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Steve Wynn Slams The Fed's "Ominous", "Artificial Nirvana"

Tyler Durden's picture




 

Nope, no bubble here...

Despite the protestations of the Fed's Tarullo and Stein that credit markets are 'stretched' or 'in bubble territory', the printer-in-chief continues to force feed liquidity to the market and squeeze an ever-increasingly-anxious investing public into ever-more levered, covenant-lite, non-recourse, dismal-risk-adjusted-return loans just to garner more yield...

When even the heads of the organizations that the Fed is trying to save are stunned at the ease of the environment... perhaps you've gone too far...

 

Here is one such story from Steve Wynn - from the transcript of his most recent earnings call...

When asked about the recent financing, the outspoken Wynn goes to town...

Steve Wynn: "we finished our financing recently; The last tranche was a $750 million bond. We sold it at 5.09% with no covenants, non-recourse to the parent. And that brought our total financing for Cotai to  $3.850 billion, at an average cost of 3.3%."

 

"Or to put it another way, we  rented the $3.85 billion for $125 million."

 

Now on one hand, as a businessman, I’m thrilled. Never dreamed that we would see anything so tasty and wonderful as that.

 

On the other hand, it’s a reflection of questionable fiscal and monetary policy in the United States that is artificially depressed interest rates because of quantitative easing by the Fed, which is also sort of killing the value of the dollar and the living standard of the working people.

 

So the good news is, if you’re a high-class borrower with good credit rating, this is one of the most tastiest seasons of all time for 2 reasons. You’re borrowing money at artificially depressed rates. And you’re most likely going to pay them back with 85-cent dollars.

 

It’s a perfect storm for a businessperson unless you look at the truth of the matter and the impact it has on your customers and your employees.

 

And that’s a much darker story.

 

It doesn’t lend itself to a soundbite, but it’s — for every businessman in America and any economist that has their heads screwed on right, it’s an ominous situation.

 

But in terms of our moment in history, in commercial history...along with our colleagues in the industry, it’s nirvana.

 

Capital structure now is — these are mostly at the Venetian and the Wynn, things of beauty. They’re lovely, better than you could ever want. I mean, they’ve got everything, low interest rates, long maturities, low covenants. What else do you want? I mean, it’s great. If you look at it from our point of view.

 

But look at it from a consumers’ point of view or a working person’s point of view, who’s paying for all this cheap money? Well, right now, the Fed is.

 

I thought Bernie Madoff went to jail for that.

 

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Tue, 05/06/2014 - 20:06 | 4734174 Big Corked Boots
Big Corked Boots's picture

I understand why he's upset - all those seniors on reduced interest income have to play the 25c slots instead of the $1 machines.

Tue, 05/06/2014 - 20:33 | 4734262 i_call_you_my_base
i_call_you_my_base's picture

True, but the first and fifteenth of every month mostly makes up for it.

Tue, 05/06/2014 - 21:33 | 4734472 Poor Grogman
Poor Grogman's picture

By Killing interest payments on savings the FED forces prudent independent people to consume their capital instead.

Thus making them more dependent on the government teat (aka the FED)

This seems to be what the FED does best, transfer sovereignty from individuals to the government. Just like they did in the Great Depression when they confiscated the very thing that people most needed at that time to secure their personal well being.

Face it, the FED is a criminal cartel that is hell bent on controlling every kind of money, in order to control YOU.

The more interaction you have with them, wether it be through debt or savings, means simply handing them more control over your own destiny...

Tue, 05/06/2014 - 20:51 | 4734311 ZH Snob
ZH Snob's picture

yea, stevie, this might not be a good the thing for the 99.9%. 

so, what's the deal anyway?  are you in the club or not?  don't play coy, you know what club I mean: the illuminated one.  you trashed obama to a card-carrying CFR creep (http://www.cfr.org/about/membership/roster.html?letter=C) then you expose the fed's policy for what it is.  we all know these guys love to play both sides of the fence, so is all this honesty just to rub it in our faces?

Tue, 05/06/2014 - 21:02 | 4734352 BC6
BC6's picture

What an excellent list and alphabetized.

Tue, 05/06/2014 - 21:20 | 4734425 ZH Snob
ZH Snob's picture

yea.  I was kind of shocked to see Clooney's name there.  I didn't think they admitted idiot celebrities. 

Tue, 05/06/2014 - 21:35 | 4734462 BC6
BC6's picture

Stevie keeps improving in my book, yes, even though he is a .0001%'er. Didn't he buy a painting that someone poked a hole through and later sell?

As noted earlier, it's an excellent list if someone were long guillotines.

Tue, 05/06/2014 - 23:09 | 4734760 holmes
holmes's picture

I'd like to know whether Wynn supports Reid. The dems are loving the Fed's easy money (remember Schumer's "get to work Mr. Bernake" remark). If Wynn supports Reid then he's full of shit.

Wed, 05/07/2014 - 01:43 | 4735028 VegasBob
VegasBob's picture

I think Wynn, along with most casino executives, has probably supported Reid the past 2 elections.  That's because the Republicans ran absolutely AWFUL candidates in 2010 and 2004.  In 2010, the Republicans nominated a certified kook named Sharron Angle.  She made Sarah Palin look good.  And in 2004, the Republicans nominated a religious zealot named Richard Ziser.

To get rid of Reid, Nevada Republicans need to nominate a mainstream Republican in 2016 and not a loony-tunes kook or religious zealot.

It's that simple.

Wed, 05/07/2014 - 03:06 | 4735104 Bay of Pigs
Bay of Pigs's picture

yeah sure...fuck u Bob you clown.

Tue, 05/06/2014 - 20:06 | 4734176 lordbyroniv
lordbyroniv's picture

Oh shiat...he didnt !!

Tue, 05/06/2014 - 20:27 | 4734239 Winston Churchill
Winston Churchill's picture

He may want to refrain from using nail guns in any hot tub
higher than the ground floor.

Tue, 05/06/2014 - 20:36 | 4734267 The Gooch
The Gooch's picture

Anyone or anything slamming the process of counterfeit banking cartels must come to to accept the root cause.

The "Fed" is "Artificial Nirvana" by definition if you're in the (invisible shreholders) club.

Tue, 05/06/2014 - 20:17 | 4734195 williambanzai7
williambanzai7's picture

Let's further note that that cheap QE money, in this instance, has created thousands of new jobs for well deserving Chinese...

Mission Accomplished

Tue, 05/06/2014 - 20:25 | 4734234 lordbyroniv
lordbyroniv's picture

Banzai...

 

really liked your WINGS - SUN archetpye pic 

 

it is a beauty!!!!

 

You are plugged in baby!!!

 

I DIG!!

Fri, 05/16/2014 - 21:15 | 4768297 Shizzmoney
Tue, 05/06/2014 - 20:16 | 4734198 starman
starman's picture

hey neither my wife nor my dick follows my orders anymore!

Tue, 05/06/2014 - 20:17 | 4734205 CrownedCoke
CrownedCoke's picture

Time to invest in penny slots..

Wed, 05/07/2014 - 00:36 | 4734943 Bunga Bunga
Bunga Bunga's picture

Online. Steve can flip his hotels into server farms.

Tue, 05/06/2014 - 20:18 | 4734206 Seize Mars
Seize Mars's picture

Stephen Weinberg is his real name.

Wed, 05/07/2014 - 01:47 | 4735034 VegasBob
VegasBob's picture

Yes, he's a Jew.  But his name was legally changed in 1946 when he was 6 months old.  So Wynn has been his legal name for practically all of his life.

Wed, 05/07/2014 - 03:35 | 4735125 bunnyswanson
bunnyswanson's picture

But why?

Tue, 05/06/2014 - 20:20 | 4734209 buzzsaw99
buzzsaw99's picture

hell it's way better than that for wynn. he held back on a bunch of what he could have said especialy about where all that borrowed money would end up, that is to say in his personal portfolio. hey steve, the fed is well aware of the looting operation. enjoy.

Tue, 05/06/2014 - 20:20 | 4734213 williambanzai7
williambanzai7's picture

Let us take it one step further:

Does anyone believe that all the Cotai revenues generatednin the new Wynn casino will be repatriated to trickle back down in the US?

Tue, 05/06/2014 - 20:39 | 4734277 One And Only
One And Only's picture

I've heard the repatriation tax is like a giant vibrating black dildo punching your asshole like Floyd Meriwhether.

Tue, 05/06/2014 - 20:42 | 4734286 i_call_you_my_base
i_call_you_my_base's picture

You've officially won this thread.

Tue, 05/06/2014 - 21:01 | 4734348 williambanzai7
williambanzai7's picture

This is one vision I hesitate to depict... 

Wed, 05/07/2014 - 01:48 | 4735037 VegasBob
VegasBob's picture

You can make the dildo red white and blue...

Tue, 05/06/2014 - 20:22 | 4734220 remain calm
remain calm's picture

Wait till Japan defaults and then Europe, Interest rartes will be negative as money runs for what they perceive as safety. Then he will have even cheaper money. Negative interest rates will be just great for seniors, the penny slot machines will be packed.

Tue, 05/06/2014 - 20:26 | 4734238 chubbar
chubbar's picture

I'm not quite sure that steve is going to make the 3 billion + to pay back the loans? Who has the money and what is the monthly nut on that amount? Sorry, I think they have killed the average joe who makes up the majority of folks who go there.

Tue, 05/06/2014 - 20:33 | 4734252 One And Only
One And Only's picture

this is one of the most tastiest seasons

Never dreamed that we would see anything so tasty and wonderful as that.

What the fuck? Why does Steve Wynn sound like what I imagine a creepy 90 year old yenta smoking Virginia Slims 100's would sound like? If I talked like that around my pop he would have belted me in the mouth.

Tue, 05/06/2014 - 20:32 | 4734260 ebworthen
ebworthen's picture

LOL!

That's great and true stuff.

Best customer service and happiest staff I expereinced in Vegas have been at Wynn properties.

I love how Wynn pissed off George Clooney by calling Obama an "asshole" (reportedly).

A succint summary of how the FED is punishing the very people they supposedly help, and leading the nation down the road to perdition.

Tue, 05/06/2014 - 20:33 | 4734263 buzzsaw99
buzzsaw99's picture

he fucked okada good, he'll get around to screwing the small shareholders too. #WYNNing!

Tue, 05/06/2014 - 21:16 | 4734407 delivered
delivered's picture

Honestly, had a terrible experience at the Venetian last fall. All of the restaurants were overpriced, couldn't find my way around the place, and when we did find a restaurant, waited for about 10 minutes and then left (as nobody provided any service). I would think that with such cheap financing, he might be able to hire a few more employees but I guess that it just wasn't our night.

Noted to my wife the other night that Vegas can no longer be done on the "cheap" but it can be made affordable (pick your nights, avoid the high profile events, limit gambling, and find the deals). But affordable is not what Mr. Wynn and everyone else in Vegas wants in a customer. They want the cash to flow freely, whether it be at dinner, on the tables, in the bars, or with the rooms. Problem is, Vegas is running into the same problem as the US. A micro faction of the population can afford to spend some real money whereas the balance simply head to Vegas on the deals, scrimp on food, meander around the streets just people/facility watching, and don't have much disposal income to spend. Not exactly what Vegas needs to repay the billions in debt it has taken on.

But really, who cares I mean with no covenant deals and no recourse, what SFBs are buying this garbage debt that yields only 5% and basically is so far down the food chain that any corporate restructuring is going to see them wiped out. Good luck stacking up against the senior lenders as they will not have a chance in hell of recouping any investment. 

Funny but you have to go back to a statement made by Henry Ford about not just building a car that people can afford but more importantly, paying them a wage which could support the purchase of a car (not to mention that Mr. Ford probably had to pay real market rates for his capital). The ultimate insult or irony in Wynn's statement is that here he is, tapping credit that is as cheap and easy as ever, and not making one statement about how poorly the gaming industry pays the majority of its employees (low paying, service types such as dealers, servers, towel boys, front desk, etc., etc., etc.). Do you honestly think the average employee in Vegas has enough disposal income to purchase the goods and services provided by these hotels? 

This is the ultimate catch 22 for these owners. They have to drive more cash flow to repay huge amounts of borrowed money by cutting costs as customers don't have the cash to spend (with the cutting costs focused squarely on the employees who in the words of Mr. Ford, can't afford to buy the services they provide so Mr. Wynn is eliminating potential customers). Hard to believe that it has taken this long for the super wealthy to realize that yes, Houston, we do have a problem and one of the root causes was without question, QE.

Wed, 05/07/2014 - 01:50 | 4735039 VegasBob
VegasBob's picture

Ummm, The Venetian is Sheldon Adelson's joint, not Steve Wynn's...

Fri, 05/16/2014 - 21:23 | 4768319 Shizzmoney
Shizzmoney's picture

Thing is, a lot of these casinos are so big in debt and stuck in this mode of almost forced enamorous expansion (because rates are so low) DESPITE a consumption slowdown, trying to make things stick.

Casino austerity is coming too.  Caesar's is in the hole and there are rumors they may restructure their comp program AGAIN (they started being less generous in comps back in 2010).  The low-to-middle income worker is highly indebted and his income has not kept up with health, rent, and (quality) food inflation.

The casinos will be stuck with all of these properties that no one will go to because they have no money.  And Sadly, they'll also probably try to snatch the lands on the Native American Casino reservations as they are struggling, too.

What QE does is paper over the numbers to make this look like a stagnating, managed "recovery", as supposed to what it actually is: a double dip recession.

p.s. Don't go the Venetian.  Sheldon Adelson is a criminal.

Tue, 05/06/2014 - 21:18 | 4734416 Wahooo
Wahooo's picture

That guy is seriously conflicted. What to do? Screw the little guy.

Tue, 05/06/2014 - 21:26 | 4734426 I Write Code
I Write Code's picture

Wynn is complaining about the fed's "artificial Nirvana", he doesn't want the competition?

Actually, I like it!  Let's open a new casino at one end of the strip, "The Fed", where all the bar-girls have strap-on Bernanke beards and the place is knee-deep in freshly printed bogus bills.

Then on the other end of the strip is "The Artificial Nirvana", where the guests float in on clouds while there are constant murders going on all over the casino and all the croupiers are dressed in bondage outfits.

Very topical.

Tue, 05/06/2014 - 21:35 | 4734475 Herdee
Herdee's picture

As well,the Market just happens to be a forward thinker.In fact there's lots of proof that it's ahead of the game by months.So,if we look at tapering going through to completion and some currency pairs having the tighest ranges in decades then I'd say that something is going to happen,and it ain't going to look pretty either.The Stock Market actually feels weak,weird and scared of itself.Going down?!Please allow the pension funds a little time please to get their money out.

Wed, 05/07/2014 - 06:00 | 4735218 Bangin7GramRocks
Bangin7GramRocks's picture

Are you high? There is no market. It's just a bunch of computers jerking each other off. And they only "forward think" until the next twitter rumor or Fed statement.

Tue, 05/06/2014 - 21:46 | 4734509 Cabreado
Cabreado's picture

I have no allegiance to Wynn whatsoever, but he has been speaking very intelligently about the state of affairs, over many years now, and stands out a bit among the should-be-could-be, and need to be, more vocal and influential.

Mute leadership in the business sector (incl vegas) is one of our biggest problems;  don't shoot the messenger -- encourage him to solicit help.

 

Wed, 05/07/2014 - 00:13 | 4734911 slightlyskeptical
slightlyskeptical's picture

The more these guys accumulate, the more they will have when the reset and convertibility kicks in. The new system will not be debt based and will require huge amounts of currency to support it which is why no one really cares about the amount of money in play right now.

In the global NWO...4 billion people working...economies and prices equalized through one currency....$50,000 grand per 4 billion workers.... ..$100k in savings each...$100k in owed benefits....Velocity of money 1.5... Currency needed about $70 trillion worldwide.  A trillion here, a trillion there will not be significant in the end. It will be everyones own responsibility to earn that wage and acquire that savings but at least the unhypothecated money will be available for them to do so unlike in the current system. It will simply make the competition a little more fair.

I really don't see any other way out which is why I posted this ridiculous theory.

Wed, 05/07/2014 - 00:28 | 4734932 kurt
kurt's picture

What he should have said:

Soon I'll have no guests at my casino.

Wed, 05/07/2014 - 00:34 | 4734938 Bunga Bunga
Bunga Bunga's picture

Steve, what is your problem? Do business with the 0.1% only - problem solved.

Wed, 05/07/2014 - 01:24 | 4735009 junction
junction's picture

There is another part to Obama's war on the middle class, how Obama's minions are looking the other way as the super-rich hide their money from the taxman in  corporations.  The Swiss hinted as such in the excerpt below.  The U.S.  Treasury and the IRS are taking a hands off approach to assets owned by the 0.01% that are stashed in shell corporations overseas, assets such as deeds or trust documents for real estate holdings, precious metals, bearer bonds and cash. Who knows how many U.S. Senators have graft payments hidden in shell corporations overseas?       

From the Financial Times: The Swiss government also highlighted the lack of transparency concerning the ownership of US companies, which are subject to limited disclosure rules. “Switzerland also expects the special provisions that apply in the United States regarding the transparency of beneficial owners to be of a temporary nature,” it said.

 

Wed, 05/07/2014 - 06:04 | 4735220 tradewithdave
tradewithdave's picture

Ancient sage advice once overheard by a Cherokee princess turned Senator... "Insiders don't criticize insiders." I must admit that he ran a tight ship downtown back in the Golden Nugget days although he never got a penny from me at the tables.... don't like the odds. He polished the brass, cleaned the rugs and within 3 minutes of someone using the ashtrays they were cleaned out and a fresh logo was stamped into the sand.

Wed, 05/07/2014 - 07:39 | 4735294 Sandy15
Sandy15's picture

Wynn was direct with his words..........he will get audited by the IRS and bully-in-chief!!

 

Buffet was indirect by saying HFT's provide volume but not liquidity........he'll get a pat on the back for trying to warn everyone about the stock market crash.

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