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INVITE: Pipeline Maintenance Expert Call (TODAY 11am)

Continuing our work on Kinder Morgan (KMI, KMP, KMR, EPB), other midstream MLPs, and the maintenance CapEx debate, we will host an Expert Call with Richard Kuprewicz TODAY at 11am EST. 

 

DIAL-IN DETAILS:

Toll Free Number:

Direct Dial Number:

Conference Code: 419527# 

 

This call will focus on long-haul oil and natural gas pipeline maintenance: 

  • How does pipeline age affect pipeline maintenance?
  • How does pipeline location affect pipeline maintenance?
  • What demands the most attention and $$$ – main lines or “the moving parts”?
  • What are the most common issues?  Repairs?  Preventative maintenance and spending?
  • What is mandated / regulated in terms of maintenance spending?
  • What is mandated / regulated in terms of pipeline inspection and testing?
  • Do pipelines spend too much (gold-plating)?  Do pipelines spend too little?  How can we know?
  • Are there coming significant changes to pipeline safety / inspection regulation?
  • How do changes in owner / operatorship (M&A) affect pipeline maintenance?  A discussion of different approaches to maintaining the same systems.

Richard Kuprewicz, President of Accufacts Inc., is a leading expert on pipeline safety and maintenance issues.  He specializes in gas and liquid pipeline investigation, auditing, risk management, siting, construction, design, operation, maintenance, training, SCADA, leak detection, management review, emergency response, and regulatory development and compliance.

 

He consults frequently with various local, state and federal agencies, NGOs, the public, and pipeline industry members on pipeline regulation, operation and design, with particular emphasis on operation in unusually sensitive areas of high population density or environmental sensitivity.

 

An engineer by training, Mr. Kuprewicz has more than 40 years of experience in the oil and gas sector.  He spent the majority of his career at Arco Products and Arco Transportation, serving as manager of, and senior technical advisor on, its oil and natural gas pipelines.  He founded Accufacts – a pipeline regulatory and safety advisory firm – in 1999.

 

If you have any questions for Mr. Kuprewicz, send them to me at .

 

Kevin Kaiser

Senior Analyst


The Biggest Loser

This note was originally published at 8am on October 01, 2013 for Hedgeye subscribers.

“Get comfortable with being uncomfortable.”

-Jillian Michaels

 

That’s a varsity quote from one of the original trainers on NBC’s “The Biggest Loser.” To a degree, Jillian Michaels typifies the attitude of my generation of entrepreneurs in America. She’s a 39 year old self-made business woman. She didn’t get anything handed to her in life. She bartended her way through college, sucked it up, and lived the American dream.

 

What is the American dream? Is it a bunch of big political and media losers getting paid to perpetuate fear and crisis on cable TV? Or is it the polar opposite of that? Bernanke, Boehner, and Obama can’t shut us down. No, no, no ladies and gentlemen. Today we are going to do what we do at the top of every risk management morning – we are going to grind.

 

Grinding in the arena of business life has been celebrated by this country for generations. In 1925, President Calvin Coolidge reminded the American Society of Newspaper Editors that “the chief business of the American people is business” (The History of Money, pg 169). So that’s the headline coming out of this 2.0 Financial Media upstart from Stamford, CT this morning. Rise Above that.

 

Back to the Global Macro Grind

 

What’s fascinating about watching both the US stock market futures and the bond market this morning is that neither of them seem to care whatsoever about Old Media’s politicized fear-mongering. Mr. Market is shutting the media’s message down.

 

That shouldn’t surprise you. As newspaper editors and television producers look backward, markets look forward. Up next is the US Employment Report for the month of September.

 

September (and the 3rd quarter in general) was one of the best quarters for US growth expectations in half a decade:

  1. US Growth Stocks hit all-time highs (for SEP Industrials (XLI) +5.4% and Consumer Discretionary (XLY) +5.1%)
  2. US (slow growth) Bonds and Utility stocks hit their YTD lows (for SEP Utilities (XLU) only +0.18%)
  3. US Equity Volatility (VIX) hit YTD lows as well

Then, mid-September, along came Bernanke, Boehner, and Obama …. and:

  1. US Growth Stocks started making a series of lower highs (down for 7 of the last 8 days)
  2. US (slow growth) Bonds and Utilities outperformed everything growth
  3. US Equity Volatility (VIX) ripped a +26% move to the upside in less than 2 weeks

Congrats to the Fed, Democrat, and Republican parties. It’s a tie – you all get a Hedgeye sticker for America’s biggest losers!

 

Looking forward to the US employment report on Friday:

  1. US Growth Stocks may very well put in yet another higher-low (SP500 = 1660 TREND support)
  2. US Treasuries appear to be making another lower-high (10yr Yield = 2.55% TREND support)
  3. And front-month fear (VIX) is making yet another lower-YTD-high as well (VIX = 18.98 TREND resistance)

What say you Mr. Market about all of that?

 

I say it’s government versus gravity!

 

That would be economic gravity of course. As in the stuff that Bernanke has been trying to bend. And while bending gravity appears to be quite innovative to the Central-Market-Planner-in-Chief-of-anti-dog-eat-dog USA, that doesn’t mean it’s going to work.

 

So play this out – the US jobs report on Friday has a binary outcome:

  1. It’s a moon-shot to the upside and bond yields rip (again) to the upside
  2. It’s in line to a “miss” and Bernanke and his old-boys from anti-gravity-smoothing headquarters say “we nailed it”

Which of the two will it be?

 

I’m proud to say that I have absolutely no idea. That’s why the Hedgeye Asset Allocation Model has a 50% Cash position and in our #RealTimeAlerts I only have 5 LONGS, and 4 SHORTS. Getting out of the way of this political gong show was a risk managed decision.

 

I’m very comfortable grinding out another business building day. I’m uncomfortable with risking what’s been a great year for us on a government report that could go either way.

 

UST 10yr Yield 2.59-2.68%

SPX 1675-1702

Nikkei 14303-14612

VIX 14.64-16.99

USD 80.02-80.77

Brent 107.08-108.98

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

The Biggest Loser - Chart of the Day

 

The Biggest Loser - Virtual Portfolio


What's New Today in Retail (10/15)

Takeaway: Nightmare scenario for WMT. AAPL lands former BRBY/FNP exec for RJ's job. Big initiative for AMZN. H&M sales slow -- good global barometer.

EVENTS TO WATCH OVER THE NEXT 24 HOURS

 

Hedgeye RH Black Book: Tomorrow, Wednesday Oct 16th at 11am.

 

CALL DETAILS

 

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 779954#
  • Materials: CLICK HERE

 

CONTACT 

Please email  for further details.

 

WWW: Analyst Meeting today in NYC. Webcast: http://phx.corporate-ir.net/phoenix.zhtml?c=88408&p=irol-irhome

 

ECONOMIC DATA

 

ICSC - Chain Store Sales Index

 

Takeaway: Chain store sales remain anemic according to this morning's ICSC reading -- with the second lowest growth rate for the year to date.

 

What's New Today in Retail (10/15) - chart1 10 15

What's New Today in Retail (10/15) - chart2 10 15

 

COMPANY NEWS

 

WMT - Walmart shelves in Springhill, Mansfield, cleared in EBT glitch

(http://www.ksla.com/story/23679489/walmart-shelves-in-springhill-mansfield-cleared-in-ebt-glitch)

 

  • "Shelves in Walmart stores in Springhill and Mansfield, LA were reportedly cleared Saturday night, when the stores allowed purchases on EBT cards even though they were not showing limits."
  • "[Police Chief Will] Lynd explained the cards weren't showing limits and they called corporate Walmart, whose spokesman  said to let the people use the cards anyway."
  • "Lynd says at 9 p.m., when the cards came back online and it was announced over the loud speaker, people just left their carts full of food in the aisles and left."
  • "It all happened at the end of a day in which the EBT system went down in several states, including Louisiana. Xerox, a vendor for the EBT system, experienced a power outage while conducting a routine backup test in one of the company's locations. While the system was back up Saturday night, it appears that it was not functioning entirely properly in some areas."
  • Asked whether Walmart would be taking the loss on any food purchased on the cards that did not show limits, or on the perishable food left behind in carts, [Wal-Mart spokesman] Whaling would only say that 'we monitored transactions during the outage.'"

 

Takeaway: This is, without a doubt, the strangest in-store blow-up I've ever seen. Ever is a long time. Not sure whose reputation it's worse for -- WMT or Xerox. Probably Xerox (WMT is used to bad press).

 

What's New Today in Retail (10/15) - chart3 10 15

 

BRBY, AAPL - Apple Hires Burberry CEO as Retail Chief

(http://online.wsj.com/news/articles/SB10001424052702304561004579136642448489128?mod=Business_newsreel_1)

 

  • "[AAPL] tapped Angela Ahrendts, currently chief executive of British luxury retailer…[BRBY]...to head up its retail efforts…"
  • "Apple said Ms. Ahrendts, 53 years old, would join Apple next year in the newly created position of senior vice president of retail and online stores. She will become a member of the executive team and report directly to Apple Chief Executive Tim Cook."
  • The appointment fills a big gap in Apple's retail operations, stemming from the 2011 departure of Ron Johnson, who vacated the role of senior vice president for retail to join...[JCP]. His replacement, John Browett, left the company last year."

 

Takeaway: It's amazing that Ahrendts went from such humble beginnings at the former Liz Claiborne (FNP), then landed a dream job at Burberry, only to end up in the best job in all of retail.

 

WWW - Keds Debuts Retail Shop

(http://www.wwd.com/footwear-news/retail/keds-debuts-retail-shop-7222395?module=Footwear%20News-hero)

 

  • "Keds…recently opened its first freestanding store, a 150-sq.-ft. shop at a mall in Natick, Mass."
  • "The idea was to launch in a kiosk-designated area, known for high foot traffic. The spot features signage to tell the brand story, including Taylor Swift marketing materials, and showcases 45 different SKUs with a focus on Keds’ fashion push. Some featured styles are from the Taylor Swift and Kate Spade collaborations."

 

Takeaway: Our view remains that Keds will go from being a $100mm brand today, to $400mm over 4-years. Most growth will be outside the US. WWW will hit on this today at its NYC analyst meeting (though its growth goals will be below ours).

 

What's New Today in Retail (10/15) - chart6 10 15

 

AMZN - Soap Opera: Amazon Moves In With P&G

(http://online.wsj.com/news/articles/SB10001424052702304330904579135840230674458)

 

  • "Each day, P&G loads products onto pallets and passes them over to Amazon inside a small, fenced-off area. Amazon employees then package, label and ship the items directly to the people who ordered them."
  • "The e-commerce giant is quietly setting up shop inside the warehouses of a number of important suppliers as it works to open up the next big frontier for Internet sales: everyday products like toilet paper, diapers and shampoo."
  • "Amazon instead is going out to its suppliers with a program it calls Vendor Flex. By piggybacking on their warehouses and distribution networks, Amazon is able to reduce its own costs of moving and storing goods, better compete on price with Wal-Mart and club stores like Costco Wholesale Corp., and cut the time it takes to get items to doorsteps."
  • "Household staples have traditionally been considered too bulky or cheap to justify the cost of shipping. Americans currently buy just 2% of such goods online, retail analysts estimate. Yet even that sliver of business was worth $16 billion in 2012, according to Nielsen Holdings NV, and the research firm believes online sales will grow by 25% a year to $32 billion in 2015."

 

Takeaway: This is a very big idea. So good for AMZN, and so bad for your local supermarket.

 

RH - Restoration Hardware launches Holiday sourcebook…and yes you can have them delivered

 

What's New Today in Retail (10/15) - chart4 10 15

 

Takeaway: We're hosting a call tomorrow to discuss our thesis on RH, and how we get to $8+ in earnings power. We'll also address key issues we explored in our consumer survey, one of which is consumers' attitude towards the Sourcebook. We were surprised by what we uncovered. Dial in tomorrow at 11am EDT.

 

HMB - H&M Sales Fall 2% in September

(http://www.wwd.com/retail-news/financial/hm-sales-fall-2-in-september-7224646?module=hp-retail)

 

  • "Hennes & Mauritz AB said same-store sales fell 2 percent in September after rising 4 percent in August.
  • Sales in local currencies climbed 7 percent, a decrease over August, when they gained 14 percent, the Swedish high-street retailer said."
  • "In September 2012, H&M had reported a 6 percent rise in same-store sales and a 15 percent increase in local currencies."
  • "The store count stood at 3,006 doors on Sept. 30, compared with 2,669 stores at the same time last year."

 

Takeaway: H&M is the most globally-diversified apparel retailer. Germany accounts for about 20% of sales, the US, UK and France each account for about 8%, and then a dozen other countries account for 5% or less.  It's a great barometer for the global retail economy.

 

ADS - Lacoste to Outfit Team France in Sochi

 

  • "The Lacoste crocodile logo will make his way onto Team France’s outfits at the Olympic and Paralympic Games in Sochi, Russia, in February. The Lacoste brand replaces Adidas as the official outfitter for the French Olympic team."

 

What's New Today in Retail (10/15) - chart5 10 15

 

Takeaway: It's odd that Adidas lost France to Lacoste given the sheer differential in the size of each brand's endorsement wallet. There's no way Lacoste could outbid Adibok, which tells us that Adi simply walked away.

 

Moncler - Moncler Sets IPO by End of Year

(http://www.wwd.com/business-news/financial/moncler-files-for-ipo-7221893?module=hp-topstories)

 

  • "After months of speculation and a shelved initial public offering in 2011, Moncler SpA on Monday filed documents to list on the Italian Stock Exchange."
  • "The IPO is expected to take place by the end of the year and sources say the company will float between 25 and 30 percent of its total shares. Industry sources said Moncler’s IPO could value the company at around 2 billion euros, or $2.7 billion at current exchange."

 

RMS - Hermès Opens New Milan Flagship

(http://www.wwd.com/retail-news/designer-luxury/hermes-opens-new-milan-flagship-7221887?module=hp-topstories)

 

  • "After 26 years on Via Sant’Andrea, Hermès has changed its Milanese address, moving its flagship to Via Montenapoleone."
  • "On Monday, the French luxury company unveiled its new boutique covering 6,459 square feet, almost double the space of the former unit."

 

WMT - Supreme Court to Hear Wal-Mart ERISA Case

(http://www.wwd.com/business-news/legal/supreme-court-to-hear-wal-mart-erisa-case-7223386?module=hp-topstories)

 

  • The Supreme Court is set to hear oral arguments Tuesday in a case involving a former Wal-Mart Stores Inc. employee whose long-term disability benefits claim was denied by the retailer’s insurance provider.
  • " The Supreme Court granted writ of certiorari in April to a petition filed by Julie Heimeshoff, a former senior public relations manager for the retailer, against Hartford Life & Accident Insurance Co. and Wal-Mart."
  • "Heimeshoff, who worked for Wal-Mart from 1985 to 2005, applied for long-term disability benefits under Wal-Mart’s ERISA plan administered by Hartford in August 2005 after she fell ill with what she said was fibromyalgia, chronic pain and other conditions. But Hartford denied her claim that December and again on a subsequent appeal in 2007, arguing its own rheumatologist consultant determined that Heimeshoff was 'able to perform the activities of her sedentary occupation,' according to court documents."

 

Takeaway: Another example of how WMT can't win. Either it ponies up and pays a claim that may or may not be valid -- setting a dangerous financial precedent -- or it goes to court and gets bad press over not paying a disabled worker (even if not disabled, that will be the perception).

 

DECK - Deckers Wins Design Lawsuit

(http://www.wwd.com/footwear-news/business/deckers-wins-design-lawsuit-7223134?module=latest-articles)

 

  • "Deckers Outdoor Corp. has emerged as the winner of a lawsuit filed by Intermedium Shoes B.V."
  • "The suit originated in The Hague District Court and referenced a design patent for the Ugg Australia Bailey Button boot."
  • "The court decision ordered Intermedium to 'cease and desist the knock-off product.' And in addition, Intermedium will send a letter to all customers who purchased the product to explain that the infringement was a design right belonging to Deckers."

 

What's New Today in Retail (10/15) - chart12 10 15

 

Takeaway: Deckers has not had many challenges to it's Intellectual Property. This one is a particularly big win.

 

CHS - Chico’s FAS enters Canada with White House Black Market

(http://www.chainstoreage.com/article/chico%E2%80%99s-fas-enters-canada-white-house-black-market)

 

  • "Chico's FAS is expanding outside of the United States, opening a White House Black Market store at Yorkdale Shopping Centre, Toronto on Oct. 24. The women's apparel retailer will open its second Canadian location at Square One, Mississauga on Oct. 29, followed by Upper Canada Mall, Newmarket on November 12."

 

INDUSTRY NEWS

 

Recasting the Retail Store in Today's Omnichannel World

(http://www.atkearney.com/consumer-products-retail/ideas-insights/featured-article/-/asset_publisher/KQNW4F0xInID/content/recasting-the-retail-store-in-today%E2%80%99s-omnichannel-world/10192)

 

  • "Despite a host of new shopping options, talk of the demise of brick and mortar is premature. Retail stores remain at the heart of the customer relationship and play a main role in fulfilling multi-channel demand."
  • "...our online study of 3,200 U.S. and UK consumers shows that stores remain at the heart of retailers' relationships with consumers, even in today's "omnichannel" world where online and mobile sales appear to rule.1 The evidence is clear: Consumers value the retail store experience on multiple levels and continue to make the vast majority of their purchases in stores. And, importantly, the value of stores extends well beyond brick-and-mortar to help increase volume and revenue across all channels."

 

What's New Today in Retail (10/15) - chart7 10 15

What's New Today in Retail (10/15) - chart8 10 15

What's New Today in Retail (10/15) - chart9 10 15

What's New Today in Retail (10/15) - chart10 10 15

What's New Today in Retail (10/15) - chart11 10 15


real-time alerts

real edge in real-time

This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.

October 15, 2013

October 15, 2013 - dtr

 

BULLISH TRENDS

October 15, 2013 - 10yr

October 15, 2013 - spx

October 15, 2013 - dax

October 15, 2013 - SHCOMP

October 15, 2013 - euro

October 15, 2013 - oil

October 15, 2013 - natgas

BEARISH TRENDS

October 15, 2013 - VIX

October 15, 2013 - yen

October 15, 2013 - gold
October 15, 2013 - copper

 


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – October 15, 2013


As we look at today's setup for the S&P 500, the range is 40 points or 1.47% downside to 1685 and 0.87% upside to 1725.                       

                                                                                                        

SECTOR PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

EQUITY SENTIMENT:

 

THE HEDGEYE DAILY OUTLOOK - 10

 

CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 2.37 from 2.34
  • VIX closed at 16.07 1 day percent change of 2.23%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:45am: ICSC weekly sales
  • 8:30am: Empire Manufacturing, Oct., est. 7 (prior 6.29)
  • 8:55am: Johnson/Redbook weekly sales
  • 10am: Fed’s Dudley speaks on monetary policy in Mexico
  • 11am: Fed to buy $4.75b-$5.75b notes in 2018-2019 sector
  • 11:30am: U.S. to sell $35b 3M bills, $30b 6M bills
  • 7:15pm: Fed’s Fisher speaks on economy in New York

GOVERNMENT:

    • House canceled recess to deal with deficit, govt shutdown
    • Supreme Court hears race-based college admissions case
    • FERC Chairman Jon Wellinghoff speaks at Assn for Demand Response and Smart Grid event, 8:30am
    • SEC Chairwoman Mary Jo White speaks at National Assn of Corporate Directors conf., 8am

WHAT TO WATCH:

  • Senate deal to raise U.S. debt limit emerges as time runs short
  • Burberry CEO Ahrendts leaves to head Apple retail business
  • Credit card charges, delinquencies to be reported today
  • Ireland return to mkt financing to be decided next month
  • Swiss Re said to consider sale of U.S. life insurance assets
  • Kogas to seek to sell stake in LNG Canada, CEO Jang says
  • AstraZeneca to pay up to $440m for Spirogen Therapies
  • BlackBerry seeks to reassure customers with newspaper ads
  • Spain sells 1-yr bills to yield 0.96%, lowest since April 2010
  • Perricone MD said to be near finalizing deal: WWD
  • Central banks begin gaming out U.S. default before deadline
  • Oct. 17 is start, not finish of debt-limit crisis endgame

AM EARNS:

    • Charles Schwab (SCHW) 8:45am, $0.20
    • Citigroup (C) 8am, $1.04 - Preview
    • Coca-Cola (KO) 7:30am, $0.53 - Preview
    • Commerce Bancshares (CBSH) 7am, $0.72
    • Domino’s Pizza (DPZ) 7:30am, $0.52 - Preview
    • First Republic Bank (FRC) 7am, $0.76
    • JB Hunt Transport Services (JBHT) 8:30am, $0.78 - Preview
    • Johnson & Johnson (JNJ) 7:45am, $1.32 - Preview
    • Omnicom Group (OMC) 7am, $0.81

PM EARNS:

    • CSX (CSX) 4:01pm, $0.43
    • Intel (INTC) 4:01pm, $0.54 - Preview
    • Linear Technology (LLTC) 5pm, $0.45
    • Pinnacle Financial Partners (PNFP) 5:18pm, $0.42
    • Yahoo! (YHOO) 4:05pm, $0.33 - Preview

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Gold Slides to 3-Month Low as Silver Declines on U.S. Optimism
  • Record Thai Rice Hoard Expanding Global Supply Glut: Commodities
  • WTI Crude Declines Amid Debt Talks, Iran Nuclear Negotiations
  • Copper Falls as Dollar Rallies Amid Speculation Deadlock to End
  • Rio Reports Record Iron Ore, Coal Output as China Demand Surges
  • Cocoa Rises as Grindings May Indicate More Demand; Coffee Falls
  • Soybeans Gain for Second Day as Rain Seen Slowing U.S. Harvest
  • U.S. Natural Gas Rises for a Fourth Day on Cold Weather Outlook
  • Kumba Needs New Right to Access Reserve at Biggest Iron-Ore Mine
  • Coal Expected to Take Share From Gas Through 2014, Says EIA
  • De Beers Squeezes Diamond Buyers Who Flip Gems: Chart of the Day
  • China Steel Binge Spurs Record Hiring of Ore Carriers: Freight
  • Uralkali Projects Record Potash Demand in 2014 on 3% to 4% Gain
  • Brent Below $100 Seen on Prospect of Iran Accord: Energy Markets

THE HEDGEYE DAILY OUTLOOK - 5A

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 6

 

GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 3

 

THE HEDGEYE DAILY OUTLOOK - 4

 

EUROPEAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 7

 

ASIAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 8

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - 9

 

 

The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 

 

 

 


MACAU ON PACE TO BREAK RECORD

Past week ADTR soared 60% YoY

 

 

MACAU ON PACE TO BREAK RECORD - M1

 

MACAU ON PACE TO BREAK RECORD - M2


Early Look

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Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

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