Troubled Times

Client Talking Points

Flash In The Pan

One day, things are groovy, the next, they aren’t. Case in point: the stock market. Yesterday’s sell off was a reminder that markets just don’t go up and to the right in a continual, straight line. People sell ‘em on some days and yesterday was one of those days. But seeing as how we are in a bull market, the sell off was short-lived. Today, the futures are back up and ready to rocket higher. Fund flows are still headed to US equities and bonds continue to get crushed.

Problematic Politicians

Europe is back in focus with the Spanish 10-year bond offering up a yield of 5.44%, up from 4.95% on January 14. European debt markets are getting shaky again as more problems arise in the Eurozone. Between allegations that the Prime Minister of Spain has been taking kickbacks for ten years and French President Francois Hollande saying that the markets shouldn’t dictate the price of  the Euro, there is much to be worried about. Throw in Japan and Taro Aso’s mission to destroy the Yen and you’ll realize that the currency wars are in full effect.

Asset Allocation

CASH 42% US EQUITIES 18%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 20%

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.

FDX

With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view.

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

“The concept of #timestamps means you don't have to lie about your positions - everyone knows them” -@KeithMcCullough

QUOTE OF THE DAY

“Society, my dear, is like salt water, good to swim in but hard to swallow.” -Arthur Stringer

STAT OF THE DAY

Redbook Retail Sales w/e Feb 3rd: 1.5% y/y prior; Jan MTD: -0.6% m/m prior, Jan MTD: 1.8% y/y prior


Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more