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Keith's Top-5 Tweets Today

Takeaway: A quick look at some of Keith's top tweets today.

What you need to be bullish on is $MD - get out there and love someone

@KeithMcCullough 2:41 PM

 

Treasuries still act like death; bond yields breaking out is a pro-growth signal

@KeithMcCullough 2:39 PM

 

At the highs of the day we shorted $OIL today - so we get the short selling thing - we like those that work

@KeithMcCullough 2:22 PM

 

I realize that some of you will feel uneasy being part of a cult, but wearing the frayed jorts is mandatory

@KeithMcCullough 9:28 AM

 

Just a friendly reminder to the housing bears - you said y/y US Home prices would be up +5-6%- already running 2x that

@KeithMcCullough 8:59 AM

 

Keith's Top-5 Tweets Today - twitter


Long CAT? Be Careful

Takeaway: The chart below suggests caution is in order for Caterpillar longs.

Long CAT? Be Careful - Cat 789D

 

For CAT longs, the renewed slide in iron ore prices should be a cause for concern. 

 

Recently, iron ore has been a key correlate for the relative performance of shares, as iron ore mine expansions are a major end-market.  We believe CAT and other capital equipment suppliers to resource-related industries are in the midst of a long and significant decline in demand as resource capital spending returns to normal (i.e. not far from depreciation) levels.

 

Long CAT? Be Careful - qqqqq2 large


Housing's Parabola & The Household Balance Sheet Recovery

Takeaway: Corelogic HPI data for April/May showed housing's parabolic recovery remains ongoing. Household net wealth set for new highs in 1Q13.

Yesterday we highlighted the expedited back-up in mortgage rates as an emergent headwind to the sustainability of housing’s accelerating  recovery.  While higher rates do represent a drag on affordability, in the more immediate term, housing’s momentum is showing no signs of deceleration. 

 

This morning’s Corelogic Home Price Index showed home prices accelerating to +12.14% Y/Y in April with the Preliminary May estimate reflecting further acceleration to 13.2% Y/Y.  Moreover, the M/M Home Price changes observed in April and May represented the fastest rates of appreciation in the last 20 years, inclusive of the 2004-2006 bubble period.  In short, the recovery in housing remains almost perfectly parabolic at present.   

 

Relatedly, ongoing home and financial asset price re-flation continue to drive the Household balance sheet recovery and should serve to further support consumption as the wealth effect increasingly manifests (see Here for fuller discussion of housing’s wealth effect) alongside rising confidence and domestic labor market strength.  

 

Collectively, Real estate and Equities (Corporate Equities & Mutual Fund shares), represented ~44% of Household assets as of 4Q12 and have appreciated ~10% and ~12% year-over-year in 1Q13, respectively.  Given the magnitude of Q/Q and Y/Y real estate and financial asset appreciation, even under aggressive assumptions for growth in Household liabilities,  the Fed’s Flow of Funds report scheduled for release on Thursday should reflect further acceleration and another new, nominal high, in Household Net Worth in 1Q13.  

 

In addition to driving some manner of wealth effect, the strengthening of the Household balance sheet and rising net wealth are supportive of credit expansion, on the margin, as household capacity for credit increases alongside rising collateral values.  A positive change in the flow of net new credit would provide an incremental tailwind to consumption growth as well.   

 

We’ll follow up with any notable highlights from the Flow of Funds release on Thursday.  

 

Housing's Parabola & The Household Balance Sheet Recovery - Corelogic May Prelim 060313

 

Housing's Parabola & The Household Balance Sheet Recovery - Household Balance Sheet 1Q13E

 

 

Christian B. Drake

Senior Analyst 



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RETAIL: DG ≠ Consumer Spending

Takeaway: DG's blowup is coming at the same time we're seeing the best ICSC reading in yrs. We think the latter is a better barometer for the consumer

This note was originally published June 04, 2013 at 13:59 in Retail

Don't let Dollar General's weak results today fool you. Consumption is not rolling over en masse. In fact, today's ICSC reading -- which is based on a sample of 80 store chains spanning different demographic groups -- reported the best trends we've seen in over two-years. The results on a 1-week, 3-week, and 12-week basis all turned up sequentially with this morning's reading, which supports Hedgeye's bullish stance on the US Consumer.

 

1-WEEK ICSC INDEX % CHG

RETAIL:  DG ≠ Consumer Spending - 1wk large

 

3-WEEK ICSC INDEX % CHG

 RETAIL:  DG ≠ Consumer Spending - 3wk

 

12-WEEK ICSC INDEX % CHG

RETAIL:  DG ≠ Consumer Spending - 12wk


RETAIL: DG ≠ Consumer Spending

Takeaway: DG's blowup is coming at the same time we're seeing the best ICSC reading in yrs. We think the latter is a better barometer for the consumer

Don't let Dollar General's weak results today fool you. Consumption is not rolling over en masse. In fact, today's ICSC reading -- which is based on a sample of 80 store chains spanning different demographic groups -- reported the best trends we've seen in over two-years. The results on a 1-week, 3-week, and 12-week basis all turned up sequentially with this morning's reading, which supports Hedgeye's bullish stance on the US Consumer.

 

1-WEEK ICSC INDEX % CHG

RETAIL:  DG ≠ Consumer Spending - 1wk

 

3-WEEK ICSC INDEX % CHG

 RETAIL:  DG ≠ Consumer Spending - 3wk

 

12-WEEK ICSC INDEX % CHG

RETAIL:  DG ≠ Consumer Spending - 12wk


CHART DU JOUR: THE MOBILE IMPACT ON IGT’S DOUBLEDOWN

Can’t just look at Facebook users anymore

 

  • Despite Zynga’s soft outlook on bookings, we believe DoubleDown is more insulated given its growth opportunities outside of Facebook, particularly in mobile applications
  • Calendar Q2-to date, we believe DoubleDown DAU Facebook users have declined sequentially in the mid-single digits
  • However, we believe the mobile ramp is on schedule, and the divergence between Facebook-sourced DD users and overall DD users will widen in the coming quarters
  • Last quarter, DoubleDown reported 1.69 million Daily Active Users in calendar 1Q 2013, +100k users higher than its tracked users through Facebook  

CHART DU JOUR: THE MOBILE IMPACT ON IGT’S DOUBLEDOWN - dd


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