prev

SINGAPORE: CHINESE VISITATION FREEFALL

Visitation from mainland China contributing to drop in overall visitation to Singapore.


 

Anyone predicting a 40% to 50% drop in total Mainland visitation?  How about eight straight months of YoY declines in Mainland visitors?  Uneasiness over the tragic Malaysian airline 370 disappearance filled with Chinese nationals on March 8 no doubt contributed to the steep decline.  The number of Mainland Chinese on Malaysia/Singapore tour destination groups is way down since the incident.  However, weakness in Mainland visitation had actually started before the incident.  Mainland Chinese had been the 2nd largest visitors to Singapore - Malaysians overtook them in May 2014.  Overall visitation has fallen for three straight months, despite growth from Indonesia which continues to account for the most visitors to Singapore.

 

Genting will report its earnings in the next few weeks and we will likely see weak VIP volumes consistent with LVS and Marina Bay Sands.  Market VIP volumes declined in both Q4 and Q1.  Genting mentioned on its 1Q 2014 conference call that they had not seen much impact from the Malaysia/Korea incidents. 

 

Not surprisingly, our regressions show that visitation is a statistically significantly variable in driving gaming revenue.

 

SINGAPORE: CHINESE VISITATION FREEFALL - gda


PENDING HOME SALES DROP, ADDING TO THE SEA OF RED THAT IS HOUSING

Takeaway: June pending home sales fell 1.1% m/m, and are down -7.2% year-over-year. The trend in housing data continues to soften.

Our Hedgeye Housing Compendium table (below) aspires to present the state of the housing market in a visually-friendly format that takes about 30 seconds to consume.

 

The table below has a lot of red on it. The only holdouts remain builder confidence - increasingly at odds with construction activity - and Existing Home Sales - a lagging indicator.

 

PENDING HOME SALES DROP, ADDING TO THE SEA OF RED THAT IS HOUSING - Compendium 072814

 

*Note - to maintain cross-metric comparability, the purchase applications index shown in the table above represents the monthly average as opposed to the most recent weekly data point.

 

 

Today's Focus: June Pending Home Sales Index

The National Association of Realtors (NAR) today released its Pending Home Sales Index for the month of June.

 

Big picture, PHS drops 1.1% (not huge), but as we’ve noted, with cash sales still elevated and the regulation-catalyzed shift in the origination channel ongoing, the truth is probably somewhere in between PHS and Purchase apps. But with Purchase demand sliding further in July, New Home Sales flagging and HPI in full retreat, the broader trend in housing remains one of ongoing softness.

 

Pending Home Sales fell by 1.1% month-over-month to an index level of 102.7 (vs 103.8 in May). For reference, an index value of 100 corresponds to the average level of contract activity in the year 2001. While the sequential decline wasn't especially large at -1.1%, it marks a continuation of the negative year-over-year trends, falling -7.2%. Moreover, it reverses three positive monthly prints in a row. Consider that at this time last year, Pending Home Sales were growing at a rate of +12% y/y and today they're shrinking at -7%. 

 

Geographically, Northeast/South were worse sequentially, West/Midwest better MoM, but all regions remain negative on a YoY basis. 

 

 

PENDING HOME SALES DROP, ADDING TO THE SEA OF RED THAT IS HOUSING - PHS vs Purchase Apps

 

PENDING HOME SALES DROP, ADDING TO THE SEA OF RED THAT IS HOUSING - PHS Index   YoY TTM

 

PENDING HOME SALES DROP, ADDING TO THE SEA OF RED THAT IS HOUSING - PHS LT

 

PENDING HOME SALES DROP, ADDING TO THE SEA OF RED THAT IS HOUSING - PHS Regional June

 

PENDING HOME SALES DROP, ADDING TO THE SEA OF RED THAT IS HOUSING - PHS vs Case Shiller 18mo lag 

 

 

 

About Pending Home Sales:

The Pending Home Sales Index is a monthly data release from the National Association of Realtors (NAR) and is considered a leading indicator for housing activity in the US. It is a leading indicator for Existing Home Sales, not New Home Sales. A pending home sale reflects the signing of a contract, but not the closing of the transaction, which occurs 1-2 months later. The NAR uses data from the MLS and large brokers to calculate the Pending Home Sales index. An index value of 100 corresponds to the average level of activity during 2001.

 

Frequency:

The NAR Pending Home Sales index is released between the 25th and the 31st of each month and covers data from the prior month.

 

Joshua Steiner, CFA

 

Christian B. Drake


European Banking Monitor: Risk Premiums Tick Higher in Russia

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 .

 

--- 

 

European Financial CDS - Russian bank, Sberbank, continued to see its swaps widen (+18 bps to 283 bps). Outside of Russia, however, there was slight tightening across Europe. The average EU bank tightened 2 bps on the week.

 

European Banking Monitor: Risk Premiums Tick Higher in Russia - chart 1 European Financials CDS

 

Sovereign CDS – Sovereign swaps tightened an average of 3 bps over the week. Portuguese swaps tightened the most, -11 bps, with Spain next at -3 bps. Swaps in the US were unchanged at 16 bps.

 

European Banking Monitor: Risk Premiums Tick Higher in Russia - chart 2 sovereign CDS

 

European Banking Monitor: Risk Premiums Tick Higher in Russia - chart 3 sovereign CDS

 

European Banking Monitor: Risk Premiums Tick Higher in Russia - 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 1 bps to 14 bps.

 

European Banking Monitor: Risk Premiums Tick Higher in Russia - chart 5 euribor OIS spread

 

Matthew Hedrick 

Associate

 

Ben Ryan

Analyst

 

 


get free cartoon of the day!

Start receiving Hedgeye's Cartoon of the Day, an exclusive and humourous take on the market and the economy, delivered every morning to your inbox

By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails.


MACAU ON TRACK FOR ANOTHER NEGATIVE GROWTH MONTH

A down low to mid single digit month is in the cards for July

 

 

Table revenue averaged HK$885 million per day in the 4th week of the month, down 11% from the comparable week of 2013.  We are hearing that some properties (Galaxy, MGM, MPEL) may have experienced lower than normal hold over the past 7-14 days.  Peninsula properties was hit particularly hard by low hold.  Mass remains strong although we think June's deceleration was not an anomaly.  

 

With 4 days left in the month, we expect July GGR to fall low to mid-single digits YoY.

 

In terms of market share, Wynn, LVS, and Galaxy are leading the way when compared to recent trend.  Indeed, Galaxy is the only Macau stock we like on the long side currently.  MPEL and MGM are both tracking below recent trend.

 

As for the upcoming Cotai projects, we continue to believe Galaxy's Phase 2 expansion may be the only new property to open in 2015.  Parisian (LVS) construction remains stalled while Macau Studio City's (MPEL) construction timetable may also suggest an early 2016 opening.  Parisian remains stalled while Sand China Limited awaits a full construction permit.  Historically, we understand operators began construction after filing for permits but prior to actual award of such permits.

 

MACAU ON TRACK FOR ANOTHER NEGATIVE GROWTH MONTH - 1

 

MACAU ON TRACK FOR ANOTHER NEGATIVE GROWTH MONTH - 2


Just Charts - Into the Heart of Earnings Season

INVESTMENT IDEAS

The table below lists our current investment ideas as well as a list of potential ideas we are in the process of evaluating (watch list).  We intend to update this table regularly and will provide detail on any material changes.

 

Just Charts - Into the Heart of Earnings Season - z. idesa

EVENTS THIS WEEK

7/28/14 TSN Earnings Call 8am EST

7/29/14 RAI Earnings Call 9am EST

7/29/14 HLF Earnings Call 11am EST

7/30/14 SODA Earnings Call 8:30am EST

7/30/14 REV Earnings Call 9:30am EST

7/30/14 ENR Earnings Call 10am EST

7/30/14 KRFT Earnings Call 5pm EST

7/30/14 SAM Earnings Call 5pm EST

7/31/14 NWL Earnings Call 8am EST

7/31/14 AVP Earnings Call 9am EST

7/31/14 K Earnings Call 9:30am EST

7/31/14 CL Earnings Call 11am EST

8/1/14 PG Earnings Call 8:30am EST

8/1/14 CHD Earnings Call 10am EST

8/1/14 CLX Earnings Call 1:15pm EST

 

 

WEEK-OVER-WEEK PERFORMANCE

Consumer Staples fell -0.9% week-over-week versus the broader market (S&P500) flat.  XLP is up 4.2% year-to-date versus the SPX at 7.0%.

 

Positive Divergence:  HLF 8.6%; SODA 7.1%; DPS 3.5%; HAIN 3.1%; MJN 2.2%

Negative Divergence:  TUP -11.6%; DF -8.0%; KMB -4.2%; RAI -3.1%; CLX -3.0%

RECENT NOTES 

 From a quantitative set-up XLP broke its immediate term TRADE duration last week and is now bearish, while the intermediate term TREND duration remains bullish.

 Just Charts - Into the Heart of Earnings Season - 2

 

The Hedgeye U.S. Consumption Model shows 7 of the 12 U.S. Economic Indicators flashing green.

 Just Charts - Into the Heart of Earnings Season - 3

 

Despite the bullish quantitative set-up for the sector, we continue to believe that the group is facing numerous headwinds, including:

  • U.S. consumption growth is slowing as inflation rises, in-line with the Macro team’s 1Q14 theme of #InflationAccelerating, Q2 2014 theme of #ConsumerSlowing, and Q3 2014 theme of #Q3 Slowing
  • The economies and currencies of the emerging market – once the sector’s greatest growth engine – remain weak with the prospect of higher inflation in 2014 eroding real growth
  • The sector is loaded with a premium valuation (P/E of 19.3x)
  • Less sector Yield Chasing as Fed continues its tapering program
  • The high frequency Bloomberg weekly U.S. Consumer Comfort Index (rescaled for cosmetic and not component reasons) has not seen any real improvement over the past 6 months, but rose to 37.6 versus 37.5 in the prior week

Just Charts - Into the Heart of Earnings Season - 4

Just Charts - Into the Heart of Earnings Season - 5

Just Charts - Into the Heart of Earnings Season - 6

 

QUANTITATIVE SETUP

In the charts below we look at the largest companies by market cap in the Consumer Staples space from a quantitative perspective.

 

BUD – bullish TREND support = 110.07

Just Charts - Into the Heart of Earnings Season - 7

 

DEO – bearish TREND resistance = 126.32

Just Charts - Into the Heart of Earnings Season - 8

 

KO – bullish TREND support = 40.88

Just Charts - Into the Heart of Earnings Season - 9

 

PEP – bullish TREND support = 88.15

Just Charts - Into the Heart of Earnings Season - 10

 

GIS – bullish TREND support = 52.44

Just Charts - Into the Heart of Earnings Season - 11

 

MDLZ – bullish TREND support = 36.99

Just Charts - Into the Heart of Earnings Season - 12

 

KMB – bearish TREND resistance = 110.91

Just Charts - Into the Heart of Earnings Season - 13

 

PG – bearish TREND resistance = 80.31

Just Charts - Into the Heart of Earnings Season - 14

 

MO – bullish TREND support = 40.41

Just Charts - Into the Heart of Earnings Season - 15

 

PM – bearish TREND resistance = 86.11

Just Charts - Into the Heart of Earnings Season - 16

 

Howard Penney

Managing Director

 

Matt Hedrick

Associate

 

Fred Masotta

Analyst

 

 


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 80.65%
  • SHORT SIGNALS 78.62%
next