“For man to truly understand himself, he must travel beyond the clouds”
When I saw my first Space Shuttle launch as a child, I knew I wanted to be an astronaut.
After I made my first real money selling PayPal/eBay stock, I bought a ticket on Virgin Galactic to go to space aboard SpaceShipTwo. I later bought a second seat on Space Expedition Corporation’s Lynx. As I became more involved in the Newspace community I began speaking at conferences and universities around the world – the topic being “The Potential for & Impact of Commercial Space & Space Tourism”.
Today, alongside my research and engineering team @Hedgeye, I am co-founding Firefly – a ground-based, small satellite launch company, with one of Hedgeye’s greatest supporters and fans, PJ King, as well as propulsion engineer extraordinaire, Tom Markusic.
With a Ph.D. from Princeton in Mechanical & Aerospace Engineering, Tom has conducted research on deep space propulsion systems and since 2006 has held senior leadership positions inside virtually every leader in the Newspace Industry: Elon Musk’s SpaceX, Jeff Bezos’ Blue Origin and Richard Branson’s Virgin Galactic. Tom is Firefly’s CEO and from what I have seen, he will be a fantastic entrepreneur and business executive.
Lowering the cost of small satellite launches to Low Earth and Sun Synchronous Orbits will revolutionize broadband data delivery and earth observation missions. What used to cost hundreds of millions of dollars, is rapidly becoming available in the single digit millions.
While the leaders in the nascent and rapidly developing small sat industry (companies such as PlanetIQ, Skybox, Planet Labs, and numerous others) have raised VC funds well in excess of $100M in the last 1-2 years, there exists virtually no dedicated launcher capacity for these ventures to deliver their payloads to orbit.
With Hedgeye’s help, Firefly will change this.
We have rapidly received our seed funding commitments and are already in discussions with investors looking towards our Series A funding. Since our website launched and word of mouth has spread through the industry, we have been overwhelmed with resumes. We have established our headquarters in Austin, TX and research and development operations in Hawthorne, CA.
What we are setting out to do will be enormously challenging. It is difficult to make exact projections about schedule until we get further along in development, but the team has set itself a goal: To be in orbit in about three years.
Hedgeye has and will continue to support Firefly on a number of fronts: Josh Steiner (today he runs our Financials vertical but in the past he analyzed satellite operators) has worked with us on market sizing.
Jay Van Sciver, who leads Hedgeye’s Industrials team, has worked on valuation analysis for some of the private New Space players. Hedgeye will lend assistance in a variety of operational areas, ranging from finance and accounting to HR, facilities and IT.
We are not in the business of complaining about the 2008 crisis. We are in the business of cutting edge research, intellectual growth, and product innovation. So, I just wanted to take a few minutes this morning to thank you for your business – it’s helping us travel beyond the clouds.
Alongside our TREND duration view (bullish or bearish in brackets), our immediate-term Risk Ranges are now:
SPX 1 (bullish)
VIX 11.85-13.75 (bearish)
Pound 1.63-1.65 (bullish)
Natural Gas 4.20-4.51 (bullish)
Brent Oil 105.25-109.39 (bearish)
Gold 1186-1245 (bearish)
Onward and upward,
President, Hedgeye Risk Management
TODAY’S S&P 500 SET-UP – January 8, 2014
As we look at today's setup for the S&P 500, the range is 26 points or 0.76% downside to 1824 and 0.66% upside to 1850.
CREDIT/ECONOMIC MARKET LOOK:
- YIELD CURVE: 2.56 from 2.55
- VIX closed at 12.92 1 day percent change of -4.65%
MACRO DATA POINTS (Bloomberg Estimates):
- 7am: Mortgage Applications, Jan. 3 (prior -6.3%)
- 8:15am: ADP Employment Change, Dec., est. 200k (prior 215K)
- 10:30am: DOE Energy Inventories
- 11am: Fed to purchase $1b-$1.5b in 2036-2043 sector
- 1:00pm: U.S. to sell $21b in 10Y notes in reopening
- 2pm: Fed releases minutes of Dec. FOMC meeting
- 3pm: Consumer Credit, Nov., est. $14b (prior $18.186b)
- House, Senate appropriators continue talks on final FY 2014 spending bill, aiming for passage by Jan. 15 deadline
- Treasury Sec. Jack Lew in Berlin for talks with German Finance Minister Wolfgang Schaeuble on growth, stability
- 10am: Senate Banking Cmte panel meets to discuss GAO report on govt support for bank holding cos.
WHAT TO WATCH:
- Mulally bows out of Microsoft race to helm Ford this year
- Sherwin-Williams among paint makers ordered to pay $1.15b
- Twitter taking questions via Twitter for 1st results since IPO
- Apple to open 10th store in mainland China after Cook’s pledge
- Chinese businessman says NYT bid faces obstacles: Reuters
- N.Y. Times rejects meeting with China’s Chen Guangbiao: WSJ
- WellPoint to sell contact lens site to Thomas H. Lee Partners
- Federal probe targets banks over bond pricing: WSJ
- Yahoo’s Mayer unveils content, advertising tools in rev. push
- Cisco CEO pegs Internet of Things as $19t opportunity
- JPMorgan fails to throw out California debt collection case
- Madoff trustee tops $10b recovery with JPMorgan deal
- Hedge funds trail stocks for 5th year with 7.4% return in 2013
- EU puts banking-union credibility on line in resolution talks
- Buick sales of 1m tops 1984 record set before China entry
- Sirius beats subscriber targets, holds steady on 2014 ests.
- U.K. home prices to extend advance this yr, Halifax says
- Arctic cold cuts fuel supplies as refineries to pipes freeze
- Bed Bath & Beyond (BBBY) 4:15pm, $1.15 - Preview
- Constellation Brands (STZ) 7:30am, $0.91 - Preview
- Global Payments (GPN) 4:01pm, $1.02 - Preview
- Monsanto (MON) 8am, $0.64 - Preview
- MSC Industrial (MSM) 7:30am, $0.95 - Preview
- RPM Intl (RPM) 7:30am, $0.45 - Preview
- UniFirst (UNF) 8am, $1.62
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
- WTI Rises for Second Day as U.S. Crude Stockpiles Seen Declining
- Soybeans Drop a Second Day as USDA Report May Show Ample Supply
- Gold Mine Deals Seen Rebounding on Fire-Sale Prices: Commodities
- Gold Drops Before Fed Minutes as Job Data May Signal Recovery
- Arabica Coffee Resumes Gains Amid Index Change; Robusta Declines
- Copper Fluctuates Before Release of Fed Policy-Meeting Minutes
- Chinese Copper Demand Seen Boosted by Grid Target, Barclays Says
- Rebar Ends Near Seven-Month Low on China Record Credit Hole
- Sake Boom Revives Vintage Rice Strains as Abe Eyes Farm Exports
- Arctic Cold Cuts Fuel Supplies as Refineries to Pipelines Freeze
- Japan Police Probe Pesticide in Croquettes That Sicken Hundreds
- Calls to Drop 1970s-Era U.S. Oil Export Ban Stir Political Fight
- Seaborne Coal Demand May Pick Up in 1Q on Inventory Building
- Indonesia Proposes Allowing Concentrate Exports as Ore Ban Looms
The Hedgeye Macro Team
Risk Managed Long Term Investing for Pros
Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.
Takeaway: We think that online shopping as a percent of total went parabolic this year.
Takeaway: This reading is simply bad. Numbers are still growing, which is good, but the growth rate isn't even in the same ball park as what we saw over the past two years. Our sense -- which unfortunately we cannot yet quantify -- is that this shows a dramatic shift to online shopping both pre and post holiday. Yes, we've been shopping online for years. But we think that online as a percent of total went parabolic this year.
When we look at the 2013 holiday season in retrospect, it will be known as the point in time when bricks & mortar really started to take it on the chin.
What this also goes to show is that so many 'sales monitoring' data sources that the Street has relied upon for years are losing relevance -- fast.
(Editor's Note: This is a complimentary research excerpt from Retail Sector Head Brian McGough.)
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