prev

RTA Live: September 8, 2015

 


Do You Airbnb? A Record 17,000,000 Travelers This Summer (And Growing)

Do you Airbnb? 

 

A record 17 million travelers around the world stayed with Airbnb hosts in 150 countries this summer from May to the end of August, according to a summer metrics report recently released by Airbnb.

 

Do You Airbnb? A Record 17,000,000 Travelers This Summer (And Growing) - z a 55

 

And that number hasn’t topped-off.

 

According to the company, another 1 million travelers booked Airbnb stays this past Labor Day weekend in the U.S. The number of summer guests swelled from 7.4 million last summer to more than twice that amount this summer.

 

Some additional interesting color:

  • Airbnb guests from Paris, New York City and Seoul were this summer’s largest source markets and they made the most bookings for Lisbon, Upstate New York, and Osaka, Japan, respectively.
  • South Korea, along with Japan and Singapore, are the company’s fastest growing markets overall. China is one of the fastest-growing markets in terms of country of origin for travelers booking stays outside their country.
  • The report reveals the average age of this summer’s Airbnb guests was 35 years old, which is considered the oldest age for millennials. Female guests slightly outnumbered male guests – the split was 54% to 46% globally.

Do You Airbnb? A Record 17,000,000 Travelers This Summer (And Growing) - z todd


Post Labor Day Mashup

Post Labor Day Mashup - CHART 1

 

RECENT NOTES

9/04/15 GIS | Sends the Jolly Green Giant Packing

9/02/15 HSY | THE CURRENT SET UP IS LEANING LONG

8/31/15 HAIN | LOW QUALITY & INCREASED BUSINESS RISK

8/28/15 GIS | Time to Close this Deal

8/21/15 WWAV | DON’T PANIC, BUY MORE…HAIN | PANIC, SHORT MORE

 

RECENT NEWS FLOW

Thursday, September 3

GIS / BGS | B&G Foods agrees to acquire Green Giant from General Mills for $765mm (click here for Hedgeye note)

 

Wednesday, September 2

MDLZ | Opened a new $30mm manufacturing line in Poland, in an effort to take advantage of the growth opportunity in European snacking (click here for article)

GIS | Upgraded to equal-weight from underweight at Morgan Stanley, the firm sees improved visibility from the company’s increased efforts to manage costs

 

Monday, August 31

BETR | Initiated neutral at Goldman Sachs, price target is $18, current price is $12.27, GS ran the IPO for BETR

 

SECTOR PERFORMANCE

Food and organic stocks that we follow outperformed the XLP last week. The XLP was down -2.4% last week, the top performer on a relative basis from our list was B&G Foods (BGS) posting an increase of +20.9%, after their acquisition of the Green Giant assets from General Mills. Worst performing company on a relative basis on our list was Hain Celestial (HAIN), which was down -4.0%.

Post Labor Day Mashup - CHART 2

 

QUANTITATIVE SETUP

From a quantitative perspective, the XLP is bearish on a TRADE and TREND duration.

Post Labor Day Mashup - CHART 3

 

Food and Organic Companies

Post Labor Day Mashup - CHART 4

Post Labor Day Mashup - CHART 5

Post Labor Day Mashup - CHART 6

 

Keith’s Three Morning Bullets

Dovish Fed article out of @WSJ as another wanna be hawk (Williams) fades alongside stocks:

 

  1. VIX – does an explicitly more dovish Fed tone down short-term volatility here? My risk range model actually implies it could as the top-end of my range on front-month VIX no longer has a 4-handle in front of it (range still elevated, but 22-36)
  2. FX – Down Dollar = Up Yen = Nikkei Down (another -2.4% overnight), so not everyone is a winner; risk ranges are narrowing though as volatility across asset classes does this am (risk range for EUR/USD narrows to $1.10-1.14)
  3. RATES – UST 10yr dropped to 2.11% on the slowest rate of change in Non-Farm Payrolls since the Labor Cycle gains peaked in FEB, then back up this morning to 2.15% with Spanish 10yr +7bps approaching parity w/ UST at 2.14%

 

SPX immediate-term risk range = 1; UST 10yr 2.07-2.19%

 

Please call or e-mail with any questions.

 

Howard Penney

Managing Director

 

Shayne Laidlaw

Analyst

 


Attention Students...

Get The Macro Show and the Early Look now for only $29.95/month – a savings of 57% – with the Hedgeye Student Discount! In addition to those daily macro insights, you'll receive exclusive content tailor-made to augment what you learn in the classroom. Must be a current college or university student to qualify.

REPLAY | MACAU CONFERENCE AT 11:00AM ET

Watch a replay of this presentation below.

 

We will host a Macau conference call Today, September 8th at 11am ET to present more analysis on the August numbers, our projections and outlook, and where the Chinese may or may not be gambling. As always, we will entertain questions at the end of the presentation.

 

RELEVANT TICKERS INCLUDE:

LVS, WYNN, MGM, MPEL, 0027.HK, 1128.HK, 1928.HK, 2282.HK, 6883.HK, and 0880.HK.

 

DISCUSSION POINTS

  • Hedgeye company EBITDA estimates vs the Street for Q3, 2015, and 2016
  • Revised 2015/2016 monthly market projections
  • The promotional environment
  • "True" Mass trends
  • Research Topic: Where has the lost Macau business gone? 

CALL DETAILS

Attendance on this call is limited. Ping  for more information


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO

Takeaway: Short-term bounces notwithstanding, China's slowing growth continues to weigh on the global outlook.

Key Takeaway:

The roller coaster ride continues with high yield (-22 bps) and commodities (+6.2%) looking better on the week, while China, the TED Spread and EM sovereign swaps looked worse. 

 

China, of course, remains a front burner focus, but the TED Spread has been quietly creeping higher over the past month and is now +6 bps M/M to 31 bps as well.

 

Concerns over the global fallout  from a slowing China continue to reverberate. CDS for Chinese financial institutions widened between +16 and +21 bps last week, and the Chinese interbank rate widened by +26 bps to 2.03%. 

 

Reflecting the market's growing worries about China, our heatmap below is dominated by red on both the short and intermediate term.

Current Ideas:


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM19 CURRENT IDEAS 2

 

Financial Risk Monitor Summary

• Short-term(WoW): Negative / 1 of 12 improved / 5 out of 12 worsened / 6 of 12 unchanged
• Intermediate-term(WoW): Negative / 0 of 12 improved / 7 out of 12 worsened / 5 of 12 unchanged
• Long-term(WoW): Negative / 2 of 12 improved / 2 out of 12 worsened / 8 of 12 unchanged

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM15

 

1. U.S. Financial CDS – Swaps tightened for 12 out of 27 domestic financial institutions while unchanged at the median. Even with stocks losing value last week, overall perceived risk of default in the U.S. was little changed.

Tightened the most WoW: MBI, AGO, ACE
Widened the most WoW: LNC, PRU, MET
Tightened the most WoW: ACE, ALL, CB
Widened the most MoM: MET, MMC, RDN

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM1

 

2. European Financial CDS – Swaps mostly widened in Europe last week, strongly affected by weak Chinese manufacturing data, even after ECB President Mario Draghi said he could provide further stimulus to the Eurozone given his projections for slower than expected growth and low inflation.

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM2

 

3. Asian Financial CDS – Chinese financial CDS widened notably last week, between +15 and +21 bps, as the country was hit with weak manufacturing data early in the week. Meanwhile, Japanese and Indian financial CDS were little changed.

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM17

 

4. Sovereign CDS – Sovereign Swaps were little changed last week. French sovereign swaps tightened by -1 bps to 33 bps while Italian sovereign swaps widened by +1 bps to 116.

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM18

 

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM3

 

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM4


5. Emerging Market Sovereign CDS – Emerging market swaps widened last week on concerns that their export-based economies would be hurt by slowing Chinese growth. Brazilian sovereign swaps widened the most, by +48 bps to 379, followed by Turkish swaps, which widened by +17 bps to 280.

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM16

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM20

6. High Yield (YTM) Monitor – High Yield rates fell 22 bps last week, ending the week at 7.15% versus 7.37% the prior week.

TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM5

7. Leveraged Loan Index Monitor – The Leveraged Loan Index rose 3.0 points last week, ending at 1865.


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM6


8. TED Spread Monitor – The TED spread rose 3 basis points last week, ending the week at 31 bps this week versus last week’s print of 27 bps.


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM7


9. CRB Commodity Price Index – The CRB index rose 6.2%, ending the week at 197 versus 185 the prior week. As compared with the prior month, commodity prices have decreased -0.8%. We generally regard changes in commodity prices on the margin as having meaningful consumption implications.


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM8


10. 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 was unchanged at 10 bps.


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM9


11. Chinese Interbank Rate (Shifon Index) –  The Shifon Index rose 26 basis points last week, ending the week at 2.03% versus last week’s print of 1.77%. The Shifon Index measures banks’ overnight lending rates to one another, a gauge of systemic stress in the Chinese banking system.


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM10


12. Chinese Steel – Steel prices in China fell 0.6% last week, or 13 yuan/ton, to 2260 yuan/ton. We use Chinese steel rebar prices to gauge Chinese construction activity and, by extension, the health of the Chinese economy.


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM12


13. 2-10 Spread – Last week the 2-10 spread tightened to 142 bps, -5 bps tighter than a week ago. We track the 2-10 spread as an indicator of bank margin pressure.


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM13

 

14. XLF Macro Quantitative Setup – Our Macro team’s quantitative setup in the XLF shows 5.9% upside to TRADE resistance and 2.5% downside to TRADE support.


TUESDAY MORNING RISK MONITOR | CHINA REMAINS RISK NUMERO UNO - RM14


Joshua Steiner, CFA


Jonathan Casteleyn, CFA, CMT

 

 


VIX, FX and Rates

Client Talking Points

VIX

Does an explicitly more dovish Fed tone down short-term volatility here? Our risk range model actually implies it could as the top-end of our range on front-month VIX no longer has a 4-handle in front of it (range still elevated, but 22-36).

FOREIGN CURRENCY

Down Dollar = Up Yen = Nikkei Down (another -2.4% overnight), so not everyone is a winner. Risk ranges are narrowing though as volatility across asset classes does this morning (risk range for EUR/USD narrows to $1.10-1.14).

RATES

UST 10YR dropped to 2.11% on the slowest rate of change in Non-Farm Payrolls since the Labor Cycle gains peaked in FEB, then back up this morning to 2.15% with Spanish 10YR +7 basis points approaching parity with UST at 2.14%.

 

**Tune into The Macro Show with Hedgeye CEO Keith McCullough at 9:00AM ET - CLICK HERE

Asset Allocation

CASH 68% US EQUITIES 0%
INTL EQUITIES 0% COMMODITIES 4%
FIXED INCOME 28% INTL CURRENCIES 0%

Top Long Ideas

Company Ticker Sector Duration
MCD

The franchisees voted YES on the proposal to launch All Day Breakfast nationwide at all 14,318 U.S. locations. This is a very important, monumental move by CEO Steve Easterbrook. It will define his legacy as the CEO that changed McDonald's (and the rest of the industry) for many years to come. In 2016, if MCD (with all day breakfast and an improved value message) can drive same-store sales up by 5%, the system will generate $1.9bn in incremental system-wide sales. 

 

As noted in our survey we released on July 27th, it is evident that All Day Breakfast (ADB) will be a game changer for the company. Breakfast is the single most requested item by McDonald’s customers. Listening to the customer is a tried and true way to succeed.

PENN

Following our recent visit to Plainridge and meetings with senior management, we reiterate our positive Penn National Gaming thesis.  Stability in regional markets provides good earnings visibility while expected strong contributions from Plainridge and Jamul next year should provide a nice 2 year growth story.

 

Regional gaming likely cooled off in August following a strong July.  While that could provide some consternation as the states begin releasing August gaming revenues later this week, the YoY slowdown is more related to quantitative factors rather than the health of the regional gaming customer.  September should quickly provide evidence of that.

TLT

The labor market peaks late cycle and the trend in key employment data suggest things are going from great to good (marginal changes matter). The ADP employment report showed a sequential acceleration, printing +190K vs. +185K in July. But to be clear, this series peaked at over +200K additions in the first couple of months of 2015. Initial jobless claims bottomed about six weeks ago. The trend in that series is moving back to the all-important 300K level. While the headline NFP number was a bomb on Friday, printing +173K for Aug. vs. estimates for +215K, the trend is also turning. This series also peaked back in February on a YoY rate-of-change basis.

 

Why do we point to all of this growth-slowing data? Because it’s meaningful.

  • As we have mentioned repeatedly Central Banks take a reactionary policy response to the data. The market is becoming more efficient at getting in front of policy the longer we venture into this modern-day central policy experiment
  • When forward-looking growth expectations are taken down, the back end of the Treasury curve flattens (this is good for TLT and EDV)
  • In reaction to more dovish policy monetary policy measures, the market likes gold over dollars coming out of central policy events

Three for the Road

TWEET OF THE DAY

I don't chase - our call was to cover the Transports $IYT and some shorts on Friday's red 

@KeithMcCullough 

QUOTE OF THE DAY

The essential part of creativity is not being afraid to fail.

Edwin H. Land

 

STAT OF THE DAY

On average, deciding to fly Spirit added 11 minutes to a person’s total flight time between July 2014 and June 2015.


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.

next