The Economic Data calendar for the week of the 12th of May through the 16th of May is full of critical releases and events. Attached below is a snapshot of some of the headline numbers that we will be focused on.
Takeaway: 53% said PAIN AHEAD; 47% ALL CLEAR.
As CEO Keith McCullough wrote in today’s Morning Newsletter, the Russell 2000 small-cap index “is down -9.1% from its all-time-bubble-peak in March…Whereas the SP500 is only -0.8% from her all-time-twitter-muscles-but-but-the-market-isn’t-down-yet peak.”
That said, we asked in today’s poll: Is the big drop in the Russell 2000 predicting pain ahead for the S&P 500?
At the time of this post, 53% agreed they saw PAIN AHEAD; 47% said ALL CLEAR.
Voters who think there is PAIN AHEAD said:
Conversely, those who believe it is ALL CLEAR said, “Don't fight the FED,” and that “this is just a bump in the road.”
Takeaway: Reason #474 why you should be tuning into HedgeyeTV.
Don't say we didn't warn you.
On October 11th, Gaming, Lodging & Leisure Sector Head Todd Jordan appeared on HedgeyeTV and warned investors about Scientific Games (SGMS). The stock is down 50% since Jordan's short call.
It gets better (or worse -- depending on who you ask).
He also warned viewers about IGT.
Click video below to see the other stock he warned about.
Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.
BLMN remains on the Hedgeye Best Ideas list as a SHORT.
BLMN reported underwhelming numbers this morning, missing both top and bottom line estimates by 69 bps and 288 bps, respectively. Same-store sales across all four main concepts decelerated on a two-year basis in 1Q14, despite initiatives aimed at stemming this decline. Traffic trends remain anemic, although they continue to outpace the casual dining industry according to Knapp Track data. This is to be expected, as weekday lunch continues to rollout across Carrabbas and Outback restaurants. Management maintained full-year guidance of 1-2% comp growth for its core domestic brands and GAAP diluted EPS of at least $1.21 on a calendar basis. Trends will need to accelerate meaningfully throughout the rest of the year in order for BLMN to hit the numbers. The real disconnect, however, comes in FY15 with the street expecting 20% EPS growth on 7% EPS growth. These numbers are far too high and will be revised down, over time, as this becomes a realization.
We continue to believe the casual dining industry is in secular decline. In the new era of casual dining, companies with large, diverse portfolios are at a structural disadvantage to smaller, more nimble players. Darden is currently having issues operating its vast array of brands and we believe Bloomin’ is on a similar path. As it stands, Bloomin’ has some of the worst operating margins in the entire restaurant industry. Despite claims of significant efficiencies, its profit margins have essentially remained flat since the beginning of 2011.
Aside from taking issue with the structure of the company, we continue to question the strategic rationale behind the company’s capital allocation decisions. Management seems intent on maintaining its unit growth story, despite less than desirable results. Carrabbas, for example, should not be growing at all. Recognizing a problem and not immediately addressing it is a flawed strategy that will inevitably come back to haunt the company.
What We Liked:
What We Didn’t Like:
Takeaway: The complexion of the US stock market this year has become a slow-growth-yield-chaser.
Controversial best-selling author James Rickards sits down with Hedgeye CEO Keith McCullough to discuss a number of important subjects in this wide ranging interview.
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