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Hedgeye Q4 Macro Theme #1

Takeaway: The biggest, current risk to forward growth domestically is not Congress, it's the prevailing policy position of the Fed.

#BernankevsCongress: The biggest, current risk to forward growth domestically is not Congress, it's the prevailing policy position of the Fed. Policy drives currencies and the Dollar is breaking down - with significant global macro investment implications.

 

Hedgeye Q4 Macro Theme #1 - mi1

 

This is a brief excerpt from Hedgeye's 52-page Q4 Macro Theme Deck. For information on how you can subscribe to Hedgeye research click here.

 



DIAL-IN & MATERIALS FOR FLASH CALL: DISMANTLING DARDEN

Takeaway: Please join us today at noon. Call details below.

Please join us for a flash call titled “Dismantling Darden” today, October 11th at 12:00pm EDT.  On the call we will discuss the opportunities we see to significantly increase shareholder value at Darden.  We have pursued this topic extensively and put together a 30 page Black Book, highlighting Darden’s inefficiencies as well as our vision for a potential turnaround.

 

 

TOPICS OF DISCUSSION INCLUDE:

  • Reshaping the enterprise
  • Operating trends among the worst in the casual dining industry
  • Darden’s bloated cost structure
  • Sum of the parts valuation
  • What are the implications of the Barington Capital news and what is next for the company?

 

 

CALL DETAILS

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 493295#
  • Materials: CLICK HERE

 

 

If you have any questions, please email or call.

 

 

 

Howard Penney

Managing Director


Early Look

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Dial-In and Materials: 4Q 2013 Macro Themes Call

 

REMINDER: Hedgeye's Macro Team, led by CEO Keith McCullough and DOR Daryl Jones, is hosting its Quarterly Macro Themes conference call TODAY, October 11th at 11:00am EDT. The accompanying presentation will detail the THREE MOST IMPORTANT MACRO TRENDS that our team has identified for the quarter, as well as the associated investment opportunities.   

 

CALL DETAILS

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 419384#
  • Materials: CLICK HERE (slides will download one hour prior to the start of the call)

        

Q4 THEMES INCLUDES:

  1. #BernankevsCongress: The biggest, current risk to forward growth domestically is not Congress, it's the prevailing policy position of the Fed.  The #StrongDollar + #RatesRising dynamic has backstopped our bullish U.S. growth call YTD and the acute risk here is that a perpetuation of unprecedentedly dovish monetary policy catalyzes a reversal in the strong dollar based growth cycle we've observed over the last year.  Policy drives currencies and the Dollar is breaking down - with significant global macro investment implications.
  2. #EuroBulls: European economic performance has been a shipwreck in its protracted "crisis", but the tide is turning. We're bullish on the marginal, positive change in the fundamentals, the improving risk climate, and the EUR versus the USD as Bernanke and Co. talk down U.S. growth and the Greenback. We'll identify the countries and asset classes that we expect to outperform across the continent.   
  3. #GetActive: With the equity fund flow story on hold for now, we think the easy money has already been made in 2013. For much of the year, tuning out the ever-changing consensus bear case and staying long of market beta was alpha. Now that is no longer the case, as alpha generation will increasingly be determined by stock/industry selection and risk managing one's gross and net exposure. Additionally, monetary and fiscal policy uncertainty is likely to contribute to rising volatility across a variety of asset classes.

 

Please email   if you have any questions.

 


Fear Fades

Client Talking Points

CHINA

What's that? Chinese Auto Sales ripped +21% year-over-year in September? Yup. Kaboom! The Shanghai Composite really liked that print. It closed up +1.7%. More importantly, China has moved back into the black for 2013 year-to-date. Make no mistake, this market is still hated. We are taking the other side and are now long of it via the FXI.

US DOLLAR

It was the "People vs Congress" this week and The People won! Witness the U.S. Dollar Index which is holding our long-term TAIL risk line of $79.21. That there was the most important market signal of the week. Now, I'll be the first to say that we are nowhere near out of the woods yet. We will outline our scenario analysis at 11am today on our Q4 Macro Themes conference call. 

GOLD

Both Gold and Bonds absolutely nailed front-running the blistering #NoDebtDefault move in US Equities yesterday. Silver is down basically -2.0% this morning. Meanwhile Gold continues to crash (alongside fear) at -23.5% year-to-date. Incidentally, 

SPX risk range is 1682-1708. We're back to bullish TRADE and TREND. Risk goes both ways, and it happens fast.

Asset Allocation

CASH 42% US EQUITIES 20%
INTL EQUITIES 22% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 16%

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.

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.

TROW

Financials sector senior analyst Jonathan Casteleyn continues to carry T. Rowe Price as his highest-conviction long call, based on the long-range reallocation out of bonds with investors continuing to move into stocks.  T Rowe is one of the fastest growing equity asset managers and has consistently had the best performing stock funds over the past ten years.

Three for the Road

TWEET OF THE DAY

GOLD: continues to crash -23.5% YTD to $1285/oz as manic media scrambles for another crisis @KeithMcCullough

QUOTE OF THE DAY

"The only thing we have to fear is fear itself." - Franklin D. Roosevelt

STAT OF THE DAY

China's economic growth will exceed the official target of 7.5% this year while some economic risks such as local-government debts and "shadow banking" remain under control, web portal Sina.com reported Friday, citing the vice governor of China's central bank.

 


Daily Trading Ranges, Refreshed

Editor's note: Here is a complimentary look at Hedgeye's Daily Trading Ranges product for 10/11. These are CEO Keith McCullough's proprietary buy and sell levels on major markets, commodities and currencies. To learn more and to sign up, click here

Daily Trading Ranges, Refreshed - jose


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