prev

Video | McCullough: Why Stocks & Bonds BOTH Have It Right

Hedgeye CEO Keith McCullough takes a look underneath the economic hood and explains why stocks and bonds both have it right.


MACAU: SOLID 2ND WEEK CONSIDERING END OF GOLDEN WEEK

No change to our full month forecast of +20% YoY growth following the release of this past week’s table revenues.  Daily table revenues (DTR) averaged HK$1,001 million this past week, up 25% YoY.  As expected, DTR softened sequentially following the end of the Golden Week holiday but was up nicely YoY.  Month to date DTR are tracking up 16%.  Fears of a significant VIP slowdown continue to be proven unfounded. 

 

In terms of market share, LVS and MPEL are tracking below recent trend, consistent with April’s results.  We believe MPEL continues to be impacted by some junket liquidity issues more than the other casino operators.  WYNN and MGM are tracking above (go peninsula!).  WYNN remains our favorite operator given the potential for market share gains, particularly in VIP.  

 

MACAU: SOLID 2ND WEEK CONSIDERING END OF GOLDEN WEEK - macau1

 

MACAU: SOLID 2ND WEEK CONSIDERING END OF GOLDEN WEEK - macau2


GET THE HEDGEYE MARKET BRIEF FREE

Enter your email address to receive our newsletter of 5 trending market topics. VIEW SAMPLE

By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails.

Fund Flows, Refreshed

Takeaway: Last week's data reveals significant deceleration in equity fund flows, capping off a week of less-than-stellar performance.

Editor's Note: This research note was originally sent to subscribers on May 8, 2014 by Hedgeye’s Financials team Jonathan Casteleyn & Josh Steiner. Follow Jonathan & Josh on Twitter @HedgeyeJC and @HedgeyeFIG.  

Fund Flows, Refreshed - OB IB046 1pay04 G 20100405173327  

ICI Mutual Fund Data & ETF Money Flow

 

In the most recent 5 day period, absolute money flow into both equity and fixed income mutual funds fell week-to-week, with domestic equity funds booking the biggest outflow all year. 

 

Total equity mutual fund flows had their biggest redemptions year-to-date with over $3.8 billion being yanked from stock funds with the leading culprit the U.S. domestic stock category. Of the $3.8 billion that flowed out of all equity mutual funds during the most recent 5 day period ending April 30th, $3.9 billion came out from domestic equity funds which was saved by a slight $104 million inflow from international stock funds. This outperformance from foreign equity products has been consistent over the past two years with international stock fund inflow having averaged $2.5 billion per week thus far this year in addition to the $2.6 billion inflow averaged per week last year in 2013 versus domestic fund trends averaging an inflow of just $932 million thus far in '14 and a $451 million inflow last year in comparison. The 2014 running weekly average inflow for all equity mutual funds is now $3.5 billion, a slight improvement from the $3.0 billion weekly average inflow from 2013. 

 

Fixed income mutual fund flow also decelerated on a w/w basis, although managing to leg out a slight inflow for the week. For the five day period ending April 30th, $931 million flowed into all fixed income funds, as opposed to last week's much stronger $2.3 billion inflow. The deterioration of bond fund inflow this week was the result of only $602 million that flowed into taxable products and $329 million that flowed into tax-free or municipal products. The inflow into taxable products this week was the 12th consecutive week of positive flow and the inflow into municipal or tax-free products was the 16th consecutive week of positive subscriptions. The 2014 weekly average for fixed income mutual funds now stands at a $1.8 billion weekly inflow, a vast improvement from 2013's weekly average outflow of $1.5 billion, but still a far cry from the $5.8 billion weekly average inflow from 2012 (our view of the blow off top in bond fund inflow). 

 

Exchange traded funds (ETFs) had a strong showing this week, with a notable weekly subscription for equity ETFs, which experienced an inflow of $4.0 billion. The previous week saw only $193 million inflow into stock ETFs. Bond ETFs fell slightly this week, still, the $818 million inflow was only slightly below the previous week's $1.2 billion inflow. The 2014 weekly averages are now a $920 million weekly inflow for equity ETFs and a $896 million weekly inflow for fixed income ETFs. 

 

The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a negative $1.6 billion spread for the week ($148 million of total equity inflow versus the $1.7 billion inflow within fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52 week moving average has been $7.8 billion (more positive money flow to equities), with a 52 week high of $31.0 billion (more positive money flow to equities) and a 52 week low of -$37.5 billion (negative numbers imply more positive money flow to bonds for the week). 

 

Mutual fund flow data is collected weekly from the Investment Company Institute (ICI) and represents a survey of 95% of the investment management industry's mutual fund assets. Mutual fund data largely reflects the actions of retail investors. ETF  information is extracted from Bloomberg and is matched to the same weekly reporting schedule as the ICI mutual fund data. According to industry leader Blackrock (BLK), U.S. ETF participation is 60% institutional investors and 40% retail investors.   

 

Fund Flows, Refreshed - 1.3 large

 

Most Recent 12 Week Flow in Millions by Mutual Fund Product

 

Fund Flows, Refreshed - 2

 

Fund Flows, Refreshed - 3

 

Fund Flows, Refreshed - 4

 

Fund Flows, Refreshed - 5

 

Fund Flows, Refreshed - 6

 

Most Recent 12 Week Flow Within Equity & Fixed Income Exchange Traded Funds

 

Fund Flows, Refreshed - 7

 

Fund Flows, Refreshed - 8

 

Net Results

The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a negative $1.6 billion spread for the week ($148 million of total equity inflow versus the $1.7 billion inflow within fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52 week moving average has been $7.8 billion (more positive money flow to equities), with a 52 week high of $31.0 billion (more positive money flow to equities) and a 52 week low of -$37.5 billion (negative numbers imply more positive money flow to bonds for the week). 

 

Fund Flows, Refreshed - 9.2 

SUBSCRIBE TO HEDGEYE.


Monday Mashup: BOBE Replay, JACK Reports on Tuesday

Investment Ideas

The table below lists our current Investment Ideas as well as our Watch List – a list of potential ideas that we are in the process of evaluating.  We intend to update this table regularly and will provide detail on any material changes.

 

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 1

Recent Notes

05/05/14  Monday Mashup: YUM, BOBE and More

05/08/14  Video: Conversation with YUM CFO Pat Grismer

05/12/14  BLMN: Still Bearish

 

*BOBE Best Ideas Call

Events This Week

05/14/14  KONA Annual General Meeting

05/14/14  DFRG Annual General Meeting

05/15/14  JACK Earnings Call 11:30am EST

05/15/14  BKW Annual General Meeting 9:00am EST

05/15/14  PBPB Annual General Meeting 9:00am EST

05/15/14  CMG Annual General Meeting

05/15/14  YUM Investor & Analyst Conference 12:30pm EST

05/16/14  MCD Investor Meeting 11:00am EST

Chart of the Day

We snagged this from our recent slide deck running through the bull case on BOBE.  The chart pretty much says it all – therein lies a major opportunity.

 

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 2

Recent News Flow

Monday, May 5th

  • CBRL upgraded to market perform at Raymond James.
  • CMG upgraded to outperform at Raymond James with a $560 PT.
  • DIN Applebee’s unveiled four new dishes (including the New Grilled Vidalia Onion Sirloin), a refreshed beverage line and under 600 calorie lunch combos. 

Tuesday, May 6th

  • BJRI announced its newest restaurant opening in Orlando, FL.

Wednesday, May 7th

  • THI declared a $0.32 dividend payable on June 5,2014 to shareholders as of May 22, 2014.
  • CMG upgraded to buy at Longbow Research with a $641 PT.
  • PZZA upgraded to buy at Feltl and Company.
  • PNRA upgraded to buy at Bank of America Merrill Lynch with a $185 PT.

Thursday, May 8th

  • MCD reported +1.2% global comps in April.  The U.S. business was flat, despite a free coffee promotion and the launch of the Bacon Clubhouse.  APMEA (+2.9%) led the way, while Europe (+0.3) was up modestly.
  • DRI Starboard sent a letter to Darden’s Board urging them to immediately provide notice of a Special Meeting.  In the letter, Starboard called the Board’s “casual and dismissive attitude toward the Special Meeting [disturbing].”
  • SONC upgraded to outperform at Oppenheimer with a $25 PT.

Friday, May 9th

  • BWLD initiated underperform at Buckingham with a $116 PT.

U.S. Macro Consumption

The XLY (-0.6%) underperformed the SPX (-0.1%) last week.  Both casual dining and quick service stocks underperformed the broader XLY index.  The Hedgeye U.S. Consumption Model turned bullish, flashing green on 8 out of 12 metrics.

 

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 3

 

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 4

 

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 5

XLY Quantitative Setup

From a quantitative perspective, the sector remains bearish on an intermediate-term TREND duration.

 

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 6

Casual Dining Restaurants

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 7

 

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 8

Quick Service Restaurants

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 20

 

Monday Mashup: BOBE Replay, JACK Reports on Tuesday - 10

 

 

 

Howard Penney

Managing Director

 

Fred Masotta

Analyst

 


European Banking Monitor: CDS Continues to Tighten

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 .

 

---

 

European Financial CDS  Almost all European bank swaps tightened last week. Most of the 31 swaps that tightened did so by a notable amount. On average, Belgian swaps tightened by 15 bps, German by 6 bps, Greek by 31 bps, Italian by 7 bps, Portuguese by 11 bps, and Russian by 26. Only Hannover Rueckversicherung, National Bank of Greece, and DNB widened, and by just 1, 3, and 2 bps, respectively.  

 

European Banking Monitor: CDS Continues to Tighten - chart 1 euro cds

 

Sovereign CDS – Sovereign swaps mostly tightened over last week. Portuguese sovereign swaps tightened by -8.6% (-14 bps to 153 ) and US sovereign swaps tightened by -3.4% (1 bps to 17).

 

European Banking Monitor: CDS Continues to Tighten - chart 2 sovereign cds

 

European Banking Monitor: CDS Continues to Tighten - chart 3 sovereign cds

 

European Banking Monitor: CDS Continues to Tighten - chart 4 sovereign cds

 

Euribor-OIS Spread – 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. The Euribor-OIS spread widened by 1 bps to 17 bps.

 

European Banking Monitor: CDS Continues to Tighten - chart 5 euribor ois spread

 

 

Matthew Hedrick

Associate

 

Ben Ryan

Analyst


Attention Students...

Get The Macro Show and the Early Look now for only $29.95/month – a savings of 57% – with the Hedgeye Student Discount! In addition to those daily macro insights, you'll receive exclusive content tailor-made to augment what you learn in the classroom. Must be a current college or university student to qualify.

next