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Did You Short $WTW Before the Bottom Fell Out? We Did.

Takeaway: Get Hedgeye. It pays.

Weight Watchers plummets over 25%... Worst day on record... Hedgeye called it.

 

Check out the video below from two weeks ago. Analysts Hesham Shaaban and Tom Tobin explained why WTW was a top Hedgeye SHORT.

 

Yes - it (literally) pays to watch HedgeyeTV.

 

While you’re at it, do yourself a big favor and sign up for a Hedgeye product today. There are worse ways to spend $29.95 a month. (Like buying a share of WTW.)

 


Burn, Baby Burn!

Client Talking Points

US DOLLAR

The buck continues to burn. It's down -1.5% in the last 2 weeks after failing our Hedgeye TAIL risk resistance of 81.17 US Dollar Index. Don’t confuse the inflation embedded in that (CRB Index new highs this morning at +4.6% year-to-date) as growth. It's great for Utilities (XLU), but brutal for Consumers (XLY and XLP).

GOLD

Ohh baby does Gold love US #GrowthSlowing. Dollar Down + Rates Down = Gold up +8.8% year-to-date! That was 2011 and that’s Q1 of 2014. Beta chasers are going to get smoked not learning the Q1 2011 lesson. Variance at both the US stock and sector and level is starting to rip.

#EuroBulls

What's that? $1.37 Euro and $1.67 Pound versus the US Dollar? Unlike US economic growth slowing on the margin, European growth actually continues to accelerate. People who claim a strong currency is “bad for Germany” certainly don’t have any economic (and/or European growth equity return) data to support that.

Asset Allocation

CASH 49% US EQUITIES 0%
INTL EQUITIES 6% COMMODITIES 15%
FIXED INCOME 15% INTL CURRENCIES 15%

Top Long Ideas

Company Ticker Sector Duration
FXB

We remain bullish on the British Pound versus the US Dollar, a position supported over the intermediate term TREND by prudent management of interest rate policy from Mark Carney at the BOE (oriented towards hiking rather than cutting as conditions improve) and the Bank maintaining its existing asset purchase program (QE). UK high frequency data continues to offer evidence of emergent strength in the economy, and in many cases the data is outperforming that of its western European peers, which should provide further strength to the currency. In short, we believe a strengthening UK economy coupled with the comparative hawkishness of the BOE (vs. Yellen et al.) will further perpetuate #StrongPound over the intermediate term.

DRI

Darden is the world’s largest full service restaurant company. The company operates +2000 restaurants in the U.S. and Canada, including Olive Garden, Red Lobster, LongHorn and Capital Grille. Management has been under a firestorm of criticism for poor performance. Hedgeye's Howard Penney has been at the forefront of this activist movement since early 2013, when he first identified the potential for unleashing significant value creation for Darden shareholders. Less than a year later, it looks like Penney’s plan is coming to fruition. Penney (who thinks DRI is grossly mismanaged and in need of a major overhaul) believes activists will drive material change at Darden. This would obviously be extremely bullish for shareholders and could happen fairly soon driving shares materially higher.

Three for the Road

TWEET OF THE DAY

The government has been very successful in convincing lemmings that there's no inflation @KeithMcCullough

QUOTE OF THE DAY

There is giant untapped potential in disagreement, especially if the disagreement is between two or more thoughtful people. -Ray Dalio

STAT OF THE DAY

Gold futures pushed higher in electronic trading Friday, trading at the highest levels since November. Gold for April delivery jumped $16.70, or 1.3%, to $1,316.70 an ounce, adding to a $5.10 gain Thursday on the Comex division of the New York Mercantile Exchange.



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 80.64%
  • SHORT SIGNALS 78.61%

Valentine's Day Massacre

“You must be new to this town, Mister. Only Al Capone kills like that.”

-Bugs Moran

 

Bugs was a Chicago gangsta, yo. And that’s all I have to say about that. We aren’t making a market call today. Like the entire Connecticut school system (that closes when it drizzles), we’re shutting the office down today for the Valentine’s Day Massacre at Chelsea Piers in Stamford.

 

Not to be confused with Capone’s made for movies stuff, this is going to be the real deal. At 1PM sharp (attendance is free), we have @HedgeyeRetail analyst (Bugs’ 3rd cousin and former Chicago Blackhawks prospect from Robbinsdale, Minnesota, Alec Richards) between the pipes versus The Dan Holland.

 

Not to be confused with the 20yr old Holland who you’ll find on HockeyDB.com (who plays for the New Hampshire Monarchs - 5 games played, 8 PIMS, and 1 assist), Hedgeye’s Holland hails from parts unknown. Scouts from Charlestown say he’s a killer. And all he has to do to win is score 1 goal in 10 breakaway tries on Richards. If he does that, he’ll make Big Alberta, Daryl Jones, a lot of dough.

 

Valentine's Day Massacre - dh wins

 

Back to the Global Macro Grind

 

Oh, you don’t care about Hedgeye hockey and want to make some dough in the market do you?

 

Heyer: “Hello, boys – something I can do for you?”

Gangster: “Yes, you can shut up!”

 

Ok, be that way.

 

While this whole attitude thing may not be what you were looking for on Valentine’s Day, that’s just too bad isn’t it.

 

Despite people on TV getting all lovey-dovey with the US stock market (on no-volume-lower-highs again) yesterday, I don’t like you buying the US stock market today anymore than I didn’t yesterday.

 

Why?

  1. US DOLLAR – down again this morning (-1.5% in the last 2 weeks and bearish on our long-term TAIL risk duration)
  2. US RATES – after failing @Hedgeye TREND resistance of 2.80% this wk, falling again this morning to 2.72%
  3. GOLD – ripping, alongside the CRB Commodities Index, to fresh new YTD highs of $1308 = +8.8% YTD!

Oh, you don’t like the #InflationAccelerating call because you aren’t long inflation?

 

Capone: “Wanna know something… I like a guy who can use his head for something more than a hatrack.”

 

Yeah.

 

Other than the explicit US #GrowthSlowing signal that has always been Dollar Down + Rates Down = Gold Ripping, what else is going on out there today that has me in such a mood?

  1. JAPAN – Yen breaking out now vs USD and the Nikkei is getting crushed (-3.3% in the last 2 days to -12.4% YTD)
  2. RETAIL SALES – reported yesterday as the worst 1 and 2 year growth rate in 2 years (and everyone blames weather)
  3. RISK RANGES – both the SP500 and VIX risk ranges of 1 and 13.39-20.41, respectively, are wicked wide

And, btw, #InflationAccelerating in the two things I drink/eat for breakfast every morning has me surly too:

  1. COFFEE = +25.7% YTD
  2. OATS = +17.8% YTD

But, whatever you do, don’t tell me there’s never going to be inflation in this world, ever.

 

Just don’t.

 

Don’t go there because, as the Interrogator in the Valentine’s Day Massacre told Franky Gusenberg, “I’ve got to tell you Frank, you’re not going to make it. Want me to call a preacher?”

 

Yep. For Danny Holland versus one of the best goalies in Yale Hockey history, I am officially recommending prayer.

 

Happy Valentines.

 

Our immediate-term Risk Ranges are now:

 

UST 10yr Yield 2.60-2.80%

SPX 1

Brent Oil 107.69-110.41 (

NatGas 4.76-5.41

Gold 1

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Valentine's Day Massacre - Chart of the Day

 

Valentine's Day Massacre - Virtual Portfolio


February 14, 2014

February 14, 2014 - 1 

BULLISH TRENDS

February 14, 2014 - Slide2

February 14, 2014 - Slide3

February 14, 2014 - Slide4

February 14, 2014 - Slide5

February 14, 2014 - Slide6

February 14, 2014 - Slide7

February 14, 2014 - Slide8

February 14, 2014 - Slide9 

BEARISH TRENDS

February 14, 2014 - Slide10

February 14, 2014 - Slide11
February 14, 2014 - Slide12

February 14, 2014 - Slide13


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – February 14, 2014


As we look at today's setup for the S&P 500, the range is 122 points or 5.67% downside to 1726 and 0.99% upside to 1848.                                   

                                                                                            

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: 2.42 from 2.42
  • VIX closed at 14.14 1 day percent change of -1.12%

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30am: Benchmark revisions of Producer Price Index
  • 8:30am: Import Price Index m/m, Jan., est. -0.1% (pr 0.0%)
  • 9:55am: UofMich. Confidence, Feb. preliminary, est. 80.2
  • 11am: Fed to buy $1b-$1.25b in 2036-2043 sector
  • 1pm: Baker Hughes rig count

GOVERNMENT:

    • President Barack Obama meets w/Jordan’s King Abdullah II
    • U.S. federal agencies open with two-hour delay

WHAT TO WATCH:

  • More snow for U.S. Northeast after 14,000 flights grounded
  • AIG boosts div., buybacks as CEO Benmosche eliminates jobs
  • Twitter insiders get first chance to sell shrs as lockup ends
  • Sony’s PlayStation 4 retakes lead over Microsoft’s Xbox One
  • Kennedy Wilson Europe to raise $1.2b in property IPO
  • Rakuten to buy Viber Internet messaging app for $900m
  • Brightoil in talks w/Anadarko, Newfield on China ops: Reuters
  • Pershing, Trian other funds face 13F disclosure deadline
  • Toyota’s Prius keeps top Calif. sales rank as Tesla moves up
  • Euro-area economy grows more than forecast on Germany, France
  • European banks avoiding risky-loan disclosure brace for review
  • China banks’ bad loans reach highest since financial crisis
  • China inflation stays subdued as producer prices drop
  • Fed Minutes, Carney, EU Talks, Olympics: Wk Ahead Feb. 15-22
  • NOTE: No U.S. Daybook Monday due to President’s Day holiday

EARNINGS (all times ET, times are approximate):

    • Allete (ALE) 8:30am, $0.82
    • Brookfield Asset Management In (BAM/A CN) 7:01am, $0.51
    • Campbell Soup Co (CPB) 6:30am, $0.73  - Preview
    • Coty (COTY) 6am, $0.29
    • DTE Energy Co (DTE) 7:15am, $0.96
    • Enbridge (ENB CN) 7am, C$0.45 - Preview
    • Hyatt Hotels (H) 7:30am, $0.20
    • Interpublic Group (IPG) 7am, $0.59
    • ITT (ITT) 7am, $0.47
    • JM Smucker (SJM) 7am, $1.68 - Preview
    • LifePoint Hospitals (LPNT) 6:30am, $0.80
    • Lincoln Electric Holdings (LECO) 7:30am, $0.86
    • Scripps Networks Interactive I (SNI) 7am, $0.97
    • TRW Automotive Holdings (TRW) 7am, $1.64
    • Ventas (VTR) 7:01am, $0.43
    • VF (VFC) 7am, $0.84 - Preview

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Gold Extends Climb Above $1,300 as Investors Boost SPDR Holdings
  • Palm Imports by India Slump to Lowest Since April on Reserves
  • Natural Gas Heads for Weekly Gain as Cold Erodes Stockpiles
  • Copper Advances as Economic Growth in Europe Exceeds Estimates
  • Soybeans Climb for a Second Day on Chinese Demand Indications
  • Coffee Declines in London to New York With Brazil Rainfall Seen
  • Rebar in Shanghai Advances as Chinese Steel Output Declines
  • Silver Trades Above 200-Day Moving Average for 1st Time in Year
  • Impala Platinum Sees Strike Lasting to May as Talks Stumble
  • Sugar Traders Bullish for Second Week on Dry Weather in Brazil
  • Frozen Peach Trees Help U.S. Southeast Orchards Amid Storm Chaos
  • Derailment in Pennsylvania Adds to Scrutiny of Crude Shipments
  • Iran Nuclear Talks Resume as Companies Prepare for Market Access
  • Palm Reserves in Indonesia Seen at 19-Month Low; Prices Advance

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

 

 

 

 

 

 

 

 

 

 

 

 

 


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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