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Cartoon of the Day: Tesla | $TSLA

Cartoon of the Day: Tesla | $TSLA - Tesla.NJ3.13.2014

 

New Jersey just banned automaker Tesla from selling cars directly to consumers in the Garden State, becoming the third, following Arizona and Texas, to impose such restrictions on the company.

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CALL TODAY: The World in 2050? Thought Leader Discussion with Professor Laurence C. Smith

Takeaway: We are hosting a thought leadership & investing discussion with Prof Laurence Smith today at 1pm. The dial-in & call details are below

"Prediction is very difficult.  Especially about the future"

-Niels Bohr

 

 

You are invited to join Hedgeye's Macro Team and Director of Research Daryl Jones for a special thought leadership and investing discussion with Laurence C. Smith, Professor and Chair of Geography and Professor of Earth & Space Sciences at UCLA and author of THE WORLD IN 2050.

 

Natural resource demand, population demographics, economic globalization and climate change will be the ascendant, global forces shaping civilization over the next half century.   

 

We will explore the implications of these emerging dynamics, the challenges for governments and society and prospective investment opportunities born out of a sweeping shift in the distribution of people and power.   

 

The call will be held on Today, March 13th at 1:00pm EST

 

CALL DETAILS

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 744597#
  • Materials: CLICK HERE (Slides will be available approximately one hour prior to the start of the call.)

Please email  for more information.

 

 

ABOUT PROFESSOR LAURENCE C. SMITH

Dr. Laurence C. Smith is Professor and Chair of Geography and Professor of Earth & Space Sciences at UCLA. His research includes topics of Arctic climate change, hydrology, carbon cycles and satellite remote sensing. He has published over 70 peer-reviewed articles including in the journals Science, Nature, and PNAS and won more than $7.7M in research funding from the National Science Foundation and NASA. In 2006 he was named a Guggenheim Fellow by the John S. Guggenheim Foundation and in 2007 his work appeared prominently in the Fourth Assessment Report of the United Nations' Intergovernmental Panel on Climate Change (IPCC). He is currently serving on steering committees for the National Research Council, NASA, and the World Economic Forum. He receives frequent requests to deliver keynotes at public and private speaking events, and in 2012 and 2014 was an invited speaker to the World Economic Forum in Davos. 

His general-audience book THE WORLD IN 2050: Four Forces Shaping Civilization's Northern Future (Plume: New York, 2011; U.K. edition titled THE NEW NORTH, Profile: London, 2011 with translations in 14 languages) synthesizing cross-cutting trends in natural resource demand, population demographics, economic globalization, and climate change with particular emphasis on northern countries was winner of the Walter P. Kistler Book Award and a NATURE Editor's Pick of 2012. His work has received coverage in The Wall Street Journal, The Economist, The Los Angeles Times, The Washington Post, The Globe and Mail, The Financial Times, Discover Magazine, NPR, CBC Radio, BBC and others.


European Banking Monitor: Russia The Big Mover | $RSX

Editor's Note: This is a complimentary research note from Hedgeye Analyst Matthew Hedrick published on March 10, 2014 at 12:00 PM. 

Below are key European banking risk monitors, which are included as part of Josh Steiner and the Financial team's "Monday Morning Risk Monitor".  If you'd like to receive the work of the Financials team or request a trial please email sales@hedgeye.com. And, for more information on our services, click here.

 

European Banking Monitor: Russia The Big Mover | $RSX - 3 13 2014 12 11 10 PM

 

European Financial CDS - The big mover in European swaps last week was Sberbank of Russia, which widened 72 bps to 286 bps from 214 bps. Russia's largest bank has often been a good indicator on geopolitical as well as commodity pressures. Elsewhere across Europe, the Financials were much more sanguine with broad-based improvement.

 

European Banking Monitor: Russia The Big Mover | $RSX - zz. banks

 

Sovereign CDS – Sovereign swaps were tighter across the globe last week with the sole exception of the US, where swaps were unchanged at 30 bps. Europe put up broad-based improvement in spite of turmoil in peripheral Ukraine.

 

European Banking Monitor: Russia The Big Mover | $RSX - z. sov1M

 

European Banking Monitor: Russia The Big Mover | $RSX - z. sov2

 

European Banking Monitor: Russia The Big Mover | $RSX - z. sov3

 

Euribor-OIS Spread – The Euribor-OIS spread tightened by 3 bps to 11 bps. The Euribor-OIS spread (the difference between the euro interbank lending rate and overnight indexed swaps) measures bank counterparty risk in the Eurozone. The OIS is analogous to the effective Fed Funds rate in the United States.  Banks lending at the OIS do not swap principal, so counterparty risk in the OIS is minimal.  By contrast, the Euribor rate is the rate offered for unsecured interbank lending.  Thus, the spread between the two isolates counterparty risk. 

 

European Banking Monitor: Russia The Big Mover | $RSX - z. euribor

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Retail Callouts (3/12): RH, WSM, AMZN

Takeaway: McGough on the road - Richards pinch-hitting...WSM strong rev #'s bullish for RH, AMZN announces prime $ increase, Alibaba recruiting

EVENTS TO WATCH

 

THURSDAY

  • ARO - Earnings Call: Thursday 3/13, 4:15pm
  • ZUMZ - Earnings Call: Thursday 3/13, 5:00pm
  • ULTA - Earnings Call: Thursday 3/13, 5:00pm

 

FRIDAY

  • ANN - Earnings Call: Friday 3/14, 8:30am
  • BWS - Earnings Call: Friday 3/14, 9:00am
  • BKE - Earnings Call: Friday 3/14, 10:00am
  • HIBB - Earnings Call: Friday 3/14, 10:00am

 

COMPANY NEWS

 

WSM - 4Q13 Earnings

 

Takeaway: 10.4% comp was driven by a big beat from DTC, with considerable strength coming from the furniture concepts. This is the first meaningful beat we've seen this quarter and it was possible for two reasons; 1) e-commerce penetration offset weather induced traffic declines and 2) furniture sales are more immune to inconsistent traffic patterns than impulse categories. Great read through for our favorite name, RH, who also leans heavily on the direct channel.


Retail Callouts (3/12): RH, WSM, AMZN - chart1 3 13

 

AMZN - Amazon Prime and Amazon Student Prime Membership Fee Changes

(http://www.amazon.com/gp/help/customer/display.html?ascsubtag=bmTVAqqiEeOhW9pxbuniXwcv01_kac.3_0_0_0&nodeId=201482600)

 

  • "For the first time since it was introduced nine years ago, the price of Prime is going up. Existing Prime members will pay $99 per year on their annual renewal date and Amazon Student members will pay $49."
  • "The Prime Fresh membership fee will remain unchanged at $299."

 

Takeaway: Step 1 for AMZN was to get users hooked on its Prime service, now it's trying to take price. That being said, 9 years is a long time to hold price steady and one could argue that AMZN should have done this a long time ago. Prime is a sticky enough service that the $20 price hike won't chase many away.

 

 Alibaba - Alibaba Ramping Up Efforts to Sell U.S. Brands in China

(http://blogs.wsj.com/digits/2014/03/11/alibaba-ramping-up-efforts-to-sell-u-s-brands-in-china/)

 

  • "Chinese e-commerce giant Alibaba Group is ramping up efforts to bring U.S. brands to consumers in its home country. Alibaba...says it will offer U.S. companies several ways to get their merchandise to China, including through its Alipay payments subsidiary and sophisticated shipping methods. It is also getting closer to launching a new U.S. online marketplace called 11Main.com for small- and medium-sized brands and manufacturers."
  • "ChannelAdvisor...has partnered with Alibaba to help U.S. companies sell into mainland China using its software. Its clients will be able to more easily list, sell and deliver items on Alibaba’s Tmall.com site. U.S. e-commerce companies have struggled to gain a foothold in China, in part because of Alibaba’s headstart with Tmall and its eBay-like site Taobao."

 

Takeaway: A number of US companies already use Tmall as a platform in China. NKE, Addy, New Balance, etc. with many more to come. Alibaba takes a lot of the guess work out the equation allowing brands to set up localized brand shops that Chinese consumers can identify with. Definitely a good starting point for brands who have struggled to gain a foothold in the Chinese marketplace.

 

OTHER NEWS

 

What's Selling: Running

(http://www.wwd.com/footwear-news/retail/whats-selling-running-7587138)

 

MAINE RUNNING CO., Portland, Maine 

  • Brooks Adrenaline GTS
  • Asics GT-2000
  • Saucony Guide 7

Top trend: “Definitely the more cushioned options for us are getting a lot of attention,” said Ben Webber, assistant GM. “People are asking about shoes that have a lower offset but with more cushioning. It’s crazy how the pendulum swings.”

 SALT LAKE RUNNING CO., Draper, Utah

  • Altra Superior and Olympus (tie)
  • Hoka One One Stinson Trail 
  • Adidas Supernova Glide Boost

Top trend: “Trail shoes are working with all the trails opening back up,” said manager David Buckle. 

 FITRIGHT NW, Portland, Ore. 

  • Brooks Adrenaline GTS
  • Saucony Guide 7 and Ride 6 (tie)
  • Asics GT-2000 

Top trend: “Color is still a big push. People really enjoyed when color started to show up on the wall. It rains here a lot and when it’s colder, people want [nice] things to look at,” said co-owner Robb Finegan. “White is trending with a lot of the vendors, but we got a big shock this spring with people wanting more color and not the white mesh.”

 

DDS - Moody's Lifts Dillard's Rating

(http://www.wwd.com/business-news/financial/moodys-lifts-dillards-rating-7587468)

 

  • Moody’s Investors Service Wednesday upgraded Dillard’s Inc.’s corporate family rating one notch to 'Ba1'…"
  • "Moody’s also raised the...retailer’s probably of default rating one notch to 'Ba1' and its senior unsecured notes a tick to 'Ba2'…"
  • "In assigning the ratings, Margaret Taylor, vice president and senior credit officer at Moody’s, noted the retailer’s 'ability to maintain its operating margin above 5.5 percent [of sales] despite gross margin erosion in the fourth quarter.'"

 

TGT - Target Apologizes for Photoshop Gaffe

(http://www.wwd.com/media-news/fashion-memopad/off-target-7587760)

 

  • "...Target apparently ran Photoshopped images of overly skinny teens wearing bathing suits on its Web site. The images received sharp criticism from national media and there was anger throughout the blogosphere as the photos went viral."
  • "Target was apologetic on the matter. 'In response to your query about the swimsuit image on target.com, this was an unfortunate error on our part and we apologize. We have removed the image from our Web site,' a company spokesman said. Asked how the mistake occurred, 'It was the result of a photo editing error on our part.'”

 

BEBE - Bebe Entering Eyewear Market

(http://www.wwd.com/accessories-news/eyewear/bebe-entering-eyewear-market-7584901)

 

  • "Bebe is entering the eyewear market with a new collection of sunglasses for spring."
  • "The range, which includes a variety of styles done in mixed metal and plastic, retails for $68 to $88 and will be sold in-store and online."

 


THE LEISURE LETTER (3/13/2014)

Takeaway: Another article focusing on money laundering in Macau

TICKERS:  SGMS

EVENTS TO WATCH:  UPCOMING EARNINGS/CONFERENCES 

TODAY

  • JP Morgan Gaming, Lodging, Restaurant & Leisure Forum
    • FCH, PNK, PENN, BYI, CCL, SGMS, GLPI, SHO, MCRI

Monday-Thursday, March 10-13

  • 2014 Cruise Shipping Miami Conference (CSM)

Friday, March 14

  • Hyatt Investor Day

COMPANY NEWS

SGMS:  missed 4Q EBITDA expectations but raised its 2014 WMS synergy guidance.  Yields also held up better than expected thanks to WAP outperformance.

  • Takeaway:  Cautious on the stock over the intermediate and long term given the lack of cash flow and slot headwinds over the next two years.

Starwood Capital – acquired U.K. hotel and conference center operator De Vere Venues from the De Vere Group for approximately $385 million. The transaction includes a collection of 23 owned and leased hotels, mostly in and around London, such as Wokefield Park, Horsley Park and Latimer Place.

 

Takeaway:  Could Barry Sternlicht be reuniting the band and will he make one more run at another lodging IPO?  We'd like to see it - Sternlicht is a money maker.  No we're not kissing arse for a piece of the underwriting - we only do research!  Stay tuned…

 

TUI Cruises (CSM):  When asked about the higher fuel prices for 2015 due to the implementation of the  more expensive low-sulphur fuel (MGO), TUI Cruises CEO Richard Vogel responded, 'We are certainly not going to stop cruising in Northern Europe but we will just have to see just how much extra passengers will be willing to pay to cruise there."  Vogel added he was confident Germany would finally overtake the UK this year and said that reaching 3m passengers is a feasible target for the future.  His brand and AIDA combined are adding 37% capacity with their four newbuilds and—assuming they fill them—this alone would bring the German total to 2.2m.

 

Takeaway:  Strong forecast for Germany this year but we see mixed pricing for the AIDA brand

 

INDUSTRY

Authorities announce first local avian flu case Macau Daily Times, Macau Business 

The Civic and Municipal Affairs Bureau (IACM) and the Health Bureau (SSM) have announced that a sample taken yesterday from live chicken imported from the mainland has tested positive for the bird flu virus. It is the first time an H7-type avian influenza virus has been detected in Macau since the latest outbreak of bird flu began in the mainland early last year.  While still early, the Health Bureau stressed that none of the workers who were in contact with the poultry have displayed any flu-like symptoms. 

 

Takeaway:  A small risk but our studies have shown bird flu have not impacted Mass revenues in the past. Only time will tell if the bird flu jumps from the avian to humans. 

 

Macau – Reuters published a story about how Chinese citizens are using their Union Pay bankcard (a Chinese government backed financial institution) to funnel money out of China and into other foreign countries – including Macau.

 

Takeaway: The article is actually informative and a little troubling.  It goes through the UnionPay structure and how it is being used to launder money and contribute to Macau’s gaming success.  We all know this goes on but the article could really raise some eyebrows here.  There seems to be an increasing amount of talk recently regarding Macau money laundering.  We commented yesterday on the US State Department asking for increased junket oversight and a lowering of the threshold for reportable transactions.

 

Some of it could be politically motivated – Steve Wynn and Sheldon Adelson are publicly not fans of Obama’s policies and the Administration has been accused of using the IRS and other government agencies against their political enemies.  Whatever the agenda, the realities of the Macau gaming business seem to be coming to light in the US public domain.  Definitely something to pay attention to with the stocks up and sentiment running high and analysts saying there are no risks.

 

Cruises set new record in Europe with 6MM passengers Hosteltur 

President of CLIA Europe, Pierfrancesco Vago said the persisting economic weakness in Europe remains a challenge but he is optimistic that hte cruise industry will continue to grow in 2014.  In 2013, 475k Spaniards chose a cruise to enjoy their holiday -similar levels to 2008.

  • 6.35MM European cruise passengers in 2013
  • 4/5 Europeans decided to enjoy cruise around Europe (Mediterranean - most popular)
  • Spain remains top 5 source market for Europe
  • In response to national economic indicators, Spain could improve their results in 2014

 Takeaway:  Can 2014 surpass 2013's good year?  So far, agents are optimistic.

 

MACRO

Hedgeye remains negative on consumer spending and believes in more inflation.  Following  a great call on rising housing prices, the Hedgeye Macro/Financials team is turning decidedly less positive. 

 

Takeaway:  We’ve found housing prices to be the single most significant factor in driving gaming revenues over the past 20 years in virtually all gaming markets across the US.


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 80.30%
  • SHORT SIGNALS 78.51%
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