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Client Talking Points

YEN

The big move this week definitely caught me off guard. The question now becomes are we past the maximum, short-term "Yen short/Nikkei long" pain? At 96.16, Yen (vs USD) is 3.1 standard deviations oversold in my model. Rest assured, that doesn’t happen very often. In addition, the Nikkei is holding TREND support of 13,445. So yes, I am tempted to buy back the DXJ on that. Waiting on the signal.

EUROPE

European Equities are behaving quite well in the face of this 2-day -5.6% Nikkei drop. Both the FTSE and DAX are still looking healthy on both our TRADE and TREND durations. Russia? Not so much. It is leading the losers again down -0.4% (-12.5% year-to-date) as Brent breaks down below my $107.71 TAIL risk line again. 

COPPER

Looks like someone overstayed their welcome on the short side of copper. It's ripping. The net short position out there is almost at its peak, so I’ll call most of this move short covering. But I could change my mind on that. Please go ahead and ping me if you have any ideas on why it should breakout above its $3.31 TREND line. 

Asset Allocation

CASH 33% US EQUITIES 26%
INTL EQUITIES 19% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 22%

Top Long Ideas

Company Ticker Sector Duration
WWW

WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow. We think that the prevailing bearish view is very backward looking and leaves out a big piece of the WWW story, which is that integration of these brands into the WWW portfolio will allow the former PLG group to achieve what it could not under its former owner (most notably – international growth, and leverage a more diverse selling infrastructure in the US). Furthermore it will grow without needing to add the capital we’d otherwise expect as a stand-alone company – especially given WWW’s consolidation from four divisions into three -- which improves asset turns and financial returns.

MPEL

Gaming, Leisure & Lodging sector head Todd Jordan says Melco International Entertainment stands to benefit from a major new European casino rollout.  An MPEL controlling entity, Melco International Development, is eyeing participation in a US$1 billion gaming project in Barcelona.  The new project, to be called “BCN World,” will start with a single resort with 1,100 hotel beds, a casino, and a theater.  Longer term, the objective is for BCN World to have six resorts.  The first property is scheduled to open for business in 2016. 

HCA

Health Care sector head Tom Tobin has identified a number of tailwinds in the near and longer term that act as tailwinds to the hospital industry, and HCA in particular. This includes: Utilization, Maternity Trends as well as Pent-Up Demand and Acuity. The demographic shift towards more health care – driven by a gradually improving economy, improving employment trends, and accelerating new household formation and births – is a meaningful Macro factor and likely to lead to improving revenue and volume trends moving forward.  Near-term market mayhem should not hamper this  trend, even if it means slightly higher borrowing costs for hospitals down the road. 

Three for the Road

TWEET OF THE DAY

BREAKING: the SP500 has corrected 1.1% from its all time high; time to freak @KeithMcCullough

QUOTE OF THE DAY

"Mr Bernanke’s exit plan apparently is that he is going to leave his job. He doesn’t want to stick around for the hangover. He doesn’t want to be around for the consequences of what he’s doing." - Jimmy Rogers

STAT OF THE DAY

Shares of Tesla Inc (TSLA) are surging over 15% in premarket trading this morning after the electric car-maker swung to a surprise profit in results released yesterday. The company posted an adjusted profit of 20 cents a share for Q2 and revenue that surged to $405.1M from $26.7M.