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THE HEDGEYE DAILY OUTLOOK

 TODAY’S S&P 500 SET-UP – May 23, 2014


As we look at today's setup for the S&P 500, the range is 32 points or 1.45% downside to 1865 and 0.24% upside to 1897.                                                            

                                                                   

SECTOR PERFORMANCE

 

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EQUITY SENTIMENT:

 

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CREDIT/ECONOMIC MARKET LOOK:

 

  • YIELD CURVE: 2.20 from 2.21
  • VIX closed at 12.03 1 day percent change of 1.01%

 

MACRO DATA POINTS (Bloomberg Estimates):

 

  • 10am: New Home Sales, April, est. 425k (prior 384k)
  • 1pm: Baker Hughes rig count

 

GOVERNMENT:

    • Obama to unveil San Antonio mayor as nominee for HUD secretary
    • 9:30am: Fifth round of Transatlantic Trade and Investment Partnership talks
    • 9pm: Rolling Thunder opens Memorial Day events with candlelight vigil for prisoners of war, MIA
    • Federal judge to rule on constitutional issues raised by Rep. John Conyers in his effort to be listed on Michigan’s Aug. 5 primary ballot
    • U.S. ELECTION WRAP: Conyers Ruling Tomorrow; Steyer, Gates Funds

 

WHAT TO WATCH:

  • German business confidence declines as economy seen slowing
  • Pfizer, AstraZeneca face May 26 deadline on possible deal
  • Anti-bailout Syriza party leads in Greek EU election poll
  • Keryx gets notification of Pdufa date extension for Zerenex
  • France, Netherlands, Slovenia, Spain ratings watch
  • Encana says PrairieSky IPO shares priced at C$28 apiece
  • Michigan Rep. Conyers faces primary ballot ruling
  • Duke Energy shareholders sue over coal-ash cleanup oversight
  • Ukraine, EU Elections, U.S. GDP: Week Ahead May 24-31

 

EARNINGS:

    • Foot Locker (FL) 7am, $1.06
    • Hibbett Sports (HIBB) 6:30am, $1.09

 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Barclays Fined $44 Million for Manipulating London Gold Prices
  • WTI Set for Longest Gain Since February on Supply; Brent Steady
  • Aluminum Climbs to Three-Week High Amid Shortage Speculation
  • Gold Declines in London as Strengthening Dollar Curbs Demand
  • JPMorgan’s CEO of Asia Commodities Eyles Resigns After 25 Years
  • Robusta Coffee Drops for Third Week on Fund Selling; Sugar Falls
  • Palm Posts Biggest Weekly Drop in Three on Malaysian Production
  • Rebar Falls for 4th Week as Demand Concerns Cloud PMI Optimism
  • Credit Suisse Sees Commodities Openings as Competitors Pull Back
  • LNG Sellers to Chase Japan, South Korea on China-Russia Gas Deal
  • Australian About-Face Bodes Ill for Global Warming Talks: Energy
  • Sale of Kurdish Oil to European Nations Angers Iraqi Government
  • Gold’s Character Is Fundamentally Changing From West to Asia
  • Soybeans Extend Gains on Signs of Rising Demand for U.S. Exports

 

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CURRENCIES


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GLOBAL PERFORMANCE

 

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EUROPEAN MARKETS

 

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ASIAN MARKETS

 

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MIDDLE EAST

 

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The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 

 

 

 


Real Conversations: Lacamp, McCullough Unplugged on Markets, Fed & the Economic Zeitgeist


Poll of the Day Recap: 72% Think E-Cigarettes are Here to Stay

Takeaway: 72% said HERE TO STAY; 28% said FAD.

Hedgeye analyst Matt Hedrick covers consumer staples and one area of focus is electronic cigarettes within the tobacco industry. Hedrick added Lorillard (LO) as a high-conviction long to Investing Ideas on 3/7/14 (it’s up 20% since then). Included in his thesis is the longer-term earnings power from blu, its e-cigarette brand.  
 

Today’s poll question was: Are electronic cigarettes a fad or here to stay?

 

Poll of the Day Recap: 72% Think E-Cigarettes are Here to Stay - ecig
 

At the time of this post, 72% said electronic cigarettes are HERE TO STAY; 28% said it’s a FAD.


Of those who voted that e-cigarettes are HERE TO STAY, they explained:
 

  •  “Vaporizing is the future of smoking anything, herbs, nicotine related products. There is no tar, extra filler products, and harmful second hand smoke. All of my friends that used to smoke now vape, because they also do not feel short of breath. I also know multiple people that used e-cigs to quit smoking all together. It is time to move on from traditional methods of smoking and embrace this new technology."
     
  • “They are at least a long term fad.  Here for 10-20 years and vaporizing marijuana will be the preferred delivery as legalization spreads.”
     
  • “Not only here to stay as smoking replacement, and as a new addiction of its own, but will also become the delivery technology of choice for legal marijuana.  this will be multi billion $ industry.”
     
  • “For people who have struggled to quit smoking or always on the verge of starting to smoke again, they offer a great compromise as they replace the nicotine and the physical habit of smoking.  As always, better not to start in the first place...  cost and smell are just 2 huge additional benefits.”

 

  • “4-7% of smokers have success in quitting. Smoking as a practice is obviously here to stay. The question is whether the electronic cigarettes ‘take the edge off.’ Seems likely.”

 

Conversely, one voter who believes it’s a FAD said, “Stick with the patch, I did. Most doctors are adamantly against them and are claiming that there are unhealthy elements within the vapor. Look for the FDA to pooh pooh the idea.”

 

Another agreed: “Someone will come up with a more natural version of an alternative cigarette (different than American Spirits) and potentially wipe out the e-cig category.”

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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 80.64%
  • SHORT SIGNALS 78.61%

Hedgeye Retail: Adidas Can’t Afford to Sell Everything but Shoes | $ADDYY

Takeaway: Adidas Chief Executive Herbert Hainer makes a pretty damning admission.

 Hedgeye Retail: Adidas Can’t Afford to Sell Everything but Shoes | $ADDYY - alansmith 2755508c

 

Adidas sees boost to sales from World Cup

 

• "German sportswear company Adidas has given a more precise sales growth target for 2014, amounting to a rise of up to 8 percent, as it gets a lift from the soccer World Cup that starts in Brazil next month."

 

• "'This year we will add 1-1.2 billion euros ($1.4-1.6 billion) to operational revenue, with the World Cup playing an important role,' Chief Executive Herbert Hainer told journalists at a briefing in Munich in remarks released for publication on Thursday."

 

• "That increase represents a rise of 7-8 percent from the 14.492 billion euros of sales Adidas recorded in 2013. Previously, Adidas had guided for a 'high single-digit' increase in currency-neutral sales in 2014."

 

• "'Football is the DNA of our company. We want to clearly show that we are number one in football,' Hainer said, adding Adidas expected to sell significantly more balls than at the last World Cup in South Africa four years ago and about as many shirts."

 

• "Hainer acknowledged, however, that Adidas faced a 'head-to-head' race with Nike in the business for football boots, including in Germany, predicting Adidas would sell 2 million pairs of special boots designed for the World Cup."

Takeaway From Hedgeye’s Brian McGough:

Pretty damning admission by Hainer. Adidas is 'head-to-head' with Nike in the football boots arms race? We would have guessed as much, but Nike is just starting to gain traction in the soccer market. Add Under Armour to the mix and it’s a pretty bleak outlook for Adidas. When soccer balls and t-shirts are the key pillar of growth for a footwear company, we get concerned.

 

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Editor's Note: This is a complimentary research excerpt from Hedgeye Retail sector head Brian McGough. Follow Brian on Twitter @HedgeyeRetail.

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Cartoon of the Day: Crushing Inflation

Takeaway: While lies about inflation in Washington can most definitely live, they can’t live forever.

Cartoon of the Day: Crushing Inflation - Inflation.AvgAmerian5.22.2014

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GLD: Adding Gold to Investing Ideas

Takeaway: We are adding GLD to Investing Ideas.

Hedgeye's Macro team is adding Gold to Investing Ideas. 

 

We will send out a full report shortly detailing our bullish case.

 

GLD: Adding Gold to Investing Ideas - gold


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