Takeaway: We'll say it again: At first risk happens slowly, then all at once.
Hedgeye CEO Keith McCullough explains the reasons why stocks have fallen during the last two sessions and why most hedge funds were not positioned for this decline.
Takeaway: When Wal-Mart's CEO talks about the US consumer, we listen.
Editor's note: This is a brief excerpt from Hedgeye retail sector head Brian McGough's morning research. Click here for more information on subscribing to Hedgeye.
U.S. job rebound not spurring spending, Wal-Mart's Simon says
- "In an interview with Reuters, Bill Simon, the president and chief executive officer of Wal-Mart U.S., said the improving employment picture had so far failed to raise cash register receipts at the retailer's U.S. stores. 'It's really hard to see in our business today … that it's gotten any better,' he said."
- “'We’ve reached a point where it’s not getting any better but it’s not getting any worse – at least for the middle (class) and down.'"
- "Simon said Wal-Mart's lower- and middle-income customers appeared to have made a number of changes to their shopping habits that were 'not the best thing in the world for a retailer,' splurging on events like back to school and holidays like the Fourth of July, but pulling back spending in between. 'They’re adapting to what has been a difficult macroeconomic situation,' he said."
Read the whole article at Reuters.
Takeaway: Nothing earth shattering here, but when Wal-Mart (WMT) talks about the US consumer we listen. The company has over 30 petabytes of shopper data to draw conclusions from. All in, this is not a ringing endorsement for the median American consumer. And it doesn’t bode well for our two least liked names in this space - Target (TGT) and Kohl's (KSS).
When we looked at shopping intent over the last 3 quarters, WMT was the only retailer in the space with positive readings, so if it is still feeling the macro heat then that pain is being felt across the rest of the industry.
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Takeaway: KLAC's announcement this morning puts our "Dividend and Buyback" theme back into focus.
Hedgeye Semiconductor analyst Craig Berger noted earlier this morning that the "Dividend and Buyback" theme is back in focus today after KLA-Tencor Corporation (KLAC) -- a SemiCap equipment firm -- raised its dividend 11% and authorized a new $1 billion share buyback.
Berger spent a fair amount of time during his recent launch discussing how the Semiconductor sector is transitioning into a Cash Return story, and how that's bolstering sector stock performance.
In his detailed and proprietary Cash Return Affordability Analysis, Berger highlighted five other firms in addition to KLAC which could make large dividend or buyback increases, and two others that are in acquisition mode, but could also possibly increase Cash Returns.
Click below to watch Berger's recent Cash Returns & Dividends video:
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