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INVESTMENT IDEAS

The table below lists our current investment ideas as well as a list of potential ideas we are in the process of evaluating (watch list).  We intend to update this table regularly and will provide detail on any material changes.

Just Charts – The Move Lower - chart1

EVENTS THIS WEEK

8/5/14 ADM Earnings Call 9am EST

8/5/14 IFF Earnings Call 10am EST

8/6/14 MDLZ Earnings Call 10am EST

8/6/14 TAP Earnings Call 11am EST

8/6/14 NUS Earnings Call 11am EST

8/7/14 THS Earnings Call 9am EST

8/7/14 LNCE Earnings Call 9am EST

8/7/14 MNST Earnings Call 5pm EST

8/8/14 POST Earnings Call 9am EST

 

WEEK-OVER-WEEK PERFORMANCE

Consumer Staples fell -2.9% week-over-week versus the broader market (S&P500) at -2.7%.  XLP is up 1.1% year-to-date versus the SPX at 4.2%. XLP is the third worst performing sector in the ytd, ahead of Industrials (XLI) -0.9% and Consumer Discretionary (XLY) -1.8%.

Positive Divergence:  SODA 9.2%; BG 8.6%; NWL 3.6%; REV 2.0%; ENR 1.1%

Negative Divergence:  HLF -20.4%; SAFM -9.7%; KRFT -6.1%; TSN -6.3%; BNNY -6.2%

RECENT NOTES 

From a quantitative set-up XLP is broken over the immediate term TRADE and intermediate term TREND durations.

Just Charts – The Move Lower - chart2

The Hedgeye U.S. Consumption Model shows 6 of the 12 U.S. Economic Indicators flashing green.

Just Charts – The Move Lower - z. consumptionpng

We continue to believe that the group is facing numerous headwinds, including:

  • U.S. consumption growth is slowing as inflation rises, in-line with the Macro team’s 1Q14 theme of #InflationAccelerating, Q2 2014 theme of #ConsumerSlowing, and Q3 2014 theme of #Q3 Slowing
  • The economies and currencies of the emerging market – once the sector’s greatest growth engine – remain weak with the prospect of higher inflation in 2014 eroding real growth
  • The sector is loaded with a premium valuation (P/E of 18.8x)
  • Less sector Yield Chasing as Fed continues its tapering program
  • The high frequency Bloomberg weekly U.S. Consumer Comfort Index (rescaled for cosmetic and not component reasons) has not seen any real improvement over the past 6 months, and fell to 36.3 versus 37.6 in the prior week

Just Charts – The Move Lower - chart4

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QUANTITATIVE SETUP

In the charts below we look at the largest companies by market cap in the Consumer Staples space from a quantitative perspective.

BUD – bearish TREND = 110.43 resistance

Just Charts – The Move Lower - chart7

DEO – bearish TREND = 124.67 resistance

Just Charts – The Move Lower - chart8

KO – bearish TREND = 40.48 resistance

Just Charts – The Move Lower - 99

PEP –  bullish TREND = 87.24 support

Just Charts – The Move Lower - 10

GIS – bearish TREND = 52.19 resistance

Just Charts – The Move Lower - 11

MDLZ – bearish TREND = 36.99 resistance

Just Charts – The Move Lower - 12

KMB – bearish TREND = 109.73 resistance

Just Charts – The Move Lower - chart13

PG – bullish TREND = 79.22 support

Just Charts – The Move Lower - 14

MO – bearish TREND = 41.33 resistance

Just Charts – The Move Lower - 15

PM – bearish TREND = 84.22 resistance

Just Charts – The Move Lower - 16

Howard Penney

Managing Director

Matt Hedrick

Associate

Fred Masotta

Analyst