• The call plus


    The Call @ Hedgeye Plus

    Our favorite, high-conviction stock ideas and CEO Keith McCullough’s Macro overlay. Exclusively on Hedgeye TV.


This week’s initial jobless claims released showed us 588,000 new applicants, 3,000 more than the revised figure for last week and 45,000 above the four week moving average. There is no need to mince words with this print – it was awfully bearish (see chart below).

Importantly, this puts the January Employment report on the table now as having to the potential to be as awful as November’s. One of the main reasons why I was bullish, for the immediate term “Trade”, in December was that weekly claims continued to decline sequentially (on a week over week basis). The end of that trend lines up almost in sync with the recent SP500 top on January 6th. The last 2 weeks of jobless data is what it is – as the math changes, I do.

In a perverse way, breaking the buck will help ease this problem. The biggest part of the country’s issue is that we have invalid corporate executives who are firing people now rather than 6-9 months ago when they proactively should have.

When you don’t have a proactive risk management process, this is what bad corporate execs do – they react to the news, buy back their stock and build capacity at economic tops, and do nothing but cut costs at bottoms. A weaker dollar will make their export business find a bid, and make these underperforming executives look as bad as they should – cutting into the bone right before demand begins to bottom is not what these guys should have their Boards sign off on paying them for.

I remain very cautious on the immediate term “Trade” in this US market – yesterday’s highs sucked a lot of people in at the high end of a straightforward trading range that we have been locking in for the last 6 weeks.

Keith R. McCullough
CEO / Chief Investment Officer