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JCP: Reminder -- Consumer Trend and Liquidity Conference Call

Takeaway: Reminder that today we're hosting a conference call at 11am to discuss our consumer survey on JCP, and it's implication on on liquidity.

JCP: Reminder -- Consumer Trend and Liquidity Conference Call - JCPdialin 08.29.13

 

Please join us for a conference call titled  "JCP: Where is The Consumer and The Cash?" later this morning at 11:00am EDT.The call will take an in-depth look at consumer trends and analyze J.C. Penney's (JCP) current liquidity situation.

  

CALL DETAILS WILL INCLUDE:  

  • We'll debut the results of our extensive consumer survey of JCP shoppers to gain insight into the following:
    • Why consumers left JCP (or spent less while they were there).
    • If they left, where did they take their business (KSS, M, GPS, Other, or Nowhere?)
    • Are they gone forever, or can JCP win them back?
    • What does JCP need to do to win back the business? Are they doing it under Ullman?
    • What do consumers think of redesigned stores, and does it impact their decision to return to JCP?
    • We will present our liquidity sensitivity analysis, and while JCP will cut it close at times, we don't think it is at risk of a material liquidity event.
    • Discuss how liquidity ties in to the timing of a shift to a permanent CEO.
    • Take a detailed look at Gross Margin, which is the one line on the P&L that we think could improve sooner than later.

  

 

DIAL-IN DETAILS:

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 173225#
  • Materials: CLICK HERE (Slides will download approximately one hour prior to the start of the call) 

 

 

CONTACT

For question please email .   

 


Time to Make Some Decisions

So. How does yesterday's -1.6% drop in the S&P 500 look within the context of the Top-3 drops since April? It ranks as #3 (June 20th = -2.5% and April 15th = -2.3%). 

 

Time to Make Some Decisions - bu77

 

The reality is you haven’t had many opportunities to buy US growth stocks in 2013. This one is a shallower correction (on less volume). Meanwhile, S&P 500 TREND support is literally right where it closed yesterday.

 

Incidentally, the II Bull/Bear Spread just tanked to a 6-month low. Only 38% in the survey admit to being bullish. That's a fresh year-to-date low. It has crashed 56% in less than a month. It's also an uber-bullish signal.

 

It's time to make some decisions.

 

Time to Make Some Decisions - hchart1


FDA: An Online E-Cig Ban?

This note was originally published August 23, 2013 at 10:40 in Consumer Staples

Yesterday the Wall Street Journal reported that the FDA is considering a ban on online sales of e-cigs as part of broader regulatory restrictions that are expected to be announced in October.

FDA: An Online E-Cig Ban?  - ecig

What’s Our Take?

  • It wouldn’t be a huge surprise to see online sales of e-cigs banned.  The FDA is well aware how easy it is for consumers to purchase e-cigs online– one simply has to put in a birth date of at least 18 years of age
  • The FDA is also concerned with the appeal of flavored e-cig offerings (like bubble gum or coffee) that may attract a younger demographic
  • Estimates suggest the online e-cig market to be worth ~$500MM of the total $1-1.5B category
  • We expect any restrictions on online sales to favor Lorillard’s Blu e-cig and NJOY (private), the two companies with the greatest retail market share and nationwide presence. [Blu is estimated to have under 20% of its total sale online]
  • Additionally, as RAI (Vuse) and MO (Mark-Ten) expand distribution (they’ve rolled out brands in the last two months across test markets in one state each), we’d expect an online ban to benefit big tobacco due to their retail leverage over smaller e-cig players
  • We expect future FDA regulatory restrictions to include at least advertising (same or more similar standards to traditional tobacco) and nicotine levels (at most equivalence with traditional tobacco) 

 

Matthew Hedrick

Senior Analyst


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Morning Reads on Our Radar Screen

Takeaway: A quick look at some stories on Hedgeye's radar screen.

Keith McCullough – CEO

Crude oil prices reach 18-month high (via WashPost)
China Sets November for Key Economic Meeting for Communist Party (via Bloomberg)
Baghdad hit by new wave of deadly bomb attacks (via BBC)

 

Morning Reads on Our Radar Screen - oil11

 

Todd Jordan – Gaming

Trump Taj Mahal To Open Strip Club (via AP)


Howard Penney – Restaurants

 

Starbucks Won't Cut Worker Hours, Benefits Ahead Of Obamacare (via HuffPost)

Kevin Kaiser – Energy

Syria sends oil to 2-year high, $150 spike feared (via RT)
No Particular Place to Go? What Will Happen to the Tsunami of Marcellus/Utica Ethane Production? (via RBN Energy)

Jonathan Casteleyn – Financials

SEC’s White to Meet With Exchanges on Nasdaq Trading Halt (via Bloomberg)
Putin Filmmaker Says Lonely Leader Scared to Loosen Grip (via Bloomberg)

Brian McGough – Retail

REI Close to Naming Key Coach Executive Stritzke As New CEO (via WSJ)

Jay Van Sciver – Industrials


Joy Global warns on revenue as coal glut hits orders (via Reuters)


Freak Out?

Client Talking Points

OIL

If you really feel the need to freak-out about something, freak out about rip roaring oil prices. That's your Huckleberry. Higher oil prices would obviously slow what’s been a sequential doubling of US Consumption Growth (2H12 to 1H13). Oil had already been signaling bullish above our TAIL risk (breakout) line of $108.11. So it was in motion, but up at $115.42 this morning this is a real bell ringer. We're watching this very closely.

10YR UST

Our call on #RatesRising is all about levels. The immediate-term TRADE line of support is 2.69%. Then there's a ton of TREND support below that at 2.44%. I re-shorted the long bond yesterday. If you’re going to do that, higher-lows in bond yields is where I start. US growth stocks trade with a positive correlation to rates.

SPY

So how does that -1.6% drop look within the context of the Top-3 drops since April? It ranks as #3 (June 20th was -2.5% and April 15th was -2.3%). You haven’t had many opportunities to buy US growth stocks in 2013. This one is a shallower correction (on less volume) and S&P 500 TREND support is literally right where it closed yesterday. It's time to make some decisions.

Asset Allocation

CASH 32% US EQUITIES 25%
INTL EQUITIES 23% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 20%

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

II Bull/Bear Spread just tanked to a 6mth low - uber bullish signal. Only 38.1% in the survey admit to being bullish; that's a fresh YTD low. @KeithMcCullough

QUOTE OF THE DAY

I think that the first thing is you should have a strategic asset allocation mix that assumes that you don't know what the future is going to hold. -Ray Dalio

STAT OF THE DAY

The six biggest U.S. banks, led by JPMorgan and Bank of America, have piled up $103 billion in legal costs since the financial crisis, more than all dividends paid to shareholders in the past five years. That’s the amount allotted to lawyers and litigation, as well as for settling claims about shoddy mortgages and foreclosures. The sum tops the banks’ combined profit last year. (Bloomberg)


August 28, 2013

August 28, 2013 - dtr

 

BULLISH TRENDS

August 28, 2013 - 10yr

August 28, 2013 - spx

August 28, 2013 - dax

August 28, 2013 - dxy

August 28, 2013 - euro

August 28, 2013 - oil

 

BEARISH TRENDS

August 28, 2013 - eem

August 28, 2013 - vix

August 28, 2013 - yen

August 28, 2013 - natgas
August 28, 2013 - gold

August 28, 2013 - copper


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

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