Notable news items and price action from the past twenty-four hours as well as our fundamental view on select names.
- SONC gained 4% on accelerating volume after reporting an acceleration in system-wide comps for the first two months of the company’s third fiscal quarter ending May 31st. The company cited hotdogs as a major driver of sales for the company in the quarter.
- DIN reported 1Q11 EPS of $1.46 versus $1.16 consensus this morning. Applebee’s domestic system-wide same-restaurants sales increased +3.9% versus consensus of 2.1%.
- TXRH reported 1Q11 EPS of $0.27 versus $0.29 consensus. Company-owned same-restaurant sales came in at +4.6% versus consensus at +3.7% but operating margin was 10.6% versus consensus 11.4%. Inflation is proving a problem for the steak chain. The company guided to EPS growth of 5-10% versus prior 10%, implying $0.84-$0.88 versus prior $0.88 and consensus of $0.90. Sales accelerated in the early stages of 2Q, according to management.
- MSSR reported 1Q11 earnings yesterday. EPS came in at -$0.04 versus expectations of $0.00. Comparable restaurant sales decreased 3.2%. The company reaffirmed its prior earnings forecast of annual 2011 fully diluted earnings per share to be between $0.35 and $0.40 excluding the remodeling project.
- KKD was initiated neutral at Janney.
- CBRL declined yesterday on strong volume. I continue to believe that CBRL will be a net market share loser in the current environment.
- PNRA is breaking down finally on strong volume. The trade line of resistance, according to the Hedgeye Quantitative setup, is $123.33.
- JACK continues to show signs of weakness.
- DPZ Is telling U.S. regulators a health-law mandate requiring chain restaurants to post calorie contents of fare is unworkable because the company offers 34 million combinations of toppings, crusts and sauces.
The Macau Metro Monitor, May 3, 2011
GAINING MASS Inside Asian Gaming
The two latest gaming initiatives at CoD are the 'Red Hot Tables' concept for baccarat players and the 'New Game Zone' for slot players. As the world's first baccarat trend indicator, Red Hot Tables technology allows incoming players to spot winning streaks at baccarat tables at a distance. MPEL's Co-COO of Gaming Ted Chan explains that this would help new mass market customers find a table they may want to bet at. He added, "It sounds very simple, but unfortunately, nobody in the world is doing it except for us. We are the only ones because we know that is what the customer would like to do."
The 'New Game Zone' helps players find the latest new electronic gaming machines. "Setting up the 'New Game Zone' took months of negotiation, and it enables us to leverage the market developments this year, with suppliers having difficulty selling their products in other markets around the world. So now we are just launching that concept with new Aristocrat products, and probably we will be able to work with other suppliers in the future." MPEL also plans to boost its jackpot appeal by linking the floorwide jackpots at CoD and Mocha Clubs.
Chan says, "I cannot give you a timeline for when mass would be overtaking VIP, but I foresee very positive growth over the next say five years time frame."
MONTHLY GROSS REVENUE FROM GAMES OF FORTUNE IN 2011 AND 2010 DICJ
Macau April gross gaming revenues hit MOP20.51 BN (HKD19.91 BN, US$2.56 BN), up 44.6% YoY.
ROOM RATES RISE OVER 15% DURING MAY DAY HOLIDAY Macau Daily News
Occupancy rate of some hotels reached 100% before and on Labor Day and then fell back to 80%‐90% the following day. Room rates were up 15-20% YoY. 3-star/4-star ADR ranged between MOP 2,500 and MOP 3,500.
MACAU: 900,000 BORDER CROSSING DURING MAY DAY HOLIDAY Macau Daily News
During the three-day May Day holiday from April 30 to May 2, Macau’s three border checkpoints--Gongbei, Hengqin, and Wanzai--recorded 900,000 times of border crossing, of which 420,000 were mainland visitors. Travelers crossing via the Gongbei border totaled over 840,000, up 10% compared with the same period last year. The figures at Hengqin and Wanzai exceeded 42,000 and 16,000 respectively.
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TODAY’S S&P 500 SET-UP - May 3, 2011
While it’s proactively predictable to see Geithner politic his way around our “reported” fiscal position, even for him this is impressive. The Republicans were allegedly waiting until mid-May to put the Democrats feet to the fire on the debt ceiling debate. The US Currency Crash is starting to price this in. As we look at today’s set up for the S&P 500, the range is 33 points or -1.27% downside to 1344 and 1.16% upside to 1377.
SECTOR AND GLOBAL PERFORMANCE
The Financials remain the only sector broken on both TRADE and TREND.
- ADVANCE/DECLINE LINE: -511 (-1428)
- VOLUME: NYSE 935.18 (-4.11%)
- VIX: 15.99 +8.41% YTD PERFORMANCE: -9.92%
- SPX PUT/CALL RATIO: 1.38 from 1.75 (-21.37%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 23.75 -0.507 (-2.090%)
- 3-MONTH T-BILL YIELD: 0.05% +0.01%
- 10-Year: 3.31 from 3.32
- YIELD CURVE: 2.70 from 2.71
MACRO DATA POINTS:
- 8:30 a.m.: Fed’s Hoenig speaks to bankers in Washington
- 10 a.m.: Factory orders, est. 2.0%, prior (-0.1%)
- 11:30 a.m.: U.S. to sell $24b 52-wk bills, $28b 4-wk bills
- 4 p.m.: Treasury’s Geithner at U.S.-China Business Council
- 4:30 p.m.: API inventories
WHAT TO WATCH:
- Renren, China’s biggest social-networking website by page views, aims to raise as much as $743.4m in U.S. IPO
- Greek Finance Minister Says Debt Restructure ‘Huge Mistake’ - Finance Minister George Papaconstantinou said a restructuring of Greece’s debt, causing losses for bondholders, would lock the country out of markets for a decade or more.
- Canada’s dollar rose, stocks and bonds may rally after Conservative Prime Minister Stephen Harper won a majority government for first time.
- Goldman Sachs Lloyd Blankfein likely to remain CEO for at least two years - NY Post
- US steel companies using price escalator clauses in longer-term contracts - WSJ
COMMODITY HEADLINES FROM BLOOMBERG:
- Gold, Silver Advance as Signs of Inflation Spur Increased Investor Demand
- Oil Drops on Economic Growth Concern as Bin Laden Death Boosts Volatility
- Copper in London Declines for Fourth Day on China, U.S. Manufacturing Data
- Soybeans Drop For a Second Day as Favorable Weather May Aid U.S. Planting
- Sugar Falls to Seven-Month Low on Thai Production; Cocoa Prices Decline
- S. Korea to Boost Tarriff-Free Pork Imports After Foot-and-Mouth Outbreak
- Dodd-Frank Rules on Swaps and Ratings Targeted by U.S. House Republicans
- Rail Access to Australia’s Fremantle Port Is Cut After Accident, ABC Says
- Palm Oil Advances as Gain in Malaysian Exports May Curb Inventory Build-up
- European equity markets opened mixed before drifting lower in choppy trading.
- UK Apr Manufacturing PMI 54.6 vs consensus 56.9; now at a 7 month low
- EuroZone Mar PPI +6.7% y/y vs consensus +6.6% and prior +6.6%; EuroZone Mar PPI +0.7% m/m vs consensus +0.6% and prior +0.8%
- Australia keeps main cash rate unchanged at 4.75%
- India’s central bank raised benchmark interest rates by a more-than-estimated 0.5 percentage point after forecasting inflation will stay at an “elevated level” until at least September - Bloomberg.
- China Home Prices Rise; Wen ‘Determined’ to Lower Them - Bloomberg
- Japan was closed for Constitution Day and will remain closed until 6-May.
Daily Trading Ranges
20 Proprietary Risk Ranges
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