Weekly placeholders mask weakness, not strength. May fizzles, up only 9%.



Well, we were wrong about May growth.  The Hedgeye model had been stellar up to this point so what went wrong?  There are 3 possibilities: 1) hold percentage was very low, 2) VIP volumes contracting faster than we expected, 3) May was a statistical anomaly. 


We suspect that hold percentage was low in the month but not low enough to justify only a 9% YoY increase in GGR.  Lower VIP volumes likely played a role.  Despite all the negative headlines regarding VIP, we were aware of liquidity issues only with a couple of junkets.  It’s possible the issues were more widespread.  The reality is that one month is a short period of time and even volumes can be volatile month to month. 


In any case, the two “placeholder” weeks this month actually masked weakness and not strength like we saw in April and previous months.  Thus, the last week showed unusually soft numbers but was really a catch up softer than indicated weeks earlier in the month.


Going forward, our model was already projecting a soft June with YoY growth of only 9-11%.  If there is a systemic problem with VIP, there could be downside even to that number.  Either way, June was unlikely to spark the Macau stocks and that’s still the case now.  May was the last near-term positive for these stocks and that didn’t quite pan out.


The Hedgeye Macau model has had a great track record in projecting Macau GGR so we’re absolutely sticking with it.  With that in mind, we move to the sidelines on these stocks.  We remain favorably disposed over the long-term but, lacking catalysts, the stocks could be volatile with downward bias.  Given some unique levers to grow market share, WYNN remains our favorite stock over the near term and given its quality as an operator, might be the safest.  LVS is a close second.

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more