHK) 4:01pm, $1.17
  • ON Semiconductor (ONNN) 4:05pm, $0.15
  • PMC-Sierra (PMCS) 4:05pm, $0.07
  • RR Donnelley & Sons Co (RRD) 4pm, $0.23
  • SBA Communications (SBAC) 4:01pm, ($0.03)
  • Southwestern Energy Co (SWN) 4:10pm, $0.63
  • Standard Pacific (SPF) 4:02pm, $0.11
  • Tempur Sealy International (TPX) 4:03pm, $0.51 - Preview
  • Vertex Pharmaceuticals (VRTX) 4pm, ($0.77)
  • Western Union Co/The (WU) 4:01pm, $0.35
  • Wynn Resorts (WYNN) 4:05pm, $2.07
  • XL Group PLC (XL) 4:01pm, $0.74


  • WTI Drops to Four-Week Low as Crude Supplies Rise; Brent Falls
  • Shale Revolution Luring Trading Houses Into U.S. Energy Assets
  • Silver Looks Like Gold as Slump Defies Car-Part Use: Commodities
  • Gold Drops for Fourth Day as Federal Reserve Curbs Bond Buying
  • Crop Futures Drop as Warmer U.S. Weather May Boost Planting Pace
  • Nickel Declines Amid Indications Rally Lifted Prices Too High
  • Robusta Coffee Drops Amid Ample Vietnamese Supplies; Cocoa Falls
  • European Gas Costs to Extend Longest Drop in 4 Years in Mild May
  • Rio Claims Vale, Steinmetz Conspired on Guinean Iron Ore Mine
  • Utility Investors Brush Off Supreme Court’s EPA Support: Energy
  • Dutch Police Arrest Activists Trying to Block Arctic Oil Tanker
  • Looming El Nino Seen Spurring Droughts to Smelly Reefs in Asia
  • Aluminum Inventories Rebound on Additional Capacity: Bear Case
  • Gas Swings Show Russia Avoids Iran-Style Curbs: Chart of the Day
  • Life Imitates Art as Wall Street Bets on Shipping Debt: Freight

























The Hedgeye Macro Team














May 1, 2014

May 1, 2014 - Slide1



May 1, 2014 - 2

May 1, 2014 - 3

May 1, 2014 - 4

May 1, 2014 - 5

May 1, 2014 - 6

May 1, 2014 - 7

May 1, 2014 - 8




May 1, 2014 - 9

May 1, 2014 - 10

May 1, 2014 - 11
May 1, 2014 - 12


Borgata disappointing (in part to 1x online startup expenses) but overall at the top of guidance. 2014 guidance looks in line. Upcoming catalysts include big refi, Borgata property tax resolution (likely favorable and material), and less bad regional gaming revs.





Core Operations

  • Cutting expenses in light of flat revenue environment
  • Recent Southern Nevada data points support stronger revenue outlook - job add, house price appreciation...within increased consumer confidence gaming spend should increase
  • Penny Lane rolled out to 15 properties with full roll out by end of the summer
  • B-Connected rolled out to all markets
  • Non-gaming amenities revitalization
  • Severe winter weather negatively impacted $10-$12M
  • Real Money On Line - Borgata brand capturing 1/3rd of NJ online revenue
  • Opportunities to expand land based operations -- looking at Northern California and South Florida
  • BS is strong and making progress, delevering and paid down $55M in Q1, estimated will save $80M in interest expense
  • $1.1B Federal loss carry forward
  • Use FCF to reduce debt
  • LT shareholder value - organic, on line, acquisitions. Will consider all opportunities and consider all options seriously.

Operating Results

  • Total Property Margins nearly unchanged YoY
  • Weather impacted results by $10-12M

 Las Vegas Locals

  • YoY comps more difficult but strength in destination business and core operations
  • 1Q maintained market share with flat reinvestment
  • Actively refining non-gaming amenities Gold Coast and Orleans room renovations, Sun Coast rooms later this year; Gold Coast meeting rooms this summer -

 Downtown Las Vegas

  • Capturing more walk-in traffic from Fremont Street
  • Higher yields on Hawaiian business


  • ex weather Q1 2014 would have been closer to Q1 2013
  • modest YoY EBITDA growth will occur in 2H14
  •  B-Connected launched last few weeks in Louisiana, complete portfolio rollout by end of summer
  •  Also launching Penny Lane
  •  Kansas Star - phase 2 started = 150 rooms, double room count and $20M in non-gaming space (meeting, banquet space and equestrian facilities)


  • Borgata operating loss due to 40" of snow
  • Philly impacted by 57" of snow vs. 8" in 2013
  • $2.5M higher utilities
  • $1.5M higher property taxes

On Line Gaming

  • lead NJ market since launch, combined market share = 40%
  • invested heavily in marketing and advertising - $2M from non-recurring one-time expenses
  • enhancing game content options
  • net-teller, prepaid service


  • reduced debt by $55M
  • available credit of $300M at Boyd, $35M Peninsula, and $20M Borgata
  • Boyd secured leverage 4.2x secured vs. 5x covenant
  • Total leverage 6.7x vs. 8.5x covenant
  • Peninsula 6.3x vs 7x covenant
  • Borgata had $114M of covenant EBITDA
  • CapEx $18M during Q1 including: $2M Borgata & $6M at Peninsula
  • Full year capex: $120M maintenance plus $20M expansion at Kansas Star

Q2 EBITDA Outlook

  • Las Vegas Local: in line
  • Downtown: in line
  • Borgata exceed prior year
  • Other US - YoY EBITDA declines similar to Q1 absent negative EBITDA weather impacts
  • 3Q anniversary Shreveport and IL VLT competition

Full Year Outlook

  • Las Vegas Locals: 2014 EBITDA growth should be similar to EBITDA growth 2013 vs. 2012.
  • Downtown: comparable
  • Midwest/South/Peninsula:  YoY growth in 2H 2014, $9.3m property tax adjustment at Blue Chip from Q4 in 2013 and not 2014
  • Borgata: even with 2013 results, not assuming any impact from property tax, but does consider ($3.5M) on line gaming loss in Q1
  • Recent trends: less optimistic about top end of guidance, therefore lower top end of guidance of EBITDA from $630M to $620M 

Q & A

  • Guidance: which segment drove cut to high end - all segments, across all aspects of business, not one specific segment.  Expect all segments to do better in Q3 and Q4.
  • How balancing investing for long-term vs. near-term earnings - loss in Q1 driven by start-up and launch advertising costs.
  • What seeing right now in regional landscape in April, specifically Kansas -- level of revenues at Kansas Star were down less than prior months, permanent casino opened just over one year ago to strong demand and visitation, thus after plateau, this is the reset/steady state operating environment.  Kansas Star is ~50% of all GGR in Kansas.  Expect uplift from add'l hotel rooms and meeting space.
  • Thus far in April - echo market commentary...slow because of tax-filing and Easter weekend.  Still looking for business uplift in May and June.
  • Midwest/South Segment Q2 declines similar to Q1 ex weather of $6M
  • Comps getting easier - what gives you confidence regarding 2H growth - Q3 and Q4 2013 was real degradation beyond normal seasonal slowdown, weakness in lower end consumer in 2013 and not expect add'l and repeat weakness in 2014.   While cautious thus far in April, some properties doing better than forecast. 
  • Las Vegas customer behavior - frequency is down, daily actual is up in Locals Segment and has been for past two years.
  • Board emphasis on shareholder value - takes many different forms, takes time to analyze and vet over short term and long term, makes correct for long term 
  • Borgata tax appeal - no estimate when appeal will run course

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