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THE M3: END TO FREE SHUTTLES IN SINGAPORE; PROPERTY PRICES

The Macau Metro Monitor, September 10th 2010


 

RWS WITHDRAWS HEARTLAND SHUTTLE BUSES TODAYonline

In a statement released last night, RWS said it was "voluntarily withdrawing its shuttle services in the spirit of collaboration with the Singapore Government".  RWS spokesman Robin Goh said that a total of eight services running through Bukit Merah, Queensway, Bedok, Choa Chu Kang and Bukit Panjang, Tampines, Jurong East, Ang Mo Kio and Bishan, as well as Tiong Bahru will end at 11pm on Sunday.  The remaining shuttles running through the Central Business District, Orchard and Marina areas will continue. 

 

Several hours before RWS's annoucement, MediaCorp visited the pick-up points in Bishan and Bedok and observed that demand for RWS' shuttle services - which had operated as scheduled - remained strong with many of the buses operating at full capacity, in spite of the authorities' investigation. Many of the passengers used the shuttles to get to Sentosa in general and not just RWS.  However, without the shuttles, business may soften.

 

 

IR'S TOLD TO STOP FREE SHUTTLE SERVICE IMMEDIATELY channelnewsasia.com
The Casino Regulatory Authority has issued directives to the IR's put and end to their free shuttle services, effective immediately.  RWS said that it received the directive at noon on Friday.  Approximately  4-5% of RWS's casino visitors travel to the resort by the free shuttle services and therefore, management doesn't expect that the Authority's move will have great impact on its business.

 

ANTICIPATED ANNUAL GROWTH OF PROPERTY VALUE IN MACAU TO EXPAND BY 5-10%  Macao Daily News

According to the president of Real Estate Chamber of Commerce in Macau, recent data indicates that Macau has clearly fully recovered from the global financial crisis. Value of real estate properties in Macau is almost back to pre financial crisis levels and if there are no further tightening measures or other negative external shocks in 2H10, the value of real estate property in Macau is estimated to sustain 5-10% annual growth.

 

 

CHINA'S PROPERTY PRICES RISE 9.3% IN AUGUST AMID COOL DOWN EFFORTS  Xinhua

According to the National Bureau of Statistics, property prices in 70 major Chinese cities rose 9.3% in August YOY but were unchanged on a MOM basis from July.  August trends are a deceleration from growth rates in the first 7 months of the year. On a YOY basis, China’s home prices increased 7.8% in Dec 2009, 9.8% Jan 2010, 10.7% in Feb 2010, 11.7% in March, 12.8% in April, 12.4% in May, 11.4% in June and 10.3% in July.  New home prices rose 11.7% YOY in August, a 1.2% deceleration from July.  Prices of second hand homes increased 6.2% YOY in August, down 0.5% from July.  Investment in property sector soared 34.1% to RMB $449BN in August.

 

 


Long Oil? Keep This Chart Front and Center

Conclusion: Total oil and petroleum stocks are at all time highs in the United States, suggesting underlying demand is slow, which supports our view of decelerating GDP growth.

 

We can get verbose at times, but sometimes it's simply easier to just show one chart.  The chart below is comprised of distillates, crude oil, and gasoline stocks from Department of Energy data going back to 1990, which is as long as the data is kept.  Currently the aggregate supply on hand of petroleum products is 1.1 billion barrels, which is the highest level we've ever seen in this data set.

 

According to the BP 2009 Global Energy Abstract, the United States consumed 18.7 million barrels per day in 2009, which was 22.3% of the total world production. Its share of world imports is slightly smaller at 11.4 million barrels per day, or 21.6% of the total.  The point is, the United States consumes and imports more than 20% of the world's oil, so if inventories are at an all time high level in the United States, it is a negative data point for future prices.

 

Distillate stocks are the real outlier in U.S. petroleum stocks as they are well above the 20-year band of 100 and 150 million barrels of inventory for really the first time ever.  Distillate inventories are currently at 175 million barrels, which suggests anemic demand for distillates.

 

The last time inventories were close to this high was October 1991.  Despite inventory declining over the next two years, the price of oil fell more than 22% over that time period.

 

We'll have more thoughts on this topic from Energy Sector Head Lou Gagliardi next Thursday as he launches his energy sector coverage, but to the extent you are long oil . . . keep the chart below front and center.

 

Daryl G. Jones

Managing Director

 

Long Oil? Keep This Chart Front and Center - 2


SEQUENTIAL REVPAR UPDATE

Based on Upper Upscale RevPAR coming in at 10%, August represented a sequential slowdown in seasonally adjusted absolute RevPAR from July.

 


As we discussed in our 08/10/10 note “DOLLAR REVPAR MORE RELEVANT THAN %,” to keep pace with July, August need to generate RevPAR of roughly $100.  Actual August YoY RevPAR growth came in at +10% which, on the surface, appears stronger than July’s 7.8% increase.  However, on an absolute basis, adjusted for seasonality, August growth need to be at least 14% to match July’s performance.  In our opinion, RevPAR is actually on a declining pace sequentially which gives credence to our Pent Up Demand thesis espoused in our 08/17/10 note “PENT UP DEMAND THEORY.”

 

The good news is that September needs only to grow RevPAR 8% to match August’s performance versus 12% to match July.  The bad news is that if this new level of absolute RevPAR continues, 2011 RevPAR could fall below the Street’s estimate.


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 80.64%
  • SHORT SIGNALS 78.57%

REGIONAL TRENDS LIKELY WORSENED AUGUST

With IL, IN, and IA already reported, August is looking worse than July on an absolute basis, after adjusting for seasonality.

 


As we did for lodging – yes, 10% RevPAR growth in August actually represented a slowdown – we’ve taken a look at sequential regional gaming trends on an absolute basis.  Of course, we adjust for seasonality since August is typically a better than average month but slower than July while September is one of the slowest months of the year.  Ignoring YoY changes is prudent in our opinion given the extreme volatility over the last two years. 

 

Seasonally adjusting the July actual revenues yield August regional gaming revenues of $1.047 billion, up 2% over last year.  However, Illinois, Indiana, and Iowa have already reported August, and they were all disappointing relative to July.  Plugging in those actual numbers, we arrive at a new estimate of $1.029 billion, flat with last year.  But that assumes that Louisiana, Mississippi, and Missouri are also not disappointing.  Since the regional markets tend to be impacted by the same macro factors, those three states could come in lower.  Thus, we believe August gaming revenues may come in at -1% to -3%. 

 

Based on July, the seasonality model would’ve projected September to be up almost 2% but if we are right on August, that would lower our September estimate to -2% and our October estimate to -4%.  Looking further ahead, November could be the first positive YoY month, but just barely, while December has more cushion and should be a positive growth month.  Nevertheless, these don’t sound like recovery numbers just yet.

 

REGIONAL TRENDS LIKELY WORSENED AUGUST - regional final


Covering our S&P 500 Short

This note was orinigally published at 3:02pm ET for Risk Manager Subscribers.  To receive Macro Select Content, and our Virtual Portfolio positions in real-time, please sign-up for a 14-day free trial or as a RISK MANAGER subscriber.

 

 

 

__________________________________________

Position Changes Today: Covered SPY, Bought EWG

I attempted to explain this today in my EL titled “Feeling Strange”, but I think it’s worth repeating. Duration Mismatch crushes performance and the best way to avoid it is having a Duration Agnostic risk management process.
 
As a reminder, we have 3 core durations that we manage risk around: TRADE, TREND, and TAIL.
 
Currently, the SP500 is bullish from an immediate term TRADE perspective (support = 1085)
and bearish from an intermediate term TREND perspective (resistance = 1144). That means that we can be mentally malleable enough to admit that the immediate term upside in the SP500 is more probable than the immediate term downside. Be sure not to confuse this with pretending you are going to be the next Buffett – keep a bullish TRADE a trade.
 
Both the DATA (ABC confidence, MBA mortgage apps and jobless claims) and the SP500’s PRICE support this immediate term bullish view. You might say, heh last week you shorted the SPY and how can you change your mind that quickly? Well, for starters, I didn’t have this week’s DATA or PRICES in my back pocket when I made that move earlier last week. The key to risk management isn’t being wed to a view that was based on prior DATA and PRICES.

If next week’s DATA turns back to bearish and the SP500 breaks 1085 again, I’ll short SPY again. As is customary, all my moves are on the tape – I have done nothing but cover and buy positions in the Hedgeye Portfolio since 11:02AM on September 3rd.
 
If the SP500 closes above our immediate term resistance line of 1107, I see heightened probability of this pain trade taking us all the way back up to another lower-high of 1123. And from a bearish intermediate term TREND perspective, nothing will have changed other than immediate term DATA and PRICES.

 

 

Covering our S&P 500 Short - chart1

 

 
Stay transparent my friends,
KM


Keith R. McCullough
Chief Executive Officer


Bear Market Macro: SP500 Levels, Refreshed...

Position Changes Today: Covered SPY, Bought EWG

 

I attempted to explain this today in my EL titled “Feeling Strange”, but I think it’s worth repeating. Duration Mismatch crushes performance and the best way to avoid it is having a Duration Agnostic risk management process.

 

As a reminder, we have 3 core durations that we manage risk around: TRADE, TREND, and TAIL.

 

Currently, the SP500 is bullish from an immediate term TRADE perspective (support = 1085) and bearish from an intermediate term TREND perspective (resistance = 1144). That means that we can be mentally malleable enough to admit that the immediate term upside in the SP500 is more probable than the immediate term downside. Be sure not to confuse this with pretending you are going to be the next Buffett – keep a bullish TRADE a trade.

 

Both the DATA (ABC confidence, MBA mortgage apps and jobless claims) and the SP500’s PRICE support this immediate term bullish view. You might say, heh last week you shorted the SPY and how can you change your mind that quickly? Well, for starters, I didn’t have this week’s DATA or PRICES in my back pocket when I made that move earlier last week. The key to risk management isn’t being wed to a view that was based on prior DATA and PRICES.

 

If next week’s DATA turns back to bearish and the SP500 breaks 1085 again, I’ll short SPY again. As is customary, all my moves are on the tape – I have done nothing but cover and buy positions in the Hedgeye Portfolio since 11:02AM on September 3rd.

 

If the SP500 closes above our immediate term resistance line of 1107, I see heightened probability of this pain trade taking us all the way back up to another lower-high of 1123. And from a bearish intermediate term TREND perspective, nothing will have changed other than immediate term DATA and PRICES.

 

Stay transparent my friends,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Bear Market Macro: SP500 Levels, Refreshed... - 1


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