What We're Reading

Great news for LVS, MGM, WYNN, FLL, CZR and BYD.  High speed rail is on the way.  Imagine the increase in revenues long term as patrons will be able to get there, in the blink of an eye.

China Railway International USA CO., LTD. and XpressWest have agreed to form a joint venture that will accelerate the launch of the XpressWest rail project connecting Las Vegas, Nevada to Los Angeles, California (the “Southwest Rail Network”). The Project will develop, finance, build and operate the Southwest Rail Network, with stations in Las Vegas, Nevada, Victorville, California, and Palmdale, California, and service throughout Los Angeles. The decision to form a joint venture is the culmination of years of work and builds upon the significant accomplishments of XpressWest.

Supported by $100 Million in initial capital, this new high-speed rail line (approximately 370 km(s) in length) will create new technology, manufacturing, and construction jobs throughout the interstate corridor and will connect

Who doesn't love the lame duck session?  It's that special time of year when Santa comes early to Wall Street and you too, can benefit.  As one example, outgoing Congressmen and woman who lost during mid terms, tend to throw in the towel (they won't be around next session anyway) and all types of goodies get through the Congressional pipeline which were stalled during the normal session.  This years winners if you're an investor are:

• Banks and insurers.  Congress repealed a portion of Dodd-Frank so that derivatives will now be covered once again by FDIC Insurance, thus lowering the risk to banks and insurers like AIG.*
• Health insurance companies get to keep their special tax breaks.
• Tourist destinations like Las Vegas get their travel promotion subsidies.*
• In a victory for food companies, the legislation even makes federally subsidized school lunches less healthy by allowing companies that provide them to include fewer whole grains. This boosts their profits because junk food is less

Meanwhile MGM and other casino names are showing signs of head-and-shoulders tops.  Full disclosure I am long LVS as a long standing drawer pick and short MGM here. (click chart to enlarge)

Macau is the growth engine for the global casino industry, and revenue growth for casinos there seems to be slowing, Wells Fargo said in a report.

That could affect sales and earnings for world's largest casino company, Las Vegas Sands (LVS), and rivals Wynn Resorts (WYNN) and MGM Resorts International (MGM), which all have properties in Macau. It could also hurt Hong Kong-based Melco Crown Entertainment (MPEL), which competes with the Vegas casinos in Macau.

Wells Fargo analyst Cameron McKnight is in Macau meeting with company executives this week. McKnight said in a Monday report that, based on those meetings and channel checks, he expects May revenue for Macau casinos will rise 10% to 14% compared with the same month a year ago. That's well below his earlier forecast for 14% to 16% growth.