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#EuroBulls: Hedgeye Q4 Macro Theme #2

Takeaway: The tide is turning in Europe.

#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.

 

#EuroBulls: Hedgeye Q4 Macro Theme #2 - wopp 

 

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


Q3 2013 GLOBAL HOTEL TRANSACTIONS (UUP/LUXURY)

Big breakout to the upside, good for Starwood and other lodging companies with assets to sell

 

 

Upper upscale (UUP) & Luxury Transaction Trends for Q3 2013

  • Q3 2013 worldwide hotel transactions (UUP & Luxury brands) was $5 billion, more than double Q2's volume and 85% higher than Q3 2012's volume. This bodes well Starwood, who are and have been, active sellers of hotels
  • The number of US luxury/UUP hotel transactions (where price was disclosed) was 17 in Q3 2013 compared with 12 in Q2 2013 and in Q3 2012. 
  • The number of non-US luxury/UUP hotel transactions (where price was disclosed) was 7 in Q3 2013 compared with 8 in Q2 2013 and 6 in Q3 2012.
  • As usual, REITs were very active. 
  • Hyatt sold two Andaz units for $394k APPK (average price per key) and Hyatt Regency Denver Tech Center for $133k APPK.
  • Marriott sold 3 EDITION hotels that are under construction (London, NYC, Miami) for $973k APPK
  • Host Hotels sold the Ritz-Carlton San Francisco for $479k APPK 
  • There were 9 multi-asset deals.  Abu Dhabi was the buyer of two large upper upscale deals.
  • Relative to a two-year trailing average, US average price per key (APPK) in the UUP segment rose 69% to $423k due to 3 transactions averaging a million dollar APPK

Delinquency rate

  • According to Fitch, the hotel delinquency rate in September was 7.5%, lower than June's 8.4% and much lower than the delinquency rate peak of 14% seen in Q3 2011.

Q3 2013 GLOBAL HOTEL TRANSACTIONS (UUP/LUXURY) - 1

Q3 2013 GLOBAL HOTEL TRANSACTIONS (UUP/LUXURY) - 2

Q3 2013 GLOBAL HOTEL TRANSACTIONS (UUP/LUXURY) - 3

Q3 2013 GLOBAL HOTEL TRANSACTIONS (UUP/LUXURY) - hotels


REPLAY: Q4 2013 MACRO THEMES CALL

Earlier today the Hedgeye Macro Team, led by CEO Keith McCullough, hosted their quarterly Macro Themes conference call in which they detailed their Top 3 Global Macro Investment themes for 4Q13.  The Replay and Presentation Materials can be accessed via the links below.

 

 

REPLAY:  CLICK HERE 
MATERIALS: CLICK HERE

Q4 THEMES:

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 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.

 

- Hedgeye Macro


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.65%
  • SHORT SIGNALS 78.64%

NKE: Just Doing It

Takeaway: NKE's growth algorithm, return profile, widening gap in category dominance, and astounding product pipe are all near impossible to match.

Editor's note: Hedgeye Retail Sector Head Brian McGough just returned from Oregon where he attended Nike's analyst day. Brian has been a big Nike bull for some time and says the stock deserves its 20x+ multiple all day long. According to McGough, "Nike won't make you rich here, but it'll still make you money -- and with a very low risk profile." Here's a brief excerpt from a report he just issued. Click here for more information on how you can sign up to receive his research.

 

NKE: Just Doing It - pink2

 

1. Focus: There were no startling revelations at the Nike analyst meeting (as we expected). But the focus and cohesiveness of the new management team was exceptional.

 

2. A cliché worth repeating. The company remains maniacal in its quest to innovate. That sounds like a cliché when talking about Nike, because it’s all management from the CEO on down ever talks about.  But in evaluating the product pipeline, it’s abundantly clear that literally no one can compete effectively with Nike without a painful outsized capital outlay.

 

3. Nike is expensive, and it should be. While we wish there was a bit more controversy on the name, the reality is that it is executing so well that it’s tough to poke holes in its growth algorithm and business visibility. CFO Don Blair noted that its goal is to generate returns in the upper quartile of the S&P. That goal to us seems modest. With 9-10% top line growth, 30bp-50bp in gross margin improvement each year as Nike builds its Direct model, better than 25% ROIC, and all the capital it needs ($5bn) to return shareholders – it’s safe to say that not many companies (in the S&P, Dow, or the whole market for that matter) could match Nike’s growth algorithm, category dominance, stability in growth, and return profile. Simply put, it deserves its 20x+ multiple all day. This stock won't make you rich, but It'll make you money -- with a low risk profile.

 


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.

 


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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