• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Client Talking Points

Shifting Expectations

By now it’s pretty obvious that one of our big Q4 Macro themes, #EarningsSlowing, has taken effect and is widespread throughout the market. What’s interesting is that while we’ve been shouting about this since late February, the Old Wall is finally changing their stance on earnings. Consensus numbers and price targets are shifting at the banks and brokers; only took them nearly a year to get it right.

The Bernanke Top

Some people will tell you that stocks are “cheap” here. We say “they can get cheaper” because they can. Take technology for instance. Since the Bernanke Top (September 2012), the XLK ETF is down -10%, AAPL is down -14% and AMZN is down -15%. And on top of it, they’re missing on earnings. So while you might want to rush in and be a buyer, we warn that technology can get a lot cheaper. 

Asset Allocation

CASH 64% US EQUITIES 3%
INTL EQUITIES 0% COMMODITIES 0%
FIXED INCOME 18% INTL CURRENCIES 15%

Top Long Ideas

Company Ticker Sector Duration
EAT

Remains our top long in casual dining as new sales layers (pizza) and strong-performing remodels (~5% comps) should maintain sales momentum. The company is continuing to enhance returns for shareholders through share buybacks . The stock trades at a discount to DIN (7.7x vs 9.3x EV/EBITDA) and in line with the group at 7.3x.

PCAR

Emissions regulations in the US focusing on greenhouse gases should end the disruptive pre-buy cycle and allow PCAR to improve margins. Improved capacity utilization, truck fleet aging, and less volatile used truck prices all should support higher long-run profitability. In the near-term, Paccar may benefit from engine certification issues at Navistar, allowing it to gain market share. Longer-term, Paccar enjos a strong position in a structurally advantaged industry and an attractive valuation.

HCA

While political and reimbursement risk will remain near-term concerns, on the fundamental side we continue to expect accelerating outpatient growth alongside further strength in pricing as acuity improves thru 1Q13. Flu trends may provide an incremental benefit on the quarter and our expectation for a birth recovery should support patient surgery growth over the intermediate term. Supply costs should remain a source of topline & earnings upside going forward.

Three for the Road

TWEET OF THE DAY

“The problem with political jokes is they get elected.” -@Giggles270346

QUOTE OF THE DAY

“History is the version of past events that people have decided to agree upon.” -Napoleon Bonaparte

STAT OF THE DAY

Apple profit rises 24% on iPhone sales.