The Economic Data calendar for the week of the 25th of August through the 29th of August is full of critical releases and events. Attached below is a snapshot of some of the headline numbers that we will be focused on.
Takeaway: Here's a quick look at some of the top videos, cartoons, market insights and more from Hedgeye this past week.
Q&A: Keith Answers Questions From Subscribers
In this Q&A portion of Tuesday's Morning Macro Call, Hedgeye CEO Keith McCullough discusses the Fed's next move, the U.S. housing market, and his continued bullishness on bonds.
Two Chip Stocks Feeding on the Apple iPhone 6 Frenzy
Hedgeye semi analyst Craig Berger highlights two new chip suppliers riding the coattails of Apple’s highly anticipated iPhone 6.
Ain't No Hawk!
Think the Fed's going to suddenly strike a hawkish tone? Don't hold your breath.
$SPY Up 150% Since 3/09 Lows
Buying the iPhone 6?
Shares of Apple are hitting record highs, fueled largely on investor optimism that iPhone 6 sales are going to be blockbuster.
Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.
Takeaway: SIGMA review for the 16 retailers reporting this week. TGT, DKS, URBN, FL, HIBB, TJX, HD, LOW, DLTR, SPLS, AEO, BONT, GPS, GME, SHLD, PETM
Here's a SIGMA review of every retailer that reported earnings this week. As a reminder, the analysis triangulates sales, inventories and margins. The vertical axis is the spread between sales and inventories -- the higher on the scale, the better. The horizontal axis is the y/y change in EBIT margin. In effect, you want to be either in the upper right hand quadrant, or headed there. The opposite holds true for the lower left.
There are 16 charts in total. The group overall carried on the trends we started to see with department stores last week, where inventory positions are improving across the board. The exception report had been made up of the winners that stood out amongst the list of dogs. But this time, we're seeing the opposite. Target, Dollar Tree ,Sears, Staples and Hibbett are leading the charge for those that are tuning the wrong way. No major surprises there. URBN and GPS are two of the more notable positive turns to us.
DICK'S SPORTING GOODS
HD - The Home Depot Names Craig Menear CEO, Effective November 1, 2014
DG, FDO, DLTR - Family Dollar Board of Directors Rejects Proposal from Dollar General Based on Antitrust Issues
UPS - UPS confirms malware breach at 51 stores
LUX - Luxottica to Discuss CEO's Possible Departure at Next Board Meeting
BRBY - Burberry chief executive sells more than £5m of luxury brand's shares
DDS - Dillard's Announces CFO Departure
Takeaway: Some cracks in the RCL bullish thesis while more positive pivots for CCL and NCLH on the margin
Some cracks in the RCL bullish thesis while more positive pivots for CCL and NCLH on the margin
Wall street darling RCL has seen little resistance this year. Quantum pricing looks good and up until now the RCL thesis looked bullet proof. However, our August survey revealed some discounting in the RC Caribbean itineraries. Stocks trade on the margin and the pivot here looks negative for RCL despite unabated strength in Europe.
On the other hand, the CCL and NCLH pivots look positive, on the margin. The August survey indicated slightly higher pricing for the Carnival brand pricing for FQ4 2014 and FQ1 2015. For NCLH, the Norwegian brand (through mostly Getaway) seems to be reflecting CEO Sheenan's promise of a 3% price increase.
We've been negative on NCLH, neutral on CCL, and positive on RCL. Given the survey results versus current sentiment, we could see the relative performance of the stocks reverse somewhat over the coming weeks.
SURVEY vs SENTIMENT
We track YoY and sequential pricing for 13,000 ship itineraries spanning across 8 geographic regions. We rely on sequential pricing trends (defined as how pricing has changed relative to pricing seen at the last time the company provided guidance) for price pivot signals.
Our pricing survey for mid-August suggests the RC brand underperformed in the Caribbean and for some Asia itineraries. Meanwhile, we saw a slight improvement for CCL and NCLH due to stronger pricing for the Carnival and Norwegian brands. European pricing, which is Q3 heavy, remained steady.
Caribbean pricing continues to be volatile but in mid-August, the Carnival brand showed higher pricing. In stark contrast, the other brands in the Caribbean fared poorly, particularly Princess.
Royal Caribbean brand pricing receded somewhat in mid-August in the Caribbean. However, that was offset by its pricing leadership in Europe.
NCL has been slumping for much of 2014 due to Caribbean overcapacity. But do pricing signals from mid-August suggest the beginning of an inflection point or a head fake?
CCL/NCLH outperformed while RCL was the laggard in August, at least relative to recent trends. The Caribbean has been a roller-coaster ride for the cruisers this summer as mixed brand pricing trends are the norm and we may see more volatility ahead. A trend or an outlier, only time will tell.
The good news is that Europe pricing remains quite robust for the rest of 2014 despite the significant global geopolitical turmoil. The question is whether it can be sustained into 2015. While it is super early, we're seeing mixed pricing there as well.
The Carnival brand is making strides in pricing thanks to ridiculously easy comps but it is not translating into higher prices for CCL's other brands. With earnings in one month, we look to September's survey for confirmation of these trends.
Though NCLH performed better in mid-August, we wait to see if it is indeed an inflection point. Remember, CEO Sheehan promised investors a 3% price increase across its fleet during its Q2 conference call. Among the big 3 operators, NCLH is most sensitive to the Caribbean/Bermuda market, and faces harder pricing headwinds in 1H 2015 along with no yield boost from a new ship until FQ4 2015.
Domestic stock funds put up their 16 consecutive week of outflow and are now entering the seasonally weakest period of the year so avoid those equity managers JNS and TROW. The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a negative $1.0 billion spread for the week ($3.0 billion of total equity inflow versus the $4.1 billion inflow within fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds).
Indices are broadly lower in-line with recent economic data out of the region. Eurozone CPI is running at 0.4% year-over-year in July, which is the lowest since October 2009. Our quantitative lines of support have been broken across European equities for 1.5 months (the DAX, CAC, and MIB index all remain bearish TREND signals).
The U.S. dollar is up here week-over-week. If it holds above the tail line of 81.44 and continues to make a series of higher highs we may have to back away from our negative view. We will have to see what Yellen’s next move is, she speaks at Jackson Hole today at 10:00am (Mario Draghi speaks at 2:30pm).
|FIXED INCOME||24%||INTL CURRENCIES||4%|
Hologic is emerging from an extremely tough period which has left investors wary of further missteps. In our view, Hologic and its new management are set to show solid growth over the next several years. We have built two survey tools to track and forecast the two critical elements that will drive this acceleration. The first survey tool measures 3-D Mammography placements every month. Recently we have detected acceleration in month over month placements. When Hologic finally receives a reimbursement code from Medicare, placements will accelerate further, perhaps even sooner. With our survey, we'll see it real time. In addition to our mammography survey. We've been running a monthly survey of OB/GYNs asking them questions to help us forecast the rest of Hologic's businesses, some of which have been faced with significant headwinds. Based on our survey, we think those headwinds are fading. If the Affordable Care Act actually manages to reduce the number of uninsured, Hologic is one of the best positioned companies.
The level of activism in the restaurant industry has never been more rampant. In the past year alone, we’ve seen CBRL, DAVE, DRI, BJRI and BOBE attract largely uninvited attention from these investors. BOBE has a long history of mismanagement, evidenced by flawed strategic rationale, an excessively bloated cost structure and severe underperformance relative to peers. Fortunately, its poor operating performance presents a tremendous opportunity. We believe activist investor Sandell has identified significant, largely feasible, opportunities to enhance shareholder value. Particularly, we see tremendous upside value in selling the foods business, transitioning to an asset light model and refocusing capital allocation.
Fixed income continues to be our favorite asset class, so it should come as no surprise to see us rotate into the Shares 20+ Year Treasury Bond Fund (TLT) on the long side. In conjunction with our #Q3Slowing macro theme, we think the slope of domestic economic growth is poised to roll over here in the third quarter. In the context of what may be flat-to-decelerating reported inflation, we think the performance divergence between Treasuries, stocks and commodities may actually be set to widen over the next two to three months. This view remains counter to consensus expectations, which is additive to our already-high conviction level in this position. Fade consensus on bonds – especially as growth slows. As it’s done for multiple generations, the 10Y Treasury Yield continues to track the slope of domestic economic growth like a glove.
$GPS makes it clear that market share for Athleta will come from $NKE. No mention of $LULU. (not that we won't see share shift there too)
Great moments are born from great opportunities.
The A.L.S. Association has received $41.8 million in donations from July 29 until Aug. 21. More than 739,000 new donors have given money to the association. That’smore than double the $19.4 million in total contributions the association received during the year that ended Jan. 31, 2013, according to a filing with the Internal Revenue Service.
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