Outlook a little worse



"The steady drumbeat of negative news emanating out of Europe is certainly having an impact.  As a result, we are seeing pluses and minuses in the different geographical markets – North America is holding up reasonably well; Asia is a big plus; but Europe is a pretty consistent minus.  Overall we have seen about a 100 basis point drop in our yield projections, but we expect to offset over half of this decline with lower spending."


-Richard Fain




  • Frustrated with results
  • Caribbean continues to be solid.  Alaska holding reasonably well but has slightly underperformed. Asia revenue yields were great (had easy comps).
  • European pressures and underperformance stand alone;  cost-cutting will continue to offset the weakness.
  • Q2 like for like yields (ex deployment changes) were up 1.7%
  • Ticket yields were slightly ahead of forecasts, driven by Asia 
    • Caribbean yields were up 7%
    • Europe yields were lower but not as low as Q1
  • Onboard revs
    • Increased modestly but less than RCL forecasted
  • Booking window for NA and other non-European countries was the same YoY
  • Closer in booking windows in key European markets, particularly Southern Europe
  • Load factors improved as Q2 progressed but ended a little lower YoY
  • Q3: booked APD is lower YoY as Europe discounting has picked up
    • Alaska prices have been reduced recently, but considering a record year in 2011, the performance is still pretty good
  • Q4: hope to be yield positive; APD has been stable
  • Excluding European, FY 2012 ticket yields are expected to increase 5-6% YoY (over last 3 months, forecast has been stable)
  • Increased revolver capacity by $225MM
  • % of repeat cruisers has been slightly elevated compared to prior years
  • Capacity % impact from deployment of Mariner of the Seas to China:  large increase in Asia, small increase in Caribbean, decrease in Europe
  • A number of on board areas contributed to the positive momentum, offset by year-over-year decrease in gaming spend. In addition to Americans spending more on a year-over-year basis, they continue to improve ability to generate higher on board spend from guests in many of our priority markets.
  • Saw decreased year-over-year spend from guests from the major Southern European markets. 




  • New ship order upcoming? 
    • Are looking but in today's market, you couldn't get a ship before 2016
  • Europe has required more discounting than expected
  • Alaska has been more discounting than expected
  • Q4 guidance:  Low-single digit constant-currency yield
  • Q3 % booked are lower than what's expected based on historical data
  • Q4 % booked are better than what's expected based on historical data
  • Order book solid in 2013
  • More contraction in booking window in Southern Europe relative to Northern Europe
  • Voyager of the Seas has gotten good reception in Asia
  • 10% YoY decrease in Europe capacity in 2013
  • Not afraid having more capacity in a market (Asia) that is getting very robust rates, but those rates may be stable instead of going up.
  • 2013 European capacity growth: 1% in 1Q; 32% in 2Q; 49% in 3Q; 24% in 4Q; overall: 27%
  • FY 2012 capacity: 42-43% Caribbean, 30% Europe, 8% Asia, 4% Alaska, 15-16% other itineraries 
  • Too early to speculate when Europe will recover
  • Pullmantour:  very challenging Spanish market
    • Currently 40% Spanish customer base, down from 87% historically; some shift to South America customer base
  • Europe airfare has been an impediment for sourcing US passengers
    • But on European cruises, % of NA customers have increased by a few % points from their original forecast
    • Have been able to drive late business in Europe at a discounted rate but with good volume across all European markets
  • Less aggressive hedging on new build costs since they are bearish on Euro
  • Have been investing in information technology area
  • Caribbean yields are higher than peak 2008 levels
  • Capacity hole in Europe: Volumes need to be higher (August/Sept/Oct). They need to find that volume but believe they are finding it.
  • Marketing efforts increased in Southern Europe, doesn't really have much an impact on market share
  • FY 2013 cost impact on the 2012 deployment changes: neutral impact
  • FY 2013 not a big shift in deployment between Northern and Southern Europe itineraries.





  • "Since the April guidance, the strengthening of the U.S. Dollar has reduced the company's full year outlook by approximately $0.13 per share.  This outlook reduction has been largely offset by the reduction in bunker pricing that occurred during this same time period.  The net effect of these currency and fuel price changes is essentially neutral for the company's full year earnings outlook."
  • "Overall, booking trends have continued to normalize and are now running at levels comparable to prior year's activity."
  • "Larger than expected discounting has been required for the European season which has lowered the midpoint of the company's Constant-Currency Net Yield expectations for the year by approximately 1% point from the April guidance."
  • Forecasted consumption is now 58% hedged via swaps for the remainder of 2012 and 54%, 38%,  22% and 7% hedged for 2013, 2014, 2015 and 2016, respectively.  For the same five-year period, the average cost per metric ton of the hedge portfolio is approximately $526, $568, $619, $595 and $582, respectively. 
  • Currently has options expiring in 2013 at a strike price of $90 bbl that cover an estimated 9% of 2013 consumption. 
  • Q2 Cash+ undrawn RC: $1 billion (currently at $1.6bn)
  • The company has utilized a portion of the accordion feature on its revolving credit facility due July 2016 which increased the size of the facility from $875 million to $1.1 billion.  The company has also closed on a €365 million, delayed draw (June 2013) five-year unsecured bank loan facility.  The combination of these actions provide liquidity of approximately $600 million and has been done primarily as part of the company's refinancing strategy to prepare for bond maturities in 2013 and 2014.
  • Additionally, the company has committed unsecured financing on its newbuilds.  The company noted that debt maturities for 2012, 2013, and 2014 are $600 million, $1.6 billion, and $1.9 billion, respectively.  
  • Capex guidance:  2012, 2013, 2014 and 2015 are $1.3 billion, $600 million, $1.1 billion and $1.0 billion, respectively. 
  • Capacity guidance: 2012, 2013, 2014 and 2015 are 1.5%, 1.1%, 1.0% and 6.6%, respectively.

Save The World







In the game of inflation, you’ve got to control it enough so that there’s some kind of outright riot among the people and their government, You reach a point where food prices and oil prices become way to high for anyone, Think China is going to cut rates anytime soon? Not a chance. As a result, Chinese equities are going to have to endure a beating until we reach a point of stability that everyone is comfortable with.



A box of short-termism. All we care about is the now and not the consequences that might affect us down the road. Yes, it’s corporate earnings season and yes, company XYZ got lucky on a beat. But really, a companies are missing out there. They are not meeting consensus and whoosh – down they go. Corporate revenues are looking a lot like they were in Q3 2008. But nevermind. All we need is a little hope that Fed Chairman Ben Bernanke (who is basically out of bullets), will ease further. Then the market is A-OK and good for another 20 handle rally in the morning, followed by an afternoon selloff.



Big news out of Europe this morning. European Central Bank Chief Mario Draghi came out and said that he’s ready to do whatever it takes to save the Euro. Talk about a catalyst. Markets immediately responded positively to the news. The ECB may go and pull a Fed by going into the markets to buy bonds to quell fears over the situations in Spain, Italy, etc.




Cash:  Flat                      U.S. Equities: Up


Int'l Equities: Flat            Commodities: Flat


Fixed Income: Down        Int'l Currencies: Flat





This company is transitioning from cash burn to $75mm annual free cash flow generation thanks to completion of a reimaging program and refranchising of JIB units. Qdoba is the leverage; a maturing and growing store base will bring higher margins. We see 8.5% upside over the next 6-9 months.




TAIL: LONG            



SS volume accelerated in 1Q12 and employment remains a tailwind to both admissions & mix. We expect acuity to stabilize and births and outpatient utilization to accelerate out of 1Q12, while supply cost management continues as a margin driver and acquisition opportunities remain a source for upside.







We continue to expect outpatient utilization to pick up in 2H12 alongside stabilization in acuity with ortho and cardiac/ICD volumes supporting both pricing and inpatient admissions growth. Births should serve as a tailwind into year-end, recent and prospective acquisitions offer some upside to 2012/13 numbers and the in place repo offers some earnings flexibility. With European and Asian growth slowing, we like targeted domestic revenue exposure as well.

                                                                                                                                                                        TRADE: NEUTRAL






Tweet of the Day: “Wait. Las Vegas Sands did more Casino Revenue in Bethlehem PA than Las Vegas??!!” -@ThemisSal


Quote of the Day: “Be yourself. The world worships the original.” – Ingrid Bergman


Stat of the Day: Initial jobless claims fell 35,000 last week to 353,000.


FNP: Early Read Very Positive

Conclusion: Better than expected (and much better than broadly feared) numbers from our top long idea. Robust top-line numbers out of FNP. Earnings came in a few pennies better than Street estimates of ($0.13) with no change to the full-year outlook for adjusted EBITDA of $125-$140mm. Underlying comps improved across each of the brands against the toughest comps of the year with both Kate and Lucky tracking well ahead of company expectations. There’s still wood to chop here before year-end on the cost side, but let’s be clear – this quarter represents a very positive update for FNP.

  • Comps by Brand:
    • Kate Spade: Kate (50%+ of EBIT) posted an exceptional quarter with comps up +34% well ahead of our expectations and company plan for high-teens growth for the full-year maintaining underlying two-year trends north of 50%.
    • Lucky Brand: Lucky comps came in up +8% also above our expectations against the toughest compare of the year posting its second consecutive solid result vs last year when the brand really began to emerge. 1H trends here are also tracking ahead of company expectations for low-teen growth for the full year.
    • Juicy Couture: Juicy comps came in down -9%. While the two-year accelerated, this is below expectations. In what might be the only surprise in the numbers, inventories were problematic despite conservative management in 1H – apparently not conservative enough
  • Square Footage Growth: Expect upside to square footage growth opportunities to be a frequent topic of discussion in light of robust sales out of Kate and Lucky where growth will be primarily focused providing further sales upside.
  • SG&A: At 68% of sales, the cost structure remains a work in progress – one that we expect new CFO George Carrera to shed greater detail on the call. But we want to be equally clear on this as well -- this is not a cost-cutting story. Stories where cost cuts drive revenue growth are like Bigfoot. They're talked about but never seen (i.e. JCP).  FNP is investing in its SG&A line, but needs to better leverage those investments in higher sales growth.
  • EBITDA Outlook: No change to full-year expectations of $125-$140mm for the second time in as many quarters. For those familiar with the history of FNP, no change is net positive. With the bulk of profitability generated in 2H it would be premature to suggest this might be conservative, but the likelihood of this range increasing before year-end just improved.
  • Cap Structure: an improvement with excess borrowing capacity at $260mm vs. $210mm due largely to the 10.5% Notes offering intra-quarter provides FNP with added flexibility.

The dial-in for the 10am call is with pass code #99380732.

Casey Flavin



FNP: Early Read Very Positive - FNP Direct Brand Comps 1yr


FNP: Early Read Very Positive - FNP Direct Brand Comps 2yr



get free cartoon of the day!

Start receiving Hedgeye's Cartoon of the Day, an exclusive and humourous take on the market and the economy, delivered every morning to your inbox

By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails.


TODAY’S S&P 500 SET-UP – July 26, 2012

As we look at today’s set up for the S&P 500, the range is 17 points or -0.51% downside to 1331 and 0.76% upside to 1348. 











    • Up versus the prior day’s trading of -1477
  • VOLUME: on 07/25 NYSE 783.50
    • Decrease versus prior day’s trading of -3.08%
  • VIX:  as of 07/25 was at 19.3
    • Decrease versus most recent day’s trading of -5.52%
    • Year-to-date decrease of -17.35%
  • SPX PUT/CALL RATIO: as of 07/25 closed at 1.23
    • Down from the day prior at 2.08


  • TED SPREAD: as of this morning 35
  • 3-MONTH T-BILL YIELD: as of this morning 0.10%
  • 10-Year: as of this morning 1.42%
    • Increase from prior day’s trading at 1.40%
  • YIELD CURVE: as of this morning 1.20
    • Up from prior day’s trading at 1.18 

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30 am: Durable Goods Orders, June, est. 0.3% (prior 1.3%)
  • 8:30 am: Initial Jobless Claims, July 21, est. 380k (prior 386k)
  • 8:30 am: Continuing Claims, July 14, est. 3.3m (prior 3.314m)
  • 9:45 am: Bloomberg Consumer Comfort, July 22 (prior -37.9)
  • 10am: Pending Home Sales M/m, June, est. 0.3% (prior 5.9%)
  • 10am: Pending Home Sales Y/y, June, est. 12.1% (prior 15.3%)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural gas change
  • 11am: Kansas City Fed Manf. Activity, July, est. 4 (prior 3)
  • 11am: U.S. to purchase $1.5-$2b notes due 2/15/36-5/15/42
  • 1pm: U.S. to sell $29b 7-yr notes


    • House, Senate in session
    • First Lady Michelle Obama arrives in U.K. in evening, leading presidential Olympics delegation
    • Treasury Secretary Timothy Geithner testifies at a Senate Banking, Housing and Urban Affairs Committee hearing on the Financial Stability Oversight Council Annual Report to Congress and the London interbank offered rate, 10am
    • House Financial Services subcommittee hearing on the 10th anniversary of the Sarbanes-Oxley Act, 9:30am
    • Senate Judiciary Committee holds hearing on the nomination of William Baer to be an assistant attorney general for the Justice Department’s Antitrust Division, 1pm
    • CFTC’s Technology Advisory Committee meets to develop methods for the CFTC, self-regulatory organizations and futures customers to verify the location and status of funds in segregated accounts, 10am
    • House Ways and Means Committee debates, revises legislation on Russia permanent normal trade relations, matching bill approved by a Senate panel
    • State Dept. advisory panel meets on defense trade, 1:30pm
    • Woodrow Wilson Center holds discussion on U.S.-Canadian efforts to enhance economies in agriculture and food, health and consumer products, transportation and the environment


  • Carlyle, BC Partners agreed to buy United Technologies’s Hamilton Sundstrand industrial unit for $3.46b
  • Rambus lost case against LSI, STMicroelectronics over controllers used in electronics, ITC said
  • Phil Gramm, former senator who helped write 1999 law that enabled creation of financial giants, told Bloomberg News his legislation didn’t make the system any riskier
  • Durable goods orders may climb 0.3%
  • Zynga plunged after cutting yr forecast
  • BTIG analyst apologizes after results, cuts Zynga to neutral
  • Facebook implied volatility plunged 10% on July 24 from record high, falling at the fastest rate ever, trading in options market shows; reports today
  • Large-city foreclosure filings climbed almost 60% in 1H 2012: RealtyTrac
  • J.C. Penney ready to make deep price cuts to most goods: WSJ
  • Alcatel-Lucent to slash 5,000 jobs after slumping to loss
  • International Grains Council monthly crop report (9:30am ET)
  • Apple senior executives Scott Forstall, Phil Schiller among officials the company said will be called to testify at patent trial against Samsung Electronics set to begin July 30
  • Samsung sought court order to prevent Apple from presenting evidence of Samsung’s overall rev., profits and wealth at trial
  • Facebook said to be working with HTC to build its own smartphone for release as soon as mid-2013
  • BlackRock, Fidelity and Vanguard gauging how their clients hurt by Libor manipulation, whether to take legal action as at least a dozen banks being investigated for rate-rigging
  • GenOn Energy, NRG Energy sued by shareholder claiming the $1.7b all-stock deal to acquire GenOn undervalues the co.
  • U.S. Navy underestimating cost of its proposed 30-year shipbuilding program by 19%, Congressional Budget Office said in report yesterday


    • Iron Mountain (IRM) 6am, $0.31
    • Patterson-UTI Energy (PTEN) 6am, $0.44
    • Starwood Hotels & Resorts Worldwide (HOT) 6am, $0.62
    • Ball (BLL) 6am, $0.87
    • MetroPCS Communications (PCS) 6am, $0.21
    • Covidien (COV) 6am, $1.06
    • Potash of Saskatchewan (POT CN) 6am, $1.02; Preview
    • Mylan (MYL) 6am, $0.55
    • Ashland (ASH) 6:01am, $1.80
    • PulteGroup (PHM) 6:30am, $0.05; Preview
    • Bunge Ltd (BG) 6:30am, $1.36
    • L-3 Communications Holdings (LLL) 6:30am, $1.88
    • Barrick Gold (ABX CN) 6:55am, $0.93; Preview
    • United Technologies (UTX) 6:59am, $1.42; Preview
    • AmerisourceBergen (ABC) 7am, $0.69; Preview
    • Moody’s (MCO) 7am, $0.71
    • Raytheon Co (RTN) 7am, $1.22
    • Zimmer Holdings (ZMH) 7am, $1.32
    • Boston Scientific (BSX) 7am, $0.11; Preview
    • Sprint Nextel (S) 7am, $(0.41); Preview
    • Hershey (HSY) 7am, $0.61
    • Colgate-Palmolive Co (CL) 7am, $1.33; Preview
    • CME Group (CME) 7am, $0.83
    • Consol Energy (CNX) 7am, $0.32
    • Dow Chemical (DOW) 7am, $0.64
    • National Oilwell Varco (NOV) 7am, $1.40
    • Interpublic Group of (IPG) 7am, $0.21
    • International Paper (IP) 7am, $0.46
    • EQT (EQT) 7am, $0.31
    • Lazard (LAZ) 7am, $0.25
    • Watson Pharmaceuticals (WPI) 7am, $1.38
    • Ventas (VTR) 7:02am, $0.92
    • McGraw-Hill (MHP) 7:10am, $0.76
    • 3M (MMM) 7:30am, $1.65; Preview
    • Celgene (CELG) 7:30am, $1.18
    • Mead Johnson Nutrition Co (MJN) 7:30am, $0.77
    • Invesco Ltd (IVZ) 7:30am, $0.43
    • Imax (IMX CN) 7:30am, $0.21
    • Kimberly-Clark (KMB) 7:30am, $1.28
    • Noble Energy (NBL) 7:30am, $0.93
    • Waste Management (WM) 7:30am, $0.52
    • Occidental Petroleum (OXY) 7:30am, $1.61
    • CMS Energy (CMS) 7:30am, $0.38
    • United Continental (UAL) 7:30am, $1.66
    • NextEra Energy (NEE) 7:31am, $1.16
    • Exxon Mobil (XOM) 8am, $1.95
    • BorgWarner (BWA) 8am, $1.37
    • Dr Pepper Snapple Group (DPS) 8am, $0.82
    • Prologis (PLD) 8am, $0.42
    • Marriott Vacations Worldwide (VAC) 8am
    • Precision Castparts (PCP) 8am, $2.36
    • Vulcan Materials (VMC) 8am, $0.06
    • Cameron International (CAM) 8:10am, $0.72
    • New York Times Co (NYT) 8:30am, $0.13
    • Royal Caribbean (RCL) 8:35am, $0.03
    • Imperial Oil (IMO CN) 9am, C$0.81
    • Goldcorp (G CN) Pre-mkt, $0.42; Preview
    • Maxim Integrated Products (MXIM) 4pm, $0.39
    • Facebook (FB) 4pm, $0.11
    • Federated Investors (FII) 4pm, $0.40
    • Principal Financial Group (PFG) 4pm, $0.74
    • Expedia (EXPE) 4pm, $0.72
    • CBL & Associates (CBL) 4pm, $0.49
    • (AMZN) 4:01pm, $0.03
    • Amgen (AMGN) 4:01pm, $1.55; Preview
    • Chubb (CB) 4:01pm, $1.15
    • Cincinnati Financial (CINF) 4:01pm, $0.11
    • Cerner (CERN) 4:01pm, $0.54
    • Global Payments (GPN) 4:01pm, $0.95
    • Coinstar (CSTR) 4:01pm, $1.16
    • Starbucks (SBUX) 4:03pm, $0.45
    • Leggett & Platt (LEG) 4:05pm, $0.36
    • CA (CA) 4:05pm, $0.60
    • Republic Services (RSG) 4:05pm, $0.49
    • Gilead Sciences (GILD) 4:05pm, $0.95
    • McKesson (MCK) 4:10pm, $1.48
    • KLA-Tencor (KLAC) 4:15pm, $1.32
    • Tellabs (TLAB) Post-Mkt 



GOLD – Hilsenrath got some Gold and Oil bulls lathered up with some Qe rumoring, but the US Dollar and TREND levels in both Gold/Oil are saying Bernanke disappoints #BailoutBulls again. If all Bernanke does is more twisting of the curve, that only perpetuates one of the biggest risks I see out there right now, Yield Curve compression.

  • Mr. Titanic Mistry Predicts Sinking Palm-Oil Prices: Commodities
  • Crude Oil Advances in New York After ECB Says Euro Will Survive
  • China Said to Tell Edible-Oil Suppliers to Keep Price Stable
  • Gold Climbs in New York as Draghi Comments Give Boost to Euro
  • Soybeans Decline as Rains Set to Relieve Parched U.S. Fields
  • Sugar Falls to One-Week Low on Brazil Area’s Crop; Coffee Rises
  • Copper Rises as ECB’s Draghi Says the Euro Will Be Supported
  • Hong Kong’s Largest Bullion Vault Signals Rising Asia Wealth
  • Cocoa Getting Boost by Year-End as Factories Erode Butter Glut
  • Western Iowa Corn Yields Seen Plunging 30%: Doane Tour Samples
  • Goldcorp Second-Quarter Profit Misses Estimates as Costs Rise
  • Shell May Have to Trim 2012 Arctic Drilling Amid Delays: Energy
  • Vietnam Coffee Exports May Rise to 130,000 Tons This Month
  • North Dakota Spring, Durum Crops Seen Topping Last Year on Rains
  • Farmers May See Gains Amid Drought With U.S.-Backed Insurance
  • Barrick Gold Quarterly Earnings Miss Estimates as Output Falls










SPAIN – both the IBEX and MIB indexes are now slicing through their May closing lows; they are both crashing (so is Russia, Brazil, etc), but Spain’s is the nastiest, down -33% since March. How’s that short selling ban going?





CHINA – they’re not going to cut rates w/ food/oil prices up here; at least, that’s what the Shanghai Comp thinks, trading down another -0.5% overnight to fresh YTD lows (down -13.7% since May when growth really started slowing faster).










The Hedgeye Macro Team

What's Your Edge?

This note was originally published at 8am on July 12, 2012. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.

“You are on your own and you must take ownership of your own destiny.”

-Hugh Hendry


No, that wasn’t the new marketing pitch from President Obama. That’s from one of Scotland’s finest – the one and only Hugh Hendry. He runs Eclectica Asset Management.


Eclectica isn’t a word that spell-checks on this word processor – that’s why you just have to love the name. This guy couldn’t give 2 deflated Canadian copper cents about what other people think about him and/or his Global Macro process.


For me, this has always meant being detached from the sell-side community. It is not a question of respect, it is just that I prefer not to engage in their perpetual dialogue of determining where the “flow” is. I cannot be reached by telephone… not one buddy, not one phone call, not one instant message. I am not seeking that kind of “edge”…” (Manager Commentary, April 2012)


Back to the Global Macro Grind


What’s our edge? Math.


Every single Global Macro thought, theme, and position we consider putting our name on is driven by what the market tells us. We don’t tell the market what to think. We aren’t that “smart.” The market tells us.


When I started in the hedge fund business in 1998, “smart” meant something that’s a lot different than what it means today. Smart is as performance does. It doesn’t mean coming up with a “value” idea, pitching it to all your favorite “smart” friends (after you bought it), getting them to buy it, and then promoting it on TV.


Modern Global Macro Risk Management (i.e. post 2007) uses computers. I hear a lot of whining about this – “it’s the machines”… I mean get real already. If it’s the machines, hire more super smart people to build better machines to front run the other machines.




Yep, I just wrote that. And I can because A) I don’t run a prop desk B) I don’t run a bank and C) I don’t run a broker-dealer. Front-running the machines is simply having a repeatable math-based decision making process that keeps you 1, 2, and hallelujah if it’s 3 steps ahead of the smartest guys/gals in the room.


In other words, understand what the other machines will act on, and act ahead of their most probable behaviors. If someone legitimately believes that the 50-day Moving Monkey is a risk management process, great. Let them – and more importantly, don’t interrupt them while they get whipped around by it.


Been there, done that.


I saw (I don’t hear, I use Twitter) more “flow” yesterday about the 50-day moving average being “intact” (it’s at 1335) than just about anything that was flowing into yesterday’s market close.


What, precisely, does that mean to people? Do they actually run other people’s money using a 1-factor simple moving average that my 4-year old son could replicate with his iPad and bang out conclusions on any ticker I give him?


That’s the biggest risk to our profession. The simple reality is that, since 2007, a lot of people have not changed what it is that they do. That’s sad and exciting. Sad because sad is as sad does; exciting because it provides for creative destruction – the guts of what we do.


What’s our edge?


Like I said, it’s math. And what I mean by that is that I am constantly re-modeling a baseline 3-factor model with dynamic price, volume, and volatility data across 3 core durations (TRADE, TREND, and TAIL).


Currently, looking at the SP500 for example, here’s what I see:

  1. Intermediate-term TREND resistance overhead (that’s bearish) at 1365
  2. Immediate-term TRADE support below last price (that’s bullish) at 1333
  3. An intermediate-term risk management range of 1286-1365

We’re Duration Agnostic. So you tell me what the duration of your risk is, and we’ll tell you what the risk of the range within your duration is. This gives us a very simplified edge that is our own. Our edge is making decisions at the highest probability points within our defined duration and range. It doesn’t mean we are always right; it means we don’t swing at outside pitches.


Our edge is by no means easy to derive. I have a team of 27 analysts constantly pumping me with quantitative inputs that I can add and/or subtract from our models. Constantly re-modeling; constantly changing – that is what I do. And I’m very humbled by the idea that I can attempt to explain our edge to you each and every day. Being held accountable to our process can only make us better.


My immediate-term support and resistance ranges for Gold, Oil (Brent), US Dollar, EUR/USD, and the SP500 are now $1549-1587, $98.24-103.01, $82.61-83.96, $1.21-1.24, and 1333-1354, respectively.


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


What's Your Edge? - Chart of the Day

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 80.47%
  • SHORT SIGNALS 78.68%