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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – May 31, 2012


As we look at today’s set up for the S&P 500, the range is 39 points or -1.39% downside to 1295 and 1.57% upside to 1334. 

                                            

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: on 5/30 NYSE -2264
    • Down from the prior day’s trading of 1709
  • VOLUME: on 5/30 NYSE 768.67
    • Increase versus prior day’s trading of 7.62%
  • VIX:  as of 5/30 was at 24.14
    • Increase versus most recent day’s trading of 14.79%
    • Year-to-date increase of 3.16%
  • SPX PUT/CALL RATIO: as of 05/30 closed at 2.35
    • Up from the day prior at 1.71 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: as of this morning 40
  • 3-MONTH T-BILL YIELD: as of this morning 0.07%
  • 10-Year: as of this morning 1.63
    • Increase from prior day’s trading at 1.62
  • YIELD CURVE: as of this morning 1.36
    • Unchanged from prior day’s trading 

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:30am: Challenger Job Cuts (Y/y), May, (prior 11.2%)
  • 8am: Fed’s Pianalto speaks on monetary policy in Cleveland
  • 8:15am: ADP Employment Change, May, 150k (prior 119k)
  • 8:30am: GDP (Q/q) (Annualized) 1Q S, est. 1.9% (prior 2.2%)
  • 8:30am: Personal Consumption 1Q S, est. 2.9% (prior 2.9%)
  • 8:30am: Core PCE (Q/q) 1Q S, est. 2.1% (prior 2.1%)
  • 8:30am: Initial Jobless Claims, week of May 29, est. 370k (prior 370k)
  • 9:45am: Chicago PMI, May, est. 56.8  (prior 56.2)
  • 9:45am: Bloomberg Consumer Comfort, week of May 27, (prior -42)
  • 10:00am: NAPM-Milwaukee, May, est. 53.4 (prior 52.9)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural gas change
  • 11am: DOE inventories
  • 11:00am: Fed to purchase $1.5b-$2b notes in 2/15/2036 to 5/15/2042 range 

GOVERNMENT:

    • CFTC meets on hedge, market-making provisions of Volcker rule
    • House in session, Senate holds pro forma session
    • House Energy and Commerce panel hears from FCC Commissioner Robert McDowell on international proposals to regulate the Internet, 10am
    • Woodrow Wilson International Center for Scholars holds forum on Chinese investment in North American energy, 9am
    • Trial begins in Apple suit seeking to block Samsung products from U.S. market, before a judge at International Trade Commission; lasts through June 6 

WHAT TO WATCH:

  • Retailers report May sales data before market opens
  • Euro-area inflation slowed more than economist est. in May
  • CGI Group to buy Logica for $2.6b cash
  • Oracle looked at Buddy Media before agreeing to acquire Vitrue
  • Prudential Plc to buy Swiss Re’s SRLC for $621m
  • German unemployment unchanged in May, adj. jobless rate falls
  • Graff cancels $1b IPO in Hong Kong, citing falling stock mkts
  • Maple provides update on plans for TMX Group at 12pm
  • United to cut 1,300 jobs at Houston’s main airport
  • U.S. stock exchanges propose changes to trading curbs
  • Short sales of U.S. homes reached 3-yr high in 1Q: RealtyTrac
  • Japan industrial production misses ests’ South Korea’s rises
  • Australian business investment rises 6.1%, more than forecast 

EARNINGS:

    • Canadian Imperial Bank of Commerce (CM CN), 5:50am, C$1.88
    • Joy Global (JOY) 6am, $1.96; Preview
    • Descartes Systems (DSG CN) 6am, $0.11
    • Ciena Corp (CIEN) 7am, $(0.04)
    • Movado (MOV) 7:30am, $0.25
    • National Bank of Canada (NA CN) 7:45am,  C$1.85
    • Esterline Technologies (ESL) 4pm, $1.29
    • Vera Bradley (VRA) 4:01pm, $0.29
    • Ascena Retail Group (ASNA) 4pm, $0.36
    • SAIC (SAI) 4:02pm, $0.33
    • OmniVision (OVTI) 4:18pm, $0.22 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG) 

  • Nickel Slump Seen Ending as China Faces Ore Curbs: Commodities
  • Gold Gains in London Trading as Weaker Dollar Bolsters Demand
  • Oil Set for Biggest Monthly Drop in Three Years on Debt Crisis
  • Copper Advances, Narrowing Monthly Decline, on German Figures
  • Cocoa Rebounds on Speculation Lower Prices Will Spur More Demand
  • Palm-Oil Shipments From Indonesia Seen Climbing on Ramadan
  • China Plan to Open Metal Futures to Foreigners to Help LME
  • Felda Targets $3.3 Billion in Biggest Share Sale Since Facebook
  • PetroChina Seeks Oil Assets as Shale Gas Seen Years Away: Energy
  • Soybeans Poised for Worst Month Since September on U.S. Planting
  • Palm Oil Has Worst Monthly Loss Since 2009 on Europe Crisis
  • Commodity, Stock Price Link Near 16-Year High: Chart of the Day
  • Vale as Cheapest Miner Signals Buy to Aberdeen: Corporate Brazil
  • Oil Set for Monthly Drop on Debt Crisis
  • Marubeni to Borrow for Half of Gavilon Payment, Sell Assets
  • Rubber Slumps to Six-Month Low on European Crisis: Tokyo Mover
  • Dalian Soybeans May Drop on Bollinger Trend: Technical Analysis 

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 6

 

 

ASIAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

 

The Hedgeye Macro Team


Proactively Prepared

This note was originally published at 8am on May 16, 2012. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.

“Most people have the will to win, few have the will to prepare to win.”

-Bobby Knight

 

We don’t have to apologize, fear-monger, or point fingers while everyone is reacting to the news again this morning. This has been going on for 5 years. Get both the Slope of Global Growth (slowing) and the direction of the US Dollar right, and you’ll get a lot of other things right.

 

Winning in this country (or being right in this business) should be celebrated instead of shunned. It’s not easy out there – and it’s not going to get any easier any time soon. Life is hard.

 

Repeatable risk management processes trump pundits. Either our profession’s broken sources go away, or whatever is left of the trust, inflows, and volumes in our markets will.

 

Back to the Global Macro Grind

 

From a Global Macro perspective (currencies, countries, commodities, etc.) I am finally seeing the early signs of capitulation (immediate-term TRADE oversold) on the downside as the US Dollar approaches immediate-term TRADE overbought.

 

That’s what happens when The Correlation Risk goes “on.” Policy (or in this case the lack thereof in expectations of an iQe4 upgrade) drives the US Dollar; and the US Dollar drives mostly everything else (USD up for the 11th consecutive day today).

 

Correlation Risk has a reflexive impact on demand (markets that go straight down scare people), but it is not traditional demand in terms of how we measure it – it’s behavioral. Our Leading Indicators on Global Demand (Growth) have been slowing since February-March.

 

Commodities and Asian Equities stopped going up in February; most other major Global Equity markets stopped going up throughout March; and US Treasury bond yields stopped going up in March as well.

 

In other words, if you have a Globally Interconnected Risk Management Process (or just a Twitter feed with credible sources), why people are freaking out right now (instead of when they should have), should at least give you a chuckle.

 

People freak-out (buy high, sell low) because we have institutionalized asset management into a very short-term game of performance chasing. Sadly, gaming the game of the next policy move is paramount on people’s minds – and the intermediate-term draw-downs (from peak-to-trough) for the last 5 years have been epic.

 

Here’s how the draw-downs (losses of your capital from the YTD tops) look in some of the majors:

  1. Japanese stocks (Nikkei) = down -14.2%
  2. Hong Kong stocks (Hang Seng) = down -11.2%
  3. Indian stocks (Sensex) = down -13.0%
  4. German stocks (DAX) = down -11.3%
  5. Spanish stocks (IBEX) = down -25.1% (crashing)
  6. Russian stocks (RTSI) = down -22.3% (crashing)
  7. CRB Commodities Index = down -11.3%
  8. Gold = down -14.2%
  9. Oil = down -11.8%
  10. Treasury Yields (US 10yr) = down -24.8%

Bullish, right?

 

Right, right. And all of this, including JPM’s news is all about Greece, right?

 

C’mon. Let’s get real here before whatever is left of the world’s investors yank all their capital from our fee based businesses. Ben Bernanke may very well have dared you to chase yield on January 25th, but that doesn’t mean you should have taken on the dare. You have seen this Qe expectations game before. You should have sold into it.

 

US Equities, which I didn’t list in the top 10 draw-downs, have done a complete round trip from where we were banging the risk management drums here in New Haven. While the Russell2000’s draw-down is about the same as the Hang Sang’s (-8.2%), the SP500’s is just -6.3%. So, if you bought the April 2ndtop, you only have to be up about 7% (from here) to get back to break-even.

 

Break-even? Yes. That matters. And so does timing – that’s why we are so focused on both.

 

Check out the timing of this trifecta:

  1. Russell 2000 peaks on March 26that 846
  2. US Equity Volatility (VIX) bottoms on March 26that 14.26
  3. Obama’s probability of winning the US Election peaks on – yep, March 26th

Political pundits probably don’t read this Newsletter. But if they did, they’d think that last point can’t be true. After all,  it doesn’t come from Washington or the accepted wisdoms of partisan paralysis.

 

We call it objective analysis. That’s all the Hedgeye Election Indicator is, math.

 

So, as US Equity markets draw-down from their March/April peaks (as they have from Q1 to Q3 in every year of the last 5 other than in 2009 when we were the most bullish firm on Wall Street 2.0), that’s obviously going to be a headwind for Obama.

 

It’s also going to be a headwind for Ben Bernanke.

 

Don’t forget that any headwind for Obama is, on the margin, a tailwind for Romney. Anything compression in the spread between Obama versus Romney (Obama had a huge lead in March), puts Bernanke’s career risk in play.

 

That, dear friends of the risk management gridiron, is US Dollar bullish.

 

And, with the US Dollar Index breaking out across all 3 of our core risk management durations (TRADE, TREND, and TAIL), you want to continue to be Proactively Prepared for what may very well be the most epic economic debate of our generation.

 

My immediate-term support and resistance ranges for Gold, Oil (Brent), US Dollar Index, EUR/USD, and the SP500 are now $1531-1598, $110.27-112.99, $80.04-81.22, $1.27-1.29, 1324-1358, respectively.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Proactively Prepared - Chart of the Day

 

Proactively Prepared - Virtual Portfolio



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The Game

“The world is not the way they tell you it is.”

-‘Adam Smith’

 

That’s the opening sentence to one of my favorite books about markets, The Money Game, by George Goodman. He wrote it in 1967 under the pseudonym ‘Adam Smith.’ That was a metaphor for the anonymity of the game itself. It helped him tell it like it is.

 

When you call what it is that we do a “game”, most people feel something about that. Some people love it – some loathe it. But that doesn’t change the fact that, for me at least, this is the most competitive arena away from professional sport that I can find.

 

The irony is that this is a money game and money is the way we keep score. But the real object of The Game is not money, it is the playing of The Game itself. For the true players, you could take all the trophies away and substitute plastic beads or whale’s teeth; as long as there is a way to keep score, they will play.” (page 21)

 

Back to the Global Macro Grind

 

For those of us keeping score since Growth Slowing became obvious, globally in March, the game has largely been won by those who moved a significant amount of their asset allocation to Cash.

 

As a reminder, our Top 3 Global Macro Themes for Q2 2012 have been:

  1. Fed Fighting: The Last War (Growth Slowing)
  2. Bernanke’s Bubbles (Commodities)
  3. Asymmetric Risks (long US Dollar)

When you have Growth Slowing and Deflating The Inflation of Bernanke’s Bubbles (Commodities), at the same time, you get draw-downs in everything big beta (cyclical commodities, emerging market stocks, European bonds, etc.). You also see a “flight to quality” (i.e. low beta) like US Dollars, German Bunds, and US Treasuries.

 

Playing the game this way is not new. If you made this beta down-shift move at the end of Q1 in 2008, 2010, 2011, you won. At every Q1 turn, the Old Wall has been as dependable as the sun rising in the East in A) not taking down their GDP Growth estimates when markets implied they should and/or B) understanding the Correlation Risk associated with a Dollar up move.

 

So, while it’s fun to say “consensus is bearish”, it’s more fun when you say that at 1295. Winning is always more fun.

 

From a fundamental research perspective, consensus is not yet Bearish Enough on Growth. By the end of Q2 it might be. Market expectations change every day, so stay tuned. On that score, in the USA we’ll get 3 Big Hedgeye Mac-ro catalysts this week:

  1. Q1 2012 US GDP (to be revised well below Old Wall consensus that was running at 2.5-3% only 3 months ago)
  2. PMI and ISM readings for the month of May (expectations are high in the mid-50’s for both prints)
  3. US Employment Report (expectations are still relatively high for a 150,000 plus print on payroll adds)

From a quantitative risk management perspective in US Equities, here’s what I am looking for to register another buy/cover signal:

  1. VIX re-test of the 24-25 zone
  2. SP500 re-test of the 1 zone
  3. The II Bull/Bear Spread to narrow to +600bps wide or less (this morning it widened to the Bull side, back to +1500 bps wide as only 24% of those surveyed admit to being bearish – that’s called career risk management after an up week)  

Volume is another critical quantitative factor to consider relative to the games we’ve played coming out of Q1 2008, 2010, and 2011. The 2012 game has no volume on the rallies (most of those other years had volume).

 

Yesterday’s +1.1% up move in the SP500 to a lower-high (down -6.1% from the 1419 SP500 YTD peak) clocked a volume reading that was -26% below the average down day volume for the month of May alone.

 

Yes, that’s bad. So are the “flows.”

 

The flows are always key to the game. Sometimes I think they can be as important as any behavioral or quantitative risk management signal I can give you.

 

The flows (as in your money) are either flowing in or out of the market in real-time. Currently, in both commodities and equities, we have outflows, globally.

 

That’s where the run of the mill 2007-2012 Perma-Bulls get right whipped around buying high. They still think this is the 1990’s or the 2004-2007 period where money was easy (Greenspan and Bernanke) and the flows where rushin’ in.

 

The flows are like the fans of The Game. You can have the best game of your life, but if no one is watching, buying popcorn, and planning on coming back to the next game, who cares?

 

That’s why I have been so focused on the leadership principles of Transparency, Accountability, and Trust ever since I put on a Hedgeye jersey in 2008. I believe in the deepest part of my being that if we don’t, as a profession, get our free-market principles back – we’re not getting The People’s trust back.

 

My immediate-term support and resistance ranges for Gold, Oil (Brent), US Dollar, EUR/USD, and the SP500 are now $1, $104.62-108.08, $81.87-82.91, $1.24-1.26, and 1, respectively.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

The Game - Chart of the Day

 

The Game - Virtual Portfolio


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – May 30, 2012


As we look at today’s set up for the S&P 500, the range is 21 points or -1.23% downside to 1316 and 0.34% upside to 1337. 

                                            

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: on 5/29 NYSE 1709
    • Up from the prior day’s trading of 114
  • VOLUME: on 5/29 NYSE 714.24
    • Increase versus prior day’s trading of 19.91%
  • VIX:  as of 5/29 was at 21.03
    • Decrease versus most recent day’s trading of -3.35%
    • Year-to-date decrease of -10.13%
  • SPX PUT/CALL RATIO: as of 05/29 closed at 1.71
    • Down from the day prior at 2.03 

CREDIT/ECONOMIC MARKET LOOK:


GROWTH – 1st Commodities, then Bonds, and now Stocks getting it; the Old Wall’s economists do not, yet – but they will; we’ve yet to see Hyman or Hatzius cut their US GDP Growth estimates to where we or the bond market has them (1.7-1.9% US GDP is our best case, for now). Looking for that consensus capitulation, blaming Europe.

 

  • TED SPREAD: as of this morning 39
  • 3-MONTH T-BILL YIELD: as of this morning 0.08%
  • 10-Year: as of this morning 1.68
    • Decrease from prior day’s trading at 1.74
  • YIELD CURVE: as of this morning 1.40
    • Down from prior day’s trading at 1.46 

MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage Applications, week of May 25
  • 7:45am/8:55am: ICSC/Redbook weekly sales
  • 10am: Pending Home Sales (M/m), Apr., est. 0.0% (prior 4.1%)
  • 10am: Pending Home Sales (Y/y), Apr., est. 22.0% (prior 10.8%)
  • 11am: Fed to purchase $4.5b-$5.25b notes in 8/15/2020 to 5/15/2022 range
  • 11:30am: U.S. to sell $25b 52-week bills
  • 11:30am: U.S. to sell 4-week bills
  • 1:20pm: Fed’s Fisher speaks on economy in San Antonio, Texas
  • 1:30pm: Fed’s Dudley to speak on regional economy in New York
  • 4:30pm: Fed’s Rosengren speaks in Worcester, Mass
  • 5pm: API weekly petroleum inventories

GOVERNMENT:

    • House returns to work following recess; Senate out until Jun 4
    • President Obama signs U.S. Export-Import Bank reauthorization
    • Commerce Dept. announces level of wind tower import tariffs
    • Mitt Romney wins Texas, giving him enough delegates to clinch Republican nomination

WHAT TO WATCH:

  • Euro-area economic confidence dropped more than est. in May
  • America Movil discussed cooperation with KPN before offer
  • Spain’s Ordonez says Bankia bailout terms still unknown
  • Pep Boys terminates $1b merger with Gores Group
  • Fiat to list in NY after CNH unit merger
  • Apple’s CEO says focus is TV, sees closer Facebook ties
  • Euro-area loans grew at slowest pace in 2 yrs. in April
  • Atlantic Broadband said to seek $1.4b sale
  • RIM shares plummet after surprise 1Q op loss
  • BankAtlantic must face SEC disclosure fraud lawsuit
  • Facebook’s Zuckerberg drops off Billionaires Index

EARNINGS:

    • Fresh Market (TFM) 6am, $0.36
    • Yingli Green (YGE) 6am, $(0.22)
    • CorVel (CRVL) 6:15am
    • Booz Allen Hamilton (BAH) 7am, $0.40
    • Daktronics (DAKT) 7am, $0.03
    • RBC Bearings (ROLL) Bef-mkt, $0.63
    • TiVo (TIVO) Aft-mkt, $(0.16)
    • Lions Gate Entertainment (LGF) Aft-mkt, $0.22

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Marubeni Follows Glencore to Boost Grain Trading: Commodities
  • Brent Falls to 5-Month Low as U.S. Supplies Seen at 22-Year High
  • Gold Falls a Second Day as Europe’s Debt Crisis Boosts Dollar
  • Copper Drops as Spain’s Credit Rating Revives Crisis Concern
  • Wheat Slides as U.S. Harvest Accelerates While Soybeans Decline
  • Cocoa Falls as Ivory Coast’s Mid-Crop Harvesting Gathers Pace
  • Felda Said to Seek $3.2 Billion in Year’s Second-Biggest IPO
  • Iraq Begins First Oil, Gas Exploration Auction Since Saddam Era
  • Japan Aluminum Buyers Said to Agree to Record Quarterly Fee
  • Standard & Poor’s GSCI Index Drops to Lowest Since October
  • Dollar’s Gold Backing Drops With Metal’s Price: Chart of the Day
  • Pakistan Seen Shipping 100,000 Tons Sugar by September on Prices
  • ONGC Plans Shale, Deepwater Strategy in Bid to Double Production
  • Oil Drops as U.S. Stockpiles Seen Rising
  • Rubber Inventory Climbing in China as Slowdown Cuts Demand
  • Rubber Drops as Rising Thai Supply Adds to Chinese Stockpiles
  • Palm Oil Set for Worst Monthly Loss Since 2009 on China Outlook

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS


SPAIN – still crashing. IBEX down another -1.4% (immediate-term TRADE oversold) to a fresh new low (down -31% from the Feb top when Global Growth Slowing became readily apparent in our models); Russia down -27% from the March top and Italian bond yields ripping a move > 6.00% this morning; there is no “de-coupling” from this.

 

THE HEDGEYE DAILY OUTLOOK - 6

 

 

ASIAN MARKETS


CHINA – but the rumors of Chinese stimulus have, at least for today; the Shanghai Comp backed off at an important TRADE line of resistance (2393) last night and the Hang Seng got crushed again, down -1.9% - no follow through from the USA day of no volume US Equity buying (US volumes down -26% vs our composite avg of the down days in May).

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

 

The Hedgeye Macro Team


AMZN: Adding TRADE, Respecting TREND and TAIL

Conclusion: AMZN already had a favorable TREND and TAIL setup. Now it scores the trifecta by working within our near-term TRADE framework as well. As with all TRADES, it might be a short-lived event. But do not ignore the power of the story across our TREND (3 months or more) and TAIL (3 yrs or less) durations.

 

TRADE (30 Days or Less)

Keith added it to the Hedgeye Virtual Portfolio as he was looking for names levered to US Consumption with favorable TREND and TAIL setups. In Retail, AMZN clearly fits that bill.

 

From a near-term perspective, AMZN does not have all the characteristics we’d ordinarily look for in a long idea at face value. First off, while 2Q estimates appear to be in check, this is a company that's not afraid to miss. It's happened in 3 of the past 10 quarters. With the company going up against a 51% revenue comp this quarter, the hurdle is a big one.

 

From a sentiment standpoint, of the 41 Analysts, there are no sells, and the 71% ‘Buy rating ratio’ just set a 5-year peak. Yes, this definitely concerns us, especially with AMZN facing its toughest yy revenue growth compare in 2Q (51% growth in 2Q11). Its trough, fyi, was 21% in 1Q 2007.

 

TREND (3 Months or more)

But make no bones about it... after the 2Q print, revenue compares start to ease, while margin compares start to get quite easy effective immediately (including 2Q).  Margins were cut in half last year to 1.8%, with an even distribution across quarters. People beat Bezos up – as usual -- for that investment. But now he has Fire, expanded DC capacity, a new B2B initiative...

 

We’ve been at a point where AMZN has had Eight quarters is a row where inventories grew faster than sales. Note that this is at the same time capex as % of sales ramped by another 90bps to 3.8%. None of this is sustainable, and ultimately very bullish for cash flow and therefore, the stock.

 

In the back half of this year, our estimates are 10% above consensus.

 

 

TAIL (3-years or less)

Let's not forget that it is the Haley’s Comet of retail. It's a retailer with $48bn in revenue growing at 40% with 2% EBIT margins that's investing on its balance sheet and p&l at a rate to make a third of retailers alive today extinct in 5+ years.  Capex is inflated, margins are depressed, and while sentiment has rebounded considerably from the latest 1Q upside, the fact of the matter is that estimates for next year are likely low as investments today drive sales and margins tomorrow. For a world class franchise like AMZN, you generally don’t want to get in the way of that. The ‘it’s too expensive’ call simply holds no water when the company can earn the $4.50 2014 consensus estimate a year early.

 

AMZN: Adding TRADE, Respecting TREND and TAIL - AMZN TTT


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