Cliffs And Peaks


Hedgeye CEO Keith McCullough appeared on CNBC's Fast Money this evening to discuss the fiscal cliff and whether or not corporate earnings have peaked. Our view since March has been that global growth and earnings are slowing; the sell-side essentially took the contra view on global growth and tried to cover up by stating that earnings would be fine. It shows how the sell-side's business model is fading and how desperate Old Wall is trying to save face.


As far as the fiscal cliff goes, the likelihood of politicians in Washington working together has the same chance as the Dow hitting 30,000 by year end. 


Watch the video clip we've posted for Keith's full take on the market and the cliff.


Takeaway: We apologize for the inconvenience, the Agricultural Call will be held tomorrow at 11am EST, the dial-in information will remain the same.

Please CLICK HERE to access the presentation. Dial in 5-10 minutes prior to the 11:00am EST start time using the number provided below. If you have any further questions email .

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Restaurant Tickers Affected:



Food Processing Tickers Affected:



Tomorrow, December 5th, at 11:00am EST the Hedgeye Macro Team and Restaurants Team will be hosting an Agricultural and Consumer Economics Expert Call with Professor Darrel Good of the University of Illinois. Good has been part of the faculty since 1976 and took part in developing a comprehensive farm risk management website ( His efforts are now focused on the performance of grain futures contracts as well as corn and soybean yield trends. 


Topics will include: 

  • Supply side - planting intentions and farmer's economics
  • Demand side - key drivers of demand - ethanol, protein, consumption (domestic and abroad)
  • General long-term trends to think about for farming - utilization, fertilizers, seed evolution
  • Thoughts on USDA projections, and their historical accuracy and what the implications are now
  • View on supply, demand, key drivers and prices for:
    • Corn
    • Wheat
    • Soybeans
    • Cattle
    • Chicken  


Good's Background

Darrel Good has a comprehensive understanding of the agricultural markets and economic implications. "There was a time period in the early seventies when grain markets changed dramatically," said Good. "Russia started importing grain, prices just exploded to the upside and there was renewed interest in markets and prices. I was hired to help develop a very extensive educational program in marketing and risk management."  

  • Professor in the department of Agricultural and Consumer Economics, is marking his 33rd year with the University of Illinois
  • Good and two other faculty members developed a seminar called "Price Forecasting and Sales Management"
  • One of the founding members of the farmdoc team
  • He writes one of the featured newsletters on the farmdoc site, Weekly OUTLOOK , and he is a primary contributor to the AgMAS section
  • Current research includes:
    • Evaluation of the pricing performance of agricultural market advisory services
    • Evaluation of USDA production and price forecasts
    • Evaluation of pricing performance of Illinois corn and soybean producers  


Buy Consumer: SP500 Levels, Refreshed

Takeaway: If oil (and food) continues to deflate, consumers get a real-time tax cut. That’s bullish, for consumers.

This note was originally published December 04, 2012 at 11:00 in Macro

POSITIONS: Long Consumer Discretionary (XLY), Short Industrials (XLI) and Utilities (XLU)


I have no idea what the next government catalyst is going to be, but those who begged for more government have no business whining about it.


The only thing I know is that if oil (and food) continues to deflate, consumers get a real-time tax cut. That’s bullish, for consumers. Period.


Across our core risk management durations, here are the lines that matter to me most:


  1. Intermediate-term TREND resistance = 1419
  2. Immediate-term TRADE support = 1404
  3. Long-term TAIL support = 1366


In other words, if 1404 holds, a re-test of 1419 on the upside is probable. A close above 1419 would be explicitly bullish. On the downside, if 1404 doesn’t hold, it’s a long way to 1366. But that long-term TAIL support is good to have underneath.


Keep moving out there,




Keith R. McCullough
Chief Executive Officer


Buy Consumer: SP500 Levels, Refreshed - SPX

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Golden Dollars

Over the last three years, gold has slowly built its way up in price as the US dollar is devalued by the Federal Reserve. In August of this year, the dollar began a particularly nasty decline while gold sought out a meteoric rise. Remember: get the dollar right and you get a lot of other things right. This applies to gold which has been rising over the past week (save for today's sell off) thanks to weakness in the dollar.


Golden Dollars - goldusd

URBN: Idea Alert

Takeaway: We think this high quality turnaround story is still in the early stages and expect upward earnings revisions ahead in 2013.

We’re adding URBN to the long-side of our Real-Time Positions yet again. We think this high quality turnaround story is still in the early stages. The long term story has not changed, but the near-term setup has. Buying on Red.


We published it first on 3/22 with the stock at $28. Then again at $26 on 5/22. Today we have an opportunity to publish it again in the wake of a 'less than breathtaking' quarter. Though we think we'll have the opportunity to remind you of our thoughts again 20% higher a year out. 

Underlying business trends came in largely as expected in the most recent 3Q, but importantly posted continued improvement in fundamentals. Importantly, Anthro is reaccelerating headed into a highly anticipated holiday season for the brand. With a rebound in comps along with new store, online, and international growth opportunities, we see a sustainable return to low double-digit top-line growth. Moderating markdown rates coupled with tighter inventories (see SIGMA below) is gross margin bullish at the same time the company is beginning to leverage its investment spending including its new DC. This call isn’t predicated on a return to prior peak margins (18%+) to work. In fact, we’re shaking out at +/- 16% margins over the next two years which will likely prove conservative.

The reality is that sentiment is still not overly bullish with 46% Buy ratings from the 31 firms that cover the name. While modestly more bullish than the 43% Buy rating mix YTD, it’s well below the 60%-80% mix from 2008 through 2010.

We’re shaking out ahead of the Street in the upcoming quarter as well as +12% and +20% above consensus EPS in 2013 and 2014 respectively. After nearly two years of declining estimate revisions, we think we’re at an inflection point of what we expect to be multiple upward earnings revisions in 2013. It's not cheap, and it’s a slow grind to full recovery. But from where we sit, boring can still work. 


URBN Risk Management Levels:


URBN: Idea Alert - URBN TTT levels


URBN SIGMA is back in the sweet spot (sales outpacing inventory growth with margins expanding):




Housing: Positive Outcomes

Yet another positive data point for the housing market this week as the latest foreclosure numbers from CoreLogic show distressed housing supply continuing to shrink. October foreclosures fell to 58,000 from 70,000 in October 2011 showing a year-over-year decline of 17%. The number of mortgaged homes relative to foreclosures has been steadily increasing and we see that as an ongoing positive development.


Housing: Positive Outcomes - housing

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