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CALL TODAY: Can Twitter Fix Its Business and Live Up To Expectations?

CALL TODAY: Can Twitter Fix Its Business and Live Up To Expectations? - TwitterDialin 11.06.13

 

"Expectations are the root of all heartache."  -Shakespeare

 

CALL DETAILS

  • Toll Free Number: 
  • Direct Dial Number: 
  • Conference Code: 629758#
  • Materials: CLICK HERE (slides will download prior to the start of the call)

 

Please join Hedgeye's resident social media experts, Director of Research Daryl Jones and Hesham Shaaban, for an in-depth overview and discussion of Twitter ahead of its initial public offering. The key question we will be looking to answer is whether Twitter management can fix its business model in order to achieve its longer-term growth potential.

 

The call titled "Can Twitter Fix Its Business and Live Up To Expectations?" will be held today, November 6th at 11:00am EST and will include a detailed 50-page presentation. As an independent research firm, with no investment banking and no trading of our own, Hedgeye is able to bring you our unconflicted, objective analysis of Twitter's forthcoming IPO.

 

KEY TOPICS OF DISCUSSION WILL INCLUDE:

  • A brief overview of Twitter's history and a detailed review of its business model
  • Analysis of the company's stated growth objectives vs. the key challenges/opportunities facing Twitter management
  • Detailed comparison of user  growth and revenue metrics versus Facebook
  • An overview of our recommendations for monetizing the business model
  • Analysis of its longer term growth potential and discussion on valuation

 

Contact  for more details.


  


Winners & Losers

Client Talking Points

POUND

The British Pound is up another +0.4% versus the US Dollar this morning after another solid accelerating in UK Services PMI to 52.9. 10-year Gilt Yields are up 10 basis points in two days. And they should be. Reality check: Bank of England Governor Mark Carney is not Mervyn King. And Carney is not going to be like Janet Yellen either. #StrongPound.

SWISS

We bought both the Eurostoxx50 (FEZ) and Swiss stocks (EWL) on yesterday’s European stock market correction. Almost half of my long positions in #RealTimeAlerts are #EuroBull related at this point. #StrongerCurrencies and still long Germany via EWG

UST 10YR

Yields shocked some to the upside yesterday as Bernanke/Yellen superimpose a) rising volatility and b) less liquidity in parts of the bond market via policy confusion. Either they whispered to Goldman Sachs' Jan Hatzius that they’re going to move the goal posts on the unemployment rate again or they did not. Which is it? Either way, this is a circus on tapering expectations.

Asset Allocation

CASH 32% US EQUITIES 6%
INTL EQUITIES 22% COMMODITIES 8%
FIXED INCOME 6% INTL CURRENCIES 26%

Top Long Ideas

Company Ticker Sector Duration
DAX

In line with our #EuroBulls Q4 theme, we’re long the German DAX via the etf EWG. With European fundamentals showing improvement off low levels, we expect outperformance from Germany, and in turn for the region’s largest economy to pull the rest of the region higher. ECB policy remains highly accommodative and prepared to aid any of its sovereign members to preserve the Union. Inflation remains moderate and fundamentals are positive: confidence readings and PMIs are up since June, with factory orders trending higher and retail sales inflecting to push the trade balance higher. Finally, the unemployment rate has held steady at the low level of 6.9%, all of which signals to us that Germany’s economic climate is ramping up.

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.

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

There's an #OldWall backslapping network out there that gets paid ad dollars to bs you, then there's us @KeithMcCullough

QUOTE OF THE DAY

”A successful man is one who can lay a firm foundation with the bricks others have thrown at him.” -David Brinkley

STAT OF THE DAY

$1.35 Billion: Found! A stash of 1,500 artworks that may be worth 1 billion euros if confirmed to be by artists such as Pablo Picasso, Max Beckmann and Marc Chagall. The works originally may have been seized by the Nazis from German museums and private collectors. They were found amid piles of garbage and outdated food packets, according to a report in Focus magazine.


November 6, 2013

November 6, 2013 - Slide1

 

BULLISH TRENDS

November 6, 2013 - Slide2

November 6, 2013 - Slide3

November 6, 2013 - Slide4

November 6, 2013 - Slide5

November 6, 2013 - Slide6

 

BEARISH TRENDS

November 6, 2013 - Slide7

November 6, 2013 - Slide8

November 6, 2013 - Slide9

November 6, 2013 - Slide10

 

 


Attention Students...

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The Fed's English

“Why do we have noses that run and feet that smell?”

-Unknown

 

The Fed’s English can be confusing too. As you can see in our Chart of The Day, that’s what’s been driving unprecedented volatility in the US bond market this year. Confusion about @FederalReserve policy is starting to breed contempt.

 

But oh no, no, no – silly Mucker must have this all wrong. The Fed has a “study” that proves pretty much anything they want to prove. The latest data-mining propaganda coming out of the head of the anti-dog-eat-dog-Fed-Monetary-Affairs-Division, William English, insinuates that it’s time for Bernanke and Yellen to move the goal posts again on the unemployment target. #Wonderful

 

Huh? This is what Bush/Obama empowered - an un-elected and un-checked central planning agency that is trying to prove out their academic dogma versus well established forces (like gravity). The Fed can pretty much keep making up the rules as they go here until the entire Bond Bubble blows up. Isn’t that awesome? History will write plenty of English “papers” on this!

 

Back to the Global Macro Grind

 

Since the Fed was wrong on its US growth forecast again (this time they and #OldWall were too low at the beginning of 2013, and the bond market started front-running them as tapering expectations perpetuated the 2-stroke engine of #StrongDollar + #RatesRising), and the unemployment rate is getting too close to their policy change target of 6.5%, they need to change the target.

 

#cool

 

Or is it? I’ll be doing another full day of institutional client meetings in NYC today and I’ll tell you that (especially for clients who aren’t in the business of being levered-long bonds that they can’t get out of) this expectations game isn’t cool.

 

Why?

  1. 1.       Dollar Down + Rates Down = US Growth Expectations Down (see US economic history for details)
  2. For the last month, you’ve seen every growth “Style Factor” start to underperform slow-growth yield chasing
  3. If we’re going back to slow-growth yield chasing (long Gold, Consumer Staples, and Bonds) that’s a big shift

The Fed won’t have a “study” on this because that would prove that incrementally dovish policy does 2 things:

  1. Devalues America’s Currency (which they are supposed to be protecting)
  2. Represses rates and growth expectations (as Dollar Debauchery perpetuates inflation, not real-growth)

All the while, the same western academic dogma that we imported from Europe remains in parts of Europe. This morning’s central planning bureau headline out of Italy’s Finance Minister is begging Mario Draghi to cut rates and devalue the Euro!

 

To review, from December 2012 to August 2013, a #StrongCurrency policy (tapering):

  1. Crushed inflation expectations
  2. Ramped real (inflation adjusted) growth expectations

But these damn bureaucrats see that very Deflating of The Inflation (from the world’s all-time high inflation readings of Gold and Food prices in 2011-2012) as a threat to their failed policies!

 

Moving along, I bought more exposure to our #EuroBull Macro Theme yesterday via:

  1. Eurostoxx50 Index (FEZ) which tested and held my immediate-term TRADE line of support
  2. Swiss stocks (EWL) which were holding support and have bounced a full +1% this morning

Why buy US Growth anymore if we’re going to let these clowns at the Fed blow up our currency again? This all started with Keynes in Britain, and even the British have given up on the QE thing (thank God) at this point. Carney (the Canadian who doesn’t do crack cocaine) replacing Mervyn King at the Bank of England is like replacing Bernanke with me (or something like that).

 

#StrongPound in the United Kingdom continues to perpetuate rising UK growth expectations. When growth expectations rise, government bond yields rise (bonds go down). The 10yr UK Gilt Bond Yield is +10 basis points in the last 2-days as the UK printed the best Services PMI reading in 16 years (UK industrial production growth just accelerated to +2.2% y/y as well).

 

The final point to be made this morning is that after perpetuating Gold, Bond, and Utility Bubbles with his 0%-interest-rates-forever thing (formally known in a Hedgeye “paper” as Yield Chasing), Bernanke is probably going to get tagged with creating another US stock market bubble too. Today’s II Bull/Bear Sentiment Spread just clocked a fresh YTD high at +3960bps wide to the bull side.

 

I am still recommending prayer for those at the Fed who still don’t yet know about the “paper” on the definition of insanity. The summary of the paper is in plain English too – doing the same thing over and over again, and expecting different results.

 

Our immediate-term Risk Ranges are now:

 

UST 10yr Yield 2.55-2.69%

SPX 1

DAX 8

Swiss Market 8113-8299

Pound 1.60-1.62

Gold 1

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

The Fed's English - Chart of the Day

 

The Fed's English - Virtual Portfolio


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – November 6, 2013


As we look at today's setup for the S&P 500, the range is 20 points or 0.68% downside to 1751 and 0.46% upside to 1771.                                              

                                                                                 

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: 2.36 from 2.37
  • VIX closed at 13.27 1 day percent change of 2.63%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage Applications, Nov. 1 (prior 6.4%)
  • 7:30am: Challenger Job Cuts, Oct., y/y (prior 19.1%)
  • 10am: Leading Index, Sept., est. 0.6% (prior 0.7%)
  • 10:30am: DOE Energy Inventories
  • 11am: Fed to buy $2.75b-$3.5b in 2020-2023 sector
  • 1:10pm: Fed’s Pianalto speaks in Ohio

GOVERNMENT:

  • Election results:
    • Chris Christie, Terry McAuliffe win gubernatorial contests
    • Christie’s landslide victory may bolster White House run
    • N.Y. votes to allow more casinos; Colorado approves pot tax
  • 8:30am: Treasury to release qtrly refunding plan, may comment on debt limit, plans to issue floating notes
  • 10am: HHS Sec. Kathleen Sebelius testifies before Sen. Finance Cmte on plans for fixing health insurance exchange website
  • 1:30pm: Labor Secretary Thomas Perez, former Rep. Patrick Murphy, D-Penn., attend discussion on veterans’ employment
  • 2:30pm: Sen. Lamar Alexander, R-Tenn., testifies before Commerce, Science, Transportation Cmte on science, U.S. economy
  • 2:30pm: HUD Secretary Shaun Donovan, FEMA Administrator Craig Fugate testify at Senate Homeland Security and Governmental Affairs Cmte hearing on recovery from Hurricane Sandy

WHAT TO WATCH:

  • Twitter IPO means more scrutiny of exchanges after FB debacle
  • Wells Fargo said among banks facing U.S. mortgage-bond probes
  • Former crude traders claim proof that oil market is rigged
  • Boeing seeks labor peace with offer to keep 777X in Seattle
  • Washington governor assembles perks to keep Boeing in-state
  • Google may scrap plans for HK data center, Apple Daily says
  • Tesla CEO Musk says battery supply constraining production
  • Revamp of U.S. military force planning delays contract awards

AM EARNS:

    • Ariad Pharmaceuticals (ARIA) 7:35am, $(0.44)
    • Brookfield Infrastructure (BIP) 7:30am, $0.26
    • Carlyle Group (CG) 6:30am, $0.60
    • CenterPoint Energy (CNP) 8:15am, $0.35
    • Chesapeake Energy (CHK) 7:01am, $0.42 - Preview
    • Cimarex Energy (XEC) 6am, $1.55
    • Clean Harbors (CLH) 7:30am, $0.65
    • Coeur Mining (CDE) 8:30am, $(0.22)
    • Devon Energy (DVN) 7am, $1.19 - Preview
    • Duke Energy (DUK) 7am, $1.51
    • Enbridge (ENB CN) 7am, $0.36 - Preview
    • Geo Group (GEO) 7:30am, $0.43
    • HollyFrontier (HFC) 7:30am, $0.62
    • Hospira (HSP) 7:30am, $0.44
    • Humana (HUM) 6am, $2.16
    • ING US (VOYA) 5:50am, $0.65
    • Intact Financial (IFC CN) 6:55am, $0.28
    • Lamar Advertising (LAMR) 6am, $0.18
    • Marsh & McLennan (MMC) 7am, $0.46
    • Molson Coors Brewing (TAP) 7:30am, $1.39
    • NPS Pharmaceuticals (NPSP) 8am, $(0.03)
    • OGE Energy (OGE) 7am, $0.93
    • Penn West Petroleum (PWT CN) 6:31am, $0.06
    • PennyMac Mortgage Investment (PMT) 8:30am, $0.69
    • Pepco Holdings (POM) 6:03am, $0.44
    • PHH (PHH) 8:30am, $0.12
    • Ralph Lauren (RL) 8am, $2.20 - Preview
    • Sinclair Broadcast (SBGI) 7am, $0.24
    • Starz (STRZA) 7:30am, $0.44
    • SunEdison (SUNE) 6am, $(0.13)
    • Time Warner (TWX) 7am, $0.89 - Preview
    • Vonage Holdings (VG) 8am, $0.03

PM EARNS:

    • ACADIA Pharmaceuticals (ACAD) 4:01pm, $(0.12)
    • Activision Blizzard (ATVI) 4:05pm, $0.04
    • Alnylam Pharmaceuticals (ALNY) 4pm, $(0.40)
    • American Water Works Co (AWK) 4:05pm, $0.85
    • Antero Resources (AR) Aft-mkt, $0.20
    • Atmos Energy (ATO) 5:01pm, $0.12
    • Brookdale Senior Living (BKD) 4:43pm, $(0.03)
    • CBS (CBS) 4:01pm, $0.76 - Preview
    • CenturyLink (CTL) 4:05pm, $0.63
    • Chambers Street Properties (CSG) Aft-mkt, $0.18
    • Concho Resources (CXO) 5pm, $1.03
    • Concur Technologies (CNQR) 4:15pm, $0.26
    • Continental Resources (CLR) 5:47pm, $1.49
    • Corrections Corp of America (CXW) 4:15pm, $0.62
    • EOG Resources (EOG) 5:11pm, $2.05
    • Genpact (G) 4pm, $0.26
    • Giant Interactive Group (GA) 5:05pm, $0.23
    • Hersha Hospitality (HT) 4:30pm, $0.13
    • Integrys Energy Group (TEG) 5:07pm, $0.46
    • Mid-America Apartment Communities (MAA) 4:05pm, $1.22
    • Mondelez Intl (MDLZ) 4:01pm, $0.40 - Preview
    • Oasis Petroleum (OAS) 4:15pm, $0.75
    • PDL BioPharma (PDLI) 4:02pm, $0.39
    • Prudential Financial (PRU) 4:07pm, $2.11
    • Qualcomm (QCOM) 4pm, $1.08 - Preview
    • SolarCity (SCTY) 4:01pm, $(0.51)
    • Solera Holdings (SLH) 4:08pm, $0.56
    • Sun Life Financial (SLF CN) 5:10pm, $0.64
    • Tempur Sealy Intl (TPX) 4:03pm, $0.68
    • Tesoro (TSO) 4:30pm, $0.49
    • Transocean (RIG) 4:30pm, $1.07 - Preview
    • US Silica Holdings (SLCA) 4:30pm, $0.41
    • Western Gas Partners (WES) 4:09pm, $0.40
    • Whole Foods Market (WFM) 4:02pm, $0.31 - Preview
    • YY (YY) 4:01pm, $0.31

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Tin Exports From Indonesia Seen Jumping as Buyers Adapt to Rules
  • Platinum Giants Ready to Stare Down Union Over Pay: Commodities
  • WTI Rebounds From Five-Month Low Before U.S. Fuel Supply Data
  • Copper Rises Before U.S. Reports Seen Signaling Further Growth
  • Wheat Climbs on Signs of Demand From Egypt to Iraq; Corn Steady
  • U.S. Cotton Supply Seen Higher as Growing Conditions Improve
  • Gold Sales at Perth Mint Advance in October as Prices Tumble
  • Rebar Futures Fall for Second Day as Construction in China Slows
  • Coal Seen Rebounding in China on Indonesia Curbs: Energy Markets
  • Palm Production in Malaysia May Drop First Time in Eight Months
  • Oil Industry May Invoke Trade Law to Challenge U.S. Export Ban
  • China Targets Steel, Aluminum Overcapacity to Boost Profits
  • Traders Face Curbs on Speculation With CFTC Vote on New Limits
  • Floods to Drought Seen Curbing China’s Corn Harvest: Commodities

THE HEDGEYE DAILY OUTLOOK - 5

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 


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