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JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT

Initial Claims Remain Elevated

Initial jobless claims fell 10k last week (14k after the revision) to 418k.  Rolling claims edged down by 3k to 423k.  This week's decline keeps rolling claims in the same band they've occupied for the last eight weeks, still far from the levels required to see unemployment improve.  

 

On a separate note, USA Today noted earlier in the week that regulators are increasing the pressure to combat fraudulent claims.  The Labor Department estimated that 12% of claims were fraudulent in the 12 months ended March 2011, up from 11% the prior year and roughly 9% in 2008.  Increased scrutiny of these claims could result in a small reduction in the level of claims going forward.   

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - rolling

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - raw

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - nsa

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - s p

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - XLF

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - fed

 

Bankruptcies Fall 5% YoY in June

Bankruptcy data shows that consumer filings fell 5% YoY in June (compared to -16% YoY in May).  Lower bankruptcies are a positive signal for net charge-offs, since credit card debt is charged-off when a borrower declares bankruptcy without ever being marked as delinquent.

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - bankruptcies

 

Bankruptcies are not far out of line with their long-term average levels, as the chart below demonstrates.  (The law change in 2005 pulled bankruptcies forward dramatically; this data is shown with a break in the y-axis.)

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - bankruptcies LT

 

Spreads Widen Slightly to Begin 3Q

The 2-10 spread, which we track as a proxy for bank margins, widened 5 bps in the first week of the quarter.  

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - spreads

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - spreads QoQ

 

Financial Subsector Performance

The chart below shows the price performance of subsectors over four durations.

 

JOBLESS CLAIMS FLAT WHILE BANKRUPTCIES SLOW THEIR RATE OF IMPROVEMENT - perf

 

Joshua Steiner, CFA

 

Allison Kaptur


TALES OF THE TAPE: KKD, SBUX, MCD, CPKI

Notable news items and price action from the restaurant space, as well as our fundamental view on select names.

 

MACRO

 

This morning, jobless claims were above 400k yet again, coming in at 418k.  While this was in line with consensus at 420k, it shows that the employment scenario is still far, far away from improving meaningfully.  4-week rolling claims declined slightly week-over-week but remain elevated at 425k. 

 

TALES OF THE TAPE: KKD, SBUX, MCD, CPKI - jobless claims77

 

 

Wheat prices dropped again yesterday as U.S. weather improved and Russia moved to resume its exports.

 

QUICK SERVICE

  • KKD’s largest holder Mohamed Abdulmohsin Al Kharafi & Sons files form 144; registers to sell 2.3M shares.
  • SBUX was downgraded at Goldman Sachs to Neutral from the Conviction List.  YUM was downgraded to sell on China uncertainty while the restaurant space was downgraded to Neutral from “Attractive” on valuation.
  • SBUX price target was target raised at Credit Suisse to $46 from $44. FY11 EPS lowered to $1.54 from $1.55 v. Reuters $1.50 and FY12 EPS reduced to $1.92 from $1.97 v. Reuters $1.80.
  • SBUX Baristas at outlets in Chile plan to strike on Thursday because their wages are so low that they cannot afford to buy lunch, the Wall Street Journal reported Wednesday. This would mark the first strike at a Starbucks-owned store in Chile.
  • MCD is rated Buy by Bank of America, the price target was raised to $96 from $85.


FULL SERVICE

  • CPKI’s acquirer, Golden Gate Capital, has completed the tender offer for California Pizza Kitchen.

TALES OF THE TAPE: KKD, SBUX, MCD, CPKI - stocks 77

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - July 7, 2011

 

Part of the Hedgeye philosophy is to just let the market show us her path of least resistance; we have shifted to be a little longer this week - the Pain Trade is up (for now).  As we look at today’s set up for the S&P 500, the range is 45 points or -1.81% downside to 1315 and 1.55% upside to 1360.

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - levels 77

 

THE HEDGEYE DAILY OUTLOOK - daily sector view

 

THE HEDGEYE DAILY OUTLOOK - global performance

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 377 (416)  
  • VOLUME: NYSE 821.05 (-9.47%)
  • VIX:  16.34 +1.74% YTD PERFORMANCE: -7.94%
  • SPX PUT/CALL RATIO: 2.04 from 1.87 (+9.10%)

 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 24.07
  • 3-MONTH T-BILL YIELD: 0.01%
  • 10-Year: 3.12 from 3.16
  • YIELD CURVE: 2.69 from 2.72 

 

MACRO DATA POINTS:

  • 8 a.m.: RBC Consumer Outlook Index
  • 8:15 a.m.: ADP Employment Change, est. 70k, prior 38k
  • 8:30 a.m.: Jobless claims, est. 420k, prior 428k
  • 9:45 a.m.: Bloomberg consumer comfort, est. (-44.3), prior (-43.9)
  • 10 a.m.: Freddie Mac mortgage survey
  • 10:30: EIA Natural Gas storage, est. 82, prior 78
  • 11 a.m.: DoE inventories
  • 12:30 p.m.: Fed’s Hoenig speaks in Ada, Okl.
  • 2 p.m.: USDA cattle, hog slaughter

 

WHAT TO WATCH:

  • President Obama meets with congressional leaders over debt
  • NYSE Euronext holders vote on $9.33b Deutsche Boerse takeover
  • Allen & Co. conference continues in Sun Valley
  • Verizon Wireless ends unlimited data plans for new customers
  • LG Electronics cut its year sales for target for smartphones; losing share to Apple, Samsung
  • Bank of England Holds Key Rate at 0.5%, as Expected

 

COMMODITY/GROWTH EXPECTATION

 

THE HEDGEYE DAILY OUTLOOK - daily commodity view

 

 

COMMODITY HEADLINES FROM BLOOMBERG:

  • World Food Prices Climb on Sugar, Dairy Costs, Stoking Inflation Pressure
  • Copper Fees May Stay High on Japan Quake, Slumping China Imports, JX Says
  • Oil Rises in New York on Signs U.S. Crude Stockpiles Shrank a Fifth Week
  • Copper Reaches 11-Week High as Adverse Weather Fuels Concern About Supply
  • Wheat Drops for Second Day as U.S. Weather Improves, Russia Exports Resume
  • Sugar Climbs as Brazil’s Cane Crop May Miss Estimate; Cocoa Prices Decline
  • Goldman, Morgan Stanley Stay Bullish on Oil, Copper as Economy to Recover
  • China’s $70 Billion Fund Managers Rush to Boost Gold Investment Overseas
  • Gold for Immediate Delivery Declines 0.2% to $1,525.65 an Ounce in London
  • Cocoa-Bean Production in Indonesia to Expand on Replanting, Rehabilitation
  • China Corn Buying Too Little to Spur Rally After USDA Report, Cofco Says
  • Coal Poised for Worst Quarter This Year on China, Japan: Energy Markets
  • Florida Orange Output Will Be Below Forecast on Dry Weather, Survey Shows

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - daily currency view

 

 

EUROPEAN MARKETS

  • European stocks advanced for the eighth time in nine days
  • UK May Manufacturing output +2.8% y/y vs consensus +2.1% and prior revised +1.2% from +1.3%; UK May Manufacturing output +1.8% m/m vs consensus +1.0% and prior revised (1.6%) from (1.5%)

THE HEDGEYE DAILY OUTLOOK - euro performance

 

 

ASIAN MARKETS

  • ASIA: looking healthier by the day; India ripped +1.7% higher overnight and the squeeze is on there now too; KOSPI and China look solid.

 

THE HEDGEYE DAILY OUTLOOK - asia performance

 

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

 

 

Howard Penney

Managing Director


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 80.30%
  • SHORT SIGNALS 78.51%

THE M3: MSC; FISHERMAN'S WHARF

The Macau Metro Monitor, July 7, 2011

 

 

NO CASINO IN STUDIO CITY: LAU Macau Daily Times

Secretary for Transport and Public Works Lau Si Io reiterated that there will be no gaming facility in the Macao Studio City project and that it must adhere to the 2008 development plan that was approved by the government.  The 2008 plan includes a major component of a film production facility but doesn’t contain any gaming elements.

 

FISHERMAN'S WHARF READY AND WILLING Intelligence Macau, Macau Daily Times

David Chow, the boss of Fisherman's Wharf, said his own redevelopment plan has been approved by the Macau government.  Although there was no details on a casino, Chow said he will build a 4-star and a 6-star hotel and he hopes the hotel projects will be done by the end of 2012.




Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

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