prev

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY

Takeaway: Initial claims were unusually strong today, yes, just as they were this time last year. Here's what to expect.

I Know I've Seen This Before ...

Initial jobless claims posted their largest 1-week decline since this same week last year. Claims fell 37k to 335k. For reference, in the corresponding week in 2012, claims fell 46k (to 356k) only to then bounce higher by 23k in the following week. That said, in the five weeks that followed that 23k bounce, claims trended lower by a further 25k. This is precisely the Jan/Feb tailwind we've been describing, and why we would expect a bonce in claims next week, but a strong tailwind to re-emerge through February-end.

 

Beginning in March and running through August, initial jobless claims will shift from having the wind at their back to the wind at their front. The effect will be subtle at first, but it will build compounding momentum. We'd expect the next six weeks of strong tailwinds (next week notwithstanding) to fuel the rally in Financials.

 

The Numbers

Prior to revision, initial jobless claims fell 36k to 335k from 371k WoW, as the prior week's number was revised up by 1k to 372k.

The headline (unrevised) number shows claims were lower by 37k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -6.75k WoW to 359k.

 

The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -7.0% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -9.7%

 

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - chart 1

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - chart 2

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - chart 3

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - chart 4

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - chart 5

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - Chart 6

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - Chart 7

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - Chart 8

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - Chart 9

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - Chart 10

 

INITIAL CLAIMS TAKE THEIR CUES FROM 2012, FOLLOWING LAST YEAR'S PATTERN TO THE DAY - Chart 11

 

 

Joshua Steiner, CFA

 

 


UNH: Caveat Emptor

When United Healthcare (UNH) reported earnings this morning that were in line with expectations but also showed rising costs, that might have surprised some on Wall Street, but not Hedgeye Healthcare Sector Head Tom Tobin. UNH has been one of Tobin’s top short ideas.  The story hasn’t played out yet, but it is beginning to, and there were several negative signals in today’s earnings release, so stay tuned.

 

UNH: Caveat Emptor - UNH   Benefit Expense PPRD adjusted

 

Tobin’s research led him to expect rising costs for UNH, which in turn would put pressure on the company’s margins. That’s essentially what today’s earnings report showed and he expects it to get worse from here.

 

Here’s a link to a story we posted last week, which detailed Tobin’s thesis.

 

UNH: Caveat Emptor - UNH   EPS Beat


CHART DU JOUR: REVPAR ACCELERATION

Takeaway: Positive momentum for H, HOT, MAR, and HST

Our math shows RevPAR accelerating December through February

 

  • December was a good month for hotels with Upper Upscale RevPAR likely up double digits
  • We expect the positive momentum to continue through Q1 with projected RevPAR up 8%, 9%, 6% and 8% in Jan, Feb, Mar, and Apr, respectively.
  • We believe consensus Q1 RevPAR expectations are for 5% YoY growth.  If we're right on RevPAR, hotel stocks could continue to move higher

 

<chart2>


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.

HOUSING: Jump Start The Market

An explosive jump in housing starts was revealed today as US builders broke ground on more homes in December than in November as builders began construction of houses and apartments at a seasonally adjusted annual rate of 954,000. 

 

Additionally, US homebuilder confidence reached a seven-year high; the NAHB/Wells Fargo Housing Market index was at 47 this month, the highest level since April 2006. The recent tailwinds in housing, such as yesterday's surge in mortgage applications, coincide with our Q1 2013 Global Macro Theme of #HousingsHammer. With plenty of positive data lifting housing, it’s clear that the best is yet to come.

 

HOUSING: Jump Start The Market - image015


Top Of The Morning

Client Talking Points

The Low Down

1466-1478 is our risk range for the S&P 500 today. There is plenty of opportunity here to make some sales and take some profits. Buying tops isn’t cool, because that’s when you get smoked and get a margin call from your broker. It’s important to manage the risk and the range of your trades because despite what the Federal Reserve is capable of, the market doesn’t just go up and to the right all the time. Our S&P Sector Model isn’t "perfectly bullish" as it has been recently and combined with yesterday’s close (the Russell 2000 didn’t make another new all-time high), it’s important to realize that the market can get nervous and dive lower. Proceed with caution out there today. 

VIX Tricks

The VIX has been getting hammered nearly every day over the past few weeks as the stock market rose towards infinity and beyond (Sorry, Buzz). We’ll be keeping an eye on it since the VIX signaled immediate-term TRADE oversold at 13.16. When the VIX is at levels this low, there's plenty of risk for a move to the downside in equities.

Asset Allocation

CASH 52% US EQUITIES 15%
INTL EQUITIES 15% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 18%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

ADM

ADM has significantly lagged the overall market in 2012 over concerns that weakness in the company’s bioproducts (ethanol) and merchandise and handling segment will persist. Ethanol margins suffered from higher corn costs, as well as weak domestic demand and low capacity utilization across the industry. Merchandising and handling results were at the mercy of a smaller U.S. corn harvest. Both segments could be in a position to rebound as we move into 2013 and a new crop goes into the ground. With corn prices remaining at elevated levels, the incentive to plant corn certainly exists, and we expect that we will see corn planted fencepost to fencepost.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

“Mantei T'eo will be confessing to Oprah in less than a month ...” -@nickragone2

QUOTE OF THE DAY

“Victory goes to the player who makes the next-to-last mistake.” -Grigorievitch Tartakower

STAT OF THE DAY

Jobless claims drop to five-year low: Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000.


THE M3: NEW RESIDENTIAL SALES; SMOKING FINES; FEWER GAMING TABLES; S'PORE NEW MRT LINES

The Macau Metro Monitor, January 17, 2013

 

 

FOUNTAINSIDE'S NEW PHASE UP FOR SALE macaubusiness.com

In 2Q13, another phase of Fountainside's residential units will go up for sale.  The developer Macau Property Opportunities Fund expects that the 42 units will be complete by March.  20 of the units have already been sold and the remaining 18 flats and 4 villas are expected to fetch an average US$800 (MOP 6,400) and US$1,400 per square foot, respectively. 

 

ALMOST 9,000 FINED FOR SMOKING IN PUBLIC AREAS macaubusiness.com

A total of 8,913 people have been fined for breaking the city's smoking ban since January 1st. 

 

FEWER GAMING TABLES IN Q4, SLIGHT REVENUE INCREASE macaudailytimes.com

According to the DICJ, at 5,485, there were 12 fewer tables in 4Q than in 3Q. The number slots decreased by 444 to a total of 16,585 units. Despite sequential drop in number of tables and slots, gross gaming revenues grew 0.8% QoQ. 

 

S'PORE TO HAVE TWO NEW MRT LINES BY 2030 channelasia.com

Following a review of the Land Transport Master Plan by the Land Transport Authority (LTA), it was announced that Singapore will have 2 new MRT lines and extend the 3 existing lines.  The new lines are Cross Island Line (CRL) and Jurong Region Line (JRL), both of which are expected to be completed by 2030. The extension of the 3 existing lines is expected to be completed by 2025.


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 80.33%
  • SHORT SIGNALS 78.49%
next