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Cartoon of the Day: Elmer Fed

Takeaway: “Mister Wabbit, before you die, you can have one wast wish.” - Elmer Fudd

Cartoon of the Day: Elmer Fed - Yellen cartoon 5.13.2014

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CHIN MUSIC: APRIL RETAIL SALES

Headline Retail sales grew +0.1% sequentially while the Control Group measure (GDP input) declined -0.1% sequentially with electronics spending and the e-sales and dining-out proxies each decelerating on a MoM, YoY and 2Y basis. 

 

CHIN MUSIC:  APRIL RETAIL SALES - RS Control Group 

 

The positive revision to the march data will help drag 1Q GDP back to positive territory but the early read through for reported 2Q growth is less sanguine – particularly in the context of consensus estimates  which have increased ~20% over the last month to +3.3%.  

 

CHIN MUSIC:  APRIL RETAIL SALES - COD 

 

 

Meanwhile, sales-to-Inventory ratio’s continue to peak despite the spread between nominal spending and nominal earnings growth re-expanding in recent months. 

 

With wage growth running sub-2% and savings rates at a cycle low (& the very low end of the historical range) the upside to consumption growth over the immediate/intermediate term remains very much constrained, in our view. 

 

CHIN MUSIC:  APRIL RETAIL SALES - Nominal PCE vs Nominal Earnings April 051314

 

CHIN MUSIC:  APRIL RETAIL SALES - Savings Rate

 

CHIN MUSIC:  APRIL RETAIL SALES - IS ratio 

 

In short, with the ~24% of the domestic economy that is retail sales off to an inauspicious start, consumption has some significant hay to bale in order to best rising consensus growth expectations and re-capture last year’s slope of growth.

 

With the dollar and 10Y broken and food/energy/housing inflation taking down a greater share of wallet, we're not convinced that consumption acceleration materializes.  

 

CHIN MUSIC:  APRIL RETAIL SALES - Retails Sales Then vs Now

 

CHIN MUSIC:  APRIL RETAIL SALES - Retail Sales table

 

 

Christian B. Drake

@HedgeyeUSA


Daily Trading Ranges, Refreshed

Takeaway: Last chance to buy what’s been working all year? Slow-growth-yield-chasing is where the performance is at.

Editor's note: This unlocked edition of Daily Trading Ranges was originally provided to subscribers on May 13, 2014 at 7:22 a.m EST. For more information on how you can receive these levels every morning in your inbox click here.

 

Daily Trading Ranges, Refreshed - Slide1

BULLISH TRENDS

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Daily Trading Ranges, Refreshed - Slide6

BEARISH TRENDS

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Daily Trading Ranges, Refreshed - Slide10

Daily Trading Ranges, Refreshed - Slide11

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Video | McCullough: Only Wall Street Will Tell You It’s Not Inflation

In this excerpt from our daily macro call for institutional investors, Hedgeye CEO Keith McCullough and senior macro analyst Darius Dale talk inflation and why the Fed just has it wrong.


Sell Growth: SP500 Levels, Refreshed

Takeaway: The weather turned, but the consumption data that matters most didn’t.

POSITION: 8 LONGS, 7 SHORTS

 

But whatever you do, don’t call falling bond yields (do not sell bonds here!) on today’s #ConsumerSlowing (Retail Sales +0.1%) print a US growth slowing confirmation. The weather turned, but the consumption data that matters most didn’t.

 

Across our core risk management durations, here are the lines that matter to me most:

 

  1. Immediate-term TRADE overbought = 1901
  2. Immediate-term TRADE support = 1866
  3. Intermediate-term TREND support = 1845

 

In other words, you have -1.8% and -2.9% immediate (TRADE) and intermediate-term (TREND) risk to the downside if you get plugged chasing the all-time SPY high here. So don’t do that.

 

Both the Russell2000 and UST 10yr yields remain bearish, because growth is slowing.

KM

 

Keith R. McCullough
Chief Executive Officer

 

Sell Growth: SP500 Levels, Refreshed  - SPX



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The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.33%
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