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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – April 30, 2014


As we look at today's setup for the S&P 500, the range is 27 points or 1.08% downside to 1858 and 0.36% upside to 1885.                                            

                                                                                   

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: 2.27 from 2.25
  • VIX closed at 13.71 1 day percent change of -1.86%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage Applications, April 25 (prior -3.3%)
  • 8:15am: ADP Employment Change, April, est. 210k (prior 191k)
  • 8:30am: Employment Cost Index, 1Q, est. 0.5% (prior 0.5%)
  • 8:30am: GDP Annualized, 1Q, est. 1.2% (prior 2.6%)
  • 8:30am: Former Fed Chairman Bernanke speaks in Washington
  • 9am: ISM Milwaukee, April, est. 56 (prior 56.03)
  • 9:45am: Chicago Purchasing Managers, April, est. 57 (pr 55.9)
  • 10am: Retail Sales annual benchmark revisions
  • 10:30am: DOE Energy Inventories
  • 2pm: FOMC seen holding benchmark interest rates in range from 0% to 0.25%, trimming QE to $45b from $55b
  • 3pm: New York Fed to issue QE schedule for May

GOVERNMENT:

    • President Obama holds event on the economy at White House
    • 10am: Supreme Court hears arguments in Limelight patent case
    • 10am: House Oversight Cmte hearing on effect of liquefied natural gas exports on U.S. foreign policy
    • Budget hearings/panels/testimony:
    • 10am: Education Sec. Duncan at Sen. Appropriations subcmte
    • 10am: Army Sec. McHugh, Chief of Staff Odierno at Sen. Appropriations defense subcmte
    • 2pm: Treasury Sec. Lew, IRS Commmissioner Koskinen, IRS IG George at Sen. Appropriations panel
    • 2pm: House Ways and Means health subcmte hearing on improving Medicare oversight

WHAT TO WATCH:

  • GE offers $17b for Alstom assets as Siemens plans bid
  • Exelon said to agree to buy Pepco for more than $5.4b
  • What to watch in the FOMC meeting: steady taper, green shoots
  • Bayer said to offer assets to compete for Merck OTC w/Reckitt
  • Sanofi said to explore $7b-$8b drug portfolio sale: Reuters
  • Energy Future sponsors KKR, TPG, Goldman to get 1% equity
  • Credit Suisse, BNP Paribas U.S. charges said to be weighed
  • Philip Morris light-tobacco case’s $10.1b award alive
  • Microsoft Xbox One game console rolls out in China in Sept.
  • Qatar’s Al Mirqab makes $1.55b cash offer for Heritage Oil
  • Deutsche Bank among 15 Europe lenders cut to negative by S&P
  • Deutsche Bank to Credit Suisse attack Basel repo-mkt measures
  • Putin says sanctions threaten U.S., EU role in Russia energy
  • Tesla plans at least 2 battery sites as Musk says speed is key

AM EARNS:

    • Actavis (ACT) 7am, $3.23 - Preview
    • ADT (ADT) 6am, $0.43
    • AllianceBernstein  (AB) 7:15am, $0.41
    • Automatic Data Processing (ADP) 7:30am, $1.08
    • Barrick Gold (ABX CN) 6:30am, $0.19 - Preview
    • Bell Aliant (BA CN) 6am, C$0.39
    • Carlyle (CG) 6:30am, $1.04
    • Cenovus Energy (CVE CN) 6am, C$0.48 - Preview
    • CGI (GIB/A CN) 6:30am, C$0.69 - Preview
    • Dominion Resources (D) 7:30am, $0.97
    • Energizer (ENR) 7:30am, $1.71
    • Energy XXI (EXXI) 6:15am, $0.28
    • Exelon (EXC) 7:30am, $0.68
    • Garmin (GRMN) 7am, $0.44
    • Hess (HES) 7:30am, $1.01 - Preview
    • Hospira (HSP) 7:30am, $0.49 - Preview
    • Hyatt Hotels (H) 7:30am, $0.11
    • IAC/InterActiveCorp (IACI) 7:30am, $0.55
    • International Paper (IP) 7am, $0.54
    • Jean Coutu (PJC/A CN) 7am, $0.30
    • Level 3 Communications (LVLT) 8am, $0.28
    • MeadWestvaco (MWV) 7:25am, $0.23
    • New York Community Bancorp (NYCB) 8am, $0.26
    • NextEra Energy (NEE) 7:30am, $1.07
    • PBF Energy (PBF) 7am, $1.00 - Preview
    • Phillips 66 (PSX) 8am, $1.35 - Preview
    • Pinnacle Entertainment (PNK) 8am, $0.42
    • Pitney Bowes (PBI) 6:30am, $0.40
    • Revlon (REV) 6:30am, $0.28 - Preview
    • Sealed Air (SEE) 7:30am, $0.25
    • Southern Co (SO) 7:30am, $0.56
    • SPX (SPW) 6:30am, $0.21
    • Taser Intl (TASR) 7:30am, $0.07
    • Thomson Reuters (TRI CN) 7am, $0.38
    • Time Warner (TWX) 7am, $0.88 - Preview
    • Vantiv (VNTV) 7am, $0.37
    • WellPoint (WLP) 6am, $2.08 - Preview
    • Wisconsin Energy (WEC) 7am, $0.85

PM EARNS:

    • Amdocs (DOX) 4:01pm, $0.78
    • American Equity Investment (AEL) 4pm, $0.47
    • Ashland (ASH) 5pm, $1.54
    • Atmel (ATML) 4:05pm, $0.05
    • Boyd Gaming (BYD) 4pm, $0.01
    • Brandywine Realty Trust (BDN) 4:12pm, $0.33
    • Canadian Oil Sands (COS CN) 5:01pm, C$0.57 - Preview
    • CBRE (CBG) 4:05pm, $0.17
    • Constellation Software (CSU CN) 4:30pm, $2.83
    • Duke Realty (DRE) 4:11pm, $(0.06)
    • Enbridge Energy Partners (EEP) 4:01pm, $0.18
    • Equity Residential (EQR) 4:29pm, $0.23
    • Fidelity National Financial (FNF) 4:03pm, $0.18
    • Flextronics Intl (FLEX) 4:01pm, $0.20
    • Fortune Brands (FBHS) 4:01pm, $0.31
    • Hologic (HOLX) 4:01pm, $0.33
    • Intersil (ISIL) 4:05pm, $0.14
    • JDS Uniphase (JDSU) 4:05pm, $0.11
    • Key Energy Services (KEG) 6:18pm, $(0.07)
    • Lincoln National (LNC) 4:10pm, $1.30
    • MetLife (MET) 4:05pm, $1.40
    • Murphy Oil (MUR) 5:01pm, $0.97
    • Neurocrine Biosciences (NBIX) 4:02pm, $(0.20)
    • New Gold (NGD CN) 4:04pm, $0.02 - Preview
    • Newfield Exploration (NFX) 4:01pm, $0.42
    • Rovi (ROVI) 4:05pm, $0.43
    • Ruckus Wireless (RKUS) 4:05pm, $0.04
    • Tesoro (TSO) 4:30pm, $0.39 - Preview
    • WebMD Health (WBMD) 4pm, $0.10
    • Weight Watchers Intl (WTW) 4:05pm, $0.09 - Preview
    • Western Digital (WDC) 4:15pm, $1.88
    • Whiting Petroleum (WLL) 4pm, $0.97
    • Williams Cos (WMB) 4:05pm, $0.24
    • Yelp (YELP) 4pm, $(0.06)

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Diamonds to Oil Bring Modern Gold Rush Dreams to Melting Arctic
  • WTI Set for Biggest Monthly Loss in Five on Supply; Brent Slides
  • China Fuels Highest Solar Silicon Demand Since 2011: Commodities
  • Gold Buying by China Seen Lower by StanChart as India Flows Rise
  • Wheat Snaps Rally as Global Supply Outlook Counters U.S. Woes
  • Gold Extends Drop Below $1,300 Before Conclusion of Fed Meeting
  • Copper Climbs as German Revival Signs Bolster Demand Prospects
  • Sugar Advances Supported by Weather Risks; Arabica Coffee Falls
  • Rebar in Shanghai Set for Monthly Drop as Iron Ore Price Slides
  • Drillers Hooked on Oil Bolster Goldman $6 Gas Outlook: Energy
  • Barclays Said to Create Bad Bank Overseen by Eric Bommensath
  • Saudi Oil Output Faces Summer Heat Challenge: Chart of the Day
  • Australia’s $40 Billion LNG Overruns Endanger Asian Supplies
  • Barrick Gold Profit Tops Estimates as Costs Beat Expectations

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

 

 

 

 

 

 

 

 

 

 

 

 

 


April 30, 2014

April 30, 2014 - Slide1

 

BULLISH TRENDS

April 30, 2014 - Slide2

April 30, 2014 - Slide3

April 30, 2014 - Slide4

April 30, 2014 - Slide5

April 30, 2014 - Slide6

April 30, 2014 - Slide7

April 30, 2014 - Slide8

 

BEARISH TRENDS

 

April 30, 2014 - Slide9

April 30, 2014 - Slide10

April 30, 2014 - Slide11
April 30, 2014 - Slide12


TGT - ADDING TO BEST IDEAS LIST AS A SHORT *Reminder: Today 11am ET

Takeaway: We’re Adding TGT to our Best Ideas list as a short. We’ll be hosting a call Today at 11am ET to review our thesis. Call details below.

The crux of our argument? Wall Street's perception of Target's financial trajectory is more upbeat than Main Street. When the stock glossed over the company's weak 4Q earnings report, it was because Steinhafel (CEO) issued guidance that he hoped the company would grow into if the Company repaired its reputation after the data breach - not guidance that he knew TGT could meet or beat. We don't think that the Street is giving TGT credit for a) a miss this year, and b) another one in 2015.  The reality is that when a customer has a great experience in retail, they tell a friend. When a customer has a bad experience, they tell 20. Just ask JC Penney or Lululemon. Some of these 'fire your customer' events are worse than others, but there's one commonality - they take a very long time to recover.  

We think that TGT will be lucky to earn $3.75 this year, and $4.00 in 2015. The current 15x multiple is about as high as TGT has seen in 5-years - clearly the market is not factoring in a miss. We think that multiple compression alone on a weaker EPS number gets to a $48-50 stock, or $12-13 downside. If we're wrong, then we're looking at about $5 upside. That's about 2.5x to one, which we like on sleepy mega-cap shorts in Retail. 

 

TGT - ADDING TO BEST IDEAS LIST AS A SHORT *Reminder: Today 11am ET - TGT Bestidea

 

KEY TOPICS WILL INCLUDE: 

  1. The biggest risks to current consensus expectations. 
  2. Target's visitation statistics (via one of our proprietary consumer surveys). 
  3. How key competitors are reacting to the opportunity to gain share from Target.  
  4. Target's value proposition compared to the rest of Retail, particularly Wal-Mart. 
  5. Has target.com suffered the same customer attrition fate as Target stores?
  6. Which categories is Target winning? Where is it losing?
  7. Historical margin cycles for Target and other major retailers, and where we are in that cycle today.  

CALL DETAILS

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 917515#
  • Materials: CLICK HERE

For more information contact .


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Pop! Pop! Pop! The Social Media Bubble (As Seen From Stamford, Connecticut)

Takeaway: CEO Keith McCullough and the team of analysts at Hedgeye have been out front proactively warning people of the social media bubble.

Pop! Pop! Pop! The Social Media Bubble (As Seen From Stamford, Connecticut) - bubblespopping1

 

On March 27th, when Wall Street consensus was still goo-goo-ga-ga about all things Social Media (Twitter, Yelp, Facebook, etc) and the bubble was hitting hew highs, Hedgeye CEO Keith McCullough wrote the following in his Morning Newsletter.

 

I know no one wants to call it a bubble. There’s career risk in calling something what it is...Boom! Crush. This stuff gets real in a hurry doesn’t it?"

 

Indeed.

 

(Click here to read the full "Morning Newsletter" from March 27.)

 

Pop! Pop! Pop! The Social Media Bubble (As Seen From Stamford, Connecticut) - km1

 

Despite being shrugged off by many a bubble-blinded pundit, he continued to question consensus' conviction that "It's different this time." He's been doing it on television, Twitter, and most importantly, with our customers.

 

Here he is on Fox Business with Maria Bartiromo advising investors to tread carefully in the market, particularly the Nasdaq.

 

Here he is again with Bartiromo, questioning an analyst's bullishness on Amazon and saying that AMZN was more likely to have a 2-handle on it than a 4-handle.

 

Shares of Amazon are down 11% since McCullough made his call.

 

In another Morning Newsletter entitled, "Accepting Little Bubbles," McCullough had this to say:

 

Accepting that little bubbles are going to start to pop bigger ones (like, say, the US stock market’s all-time high price) is a process, not a point.

 

...Having survived (made $ at a hedge fund in down tapes - 2000, 2001, 2002) the Tech Bubble, The LBO and Oil Bubbles (2008), and The Gold and Bond Bubbles (2011-2012), what I have learned about risk managing these suckers is quite simple:

 

First, they start to make lower-highs. Then the volume on down days eclipses the volume on the bounces (up days to lower-highs)… then bearish catalysts start to pile up… then what was happening slowly starts to happen more than a little – it happens all at once.

 

Pop! Pop! Pop! The Social Media Bubble (As Seen From Stamford, Connecticut) - km2

Finally, take a look at this brief HedgeyeTV video below from April 4th, where McCullough spells out his concerns about the bubble. Pay close attention to his bearish comments on YELP and note the date the video was shot. (Hat tip to Hedgeye Internet & Media analyst Hesham Shaaban.)

 

Pop! Pop! Pop! The Social Media Bubble (As Seen From Stamford, Connecticut) - yelp

 

 

Do you want to learn more about Morning Newsletter and other Hedgeye offerings? Click here.


Did You See Panera Bread? You Could've Made Money Listening to Howard Penney | $PNRA

Takeaway: It (literally) pays to listen to Howard Penney.

Fast-casual food chain Panera Bread reported earnings and lowered 2014 guidance which sent its shares tumbling 4.4% in after-hours trading Tuesday evening.

 

Did You See Panera Bread? You Could've Made Money Listening to Howard Penney | $PNRA - pnra

 

Talk about nailing it.

 

Yesterday, Hedgeye Managing Director and Restaurants Analyst Howard Penney shot a 3-minute video on HedgeyeTV outlining his bearish case on PNRA and why he added the stock as a "Best Idea" on the short side.

 

As you can see below, it pays to listen to Penney.

 


Poll of the Day Recap: 80% Would Invest in $AMZN Over $TWTR

Takeaway: 80% AMAZON; 20% TWITTER

Ahead of Twitter’s Q1 2014 earnings report and after Amazon’s earning disaster last week, we put this question to you in today’s poll: You have $1,000,000 to invest in Amazon or Twitter and hold for 5 years. Where do you put it?

 

Poll of the Day Recap: 80% Would Invest in $AMZN Over $TWTR - amazon


At the time of this post, an overwhelming 80% of voters said AMAZON; 20% TWITTER.


As this AMAZON voter explained, “Twitter can be displaced.  Amazon is the new Wal-mart.” Another echoed that sentiment, “Follow the money. A lot of mine goes to Amazon. None goes to Twitter.”

 

One AMAZON voter said they really wouldn't buy either, “but if forced to choose, AMZN remains a name that – at some point – could account for over 5% of US Retail Sales. Much easier for some new technology that we haven't heard of yet to disintermediate TWTR than AMZN.”

 

Conversely, one TWITTER voter said, “Twitter will be bought out; Amazon will have its multiple severely divided someday soon.”

 

And to put it a different way, as this TWITTER voter noted, “I'd pick Twitter over Amazon, but I'd pick Pinterest over both.”

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