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Bloody Highs

This note was originally published at 8am on August 27, 2014 for Hedgeye subscribers.

“The perpetuation of debt has drenched the earth with blood.”

-Thomas Jefferson

 

No volume, no worries. We’re at the all-time bloody SPY highs, baby. Didn’t you hear? This time is different. Ask the guys who said bond yields would rise as US growth accelerated (our call in 2013) throughout 2014, who are now saying that US growth will rip, as bond yields fall?

 

Since I started playing this game in the late 1990s, most of the time was supposed to be “different” (newsflash: it wasn’t). While the stock, bond, and commodity market bubbles have all had different narratives, one thing is not different – prices go up, then down, a lot.

 

Another thing that has not changed, for literally 200 years, is the bull/bear debate on US government debt, central planning, and easy money. It’s ole school Jefferson vs. Hamilton. And, until the next stock market bubble pops, to some Hamilton will appear to be right.

 

Bloody Highs - Bull goes... 07.11.2014

 

Back to the Global Macro Grind

 

The stock market is not the economy. Drawing down US National Savings in order to A) keep up with the Policy To Inflate USA’s cost of living to all-time highs and B) perpetuate a levered slow-to-no-growth real economy is not the path towards long-term prosperity.

 

But, Keith, the stock market is up. Indeed. So is Argentina’s.

 

Argentina is basically in default, but its stock market was up another +1.5% yesterday to +78.4% YTD. If only CNBC could do an inversion from New Jersey to Buenos Aires, they could bounce their ratings off all-time lows trumpeting Argentina’s big government success.

 

Alexander Hamilton would have been the darling of big debtor, money printing, and taxing TV too. He did, after all, promote a US National Debt as a “public blessing.” Whereas the more libertarian minded Thomas Jefferson said:

 

“I consider the fortunes of our republic as depending on the extinguishment of the public debt.”

-Hamilton’s Curse (pg 38)

 

So which one is it that drives your family or country’s fortunes – debt or savings?

 

As you can see in the Chart of The Day (pg 30 in our current Macro Themes slide deck – if you’d like a copy, ping sales@Hedgeye.com), the US Personal Savings Rate (% of Disposable Income) has been falling for the past 3 years (as the stock market makes new highs).

 

How do you solve for sustainable Investment Growth in America if you can’t solve for S (Savings) = I (Investment)?

 

I’m pretty sure that the answer to that is you get everyone to borrow (lever up) to either buy growth or, in Kinder Morgan’s (KMI) case, to pay the dividend.  Oh, those juicy dividends. Gotta have them - especially if the risk free rate of return on American Savings is centrally planned at 0%.

 

Who is dumb enough to put money into a savings account that earns 0%? Throughout this summer I have taken my Cash position in the Hedgeye Asset Allocation Model from 10% to 56%. “So”, evidently me. Why?

 

  1. Raising cash in both 2000 and 2007 worked for me (they were cycle calls)
  2. I’m not a big fan of drawing down my net worth 30-60% every 7 years and telling my family everyone else missed it too

 

After an economic cycle plays out (we’re going on 63 months into a US economic expansion), if I’ve raised cash at a measured pace, I’ll have it to re-invest it in my business when the proverbial poop hits the fan (see 2008-2009 Hedgeye Risk Management ROIC for details).

 

But that’s just me. I like to save (raise cash) so that I can invest counter-cyclically.

 

What does being counter-cyclical mean? It means the opposite of what the Old Wall pressures companies and investors to do, which is chase returns and invest in inventories, capex, etc. at the end (instead of the beginning) of a cycle. In public co. CYA speak, most CFO’s are pro-cyclical.

 

Which brings up the most important part of my decision making process – the bloody cycle!

 

You either agree with me or not here, but at SPX 2,000, you do have to make a decision. You either invest up here, or you book gains and raise cash for a rainy day. Which means you have to have a view on where we are in the economic cycle:

 

  1. If you think it’s different this time, you buy early cycle stocks (Russell 2000 is only +0.8% YTD, gotta be “cheap”)
  2. If you think it’s not (falling bond yields and compressing yield spread = growth slowing), you sell early cycle stocks (and buy TLT)

 

If this time is different, you don’t have to ever worry about things like no-volume (Total US Equity Market Volume was -13% and -39% vs. its 3 month

and YTD averages yesterday), peak debt leverage ratios to peak cash flows, or the Russell 2000 trading at 55x trailing earnings.

 

All you have to do is wake up at 9AM every day and tweet me that we’re at the bloody highs.

 

Our immediate-term Global Macro Risk Ranges are now (all 12 big macro ranges, with intermediate-term TREND signals in brackets, are in our Daily Trading Range product, every day):

 

UST 10yr Yield 2.34-2.44% (bearish = bullish Long Bond)

SPX 1980-2011 (bullish)

RUT 1138-1178 (bearish)

BSE Sensex 25991-26876 (bullish)

VIX 11.06-13.15 (neutral)

USD 82.01-82.94 (bullish)

EUR/USD 1.31-1.33 (bearish)

Pound 1.65-1.67 (bullish)

WTI Oil 92.34-97.41 (bearish)

Natural Gas 3.81-3.99 (bearish)

Gold 1271-1299 (bullish)

Copper 3.16-3.25 (bullish)

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Bloody Highs - Savings


September 10, 2014

September 10, 2014 - Slide1

 

BULLISH TRENDS

September 10, 2014 - Slide2

September 10, 2014 - Slide3

September 10, 2014 - Slide4

September 10, 2014 - Slide5

BEARISH TRENDS

September 10, 2014 - Slide6 

September 10, 2014 - Slide7

September 10, 2014 - Slide8

September 10, 2014 - Slide9


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – September 10, 2014


As we look at today's setup for the S&P 500, the range is 17 points or 0.32% downside to 1982 and 0.53% upside to 1999.                                                       

                                                                        

SECTOR PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2A

 

EQUITY SENTIMENT:

 

THE HEDGEYE DAILY OUTLOOK - 10

 

CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 1.96 from 1.95
  • VIX closed at 13.5 1 day percent change of 6.64%

 

MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage Applications, Sept. 5 (prior 0.2%)
  • 9:45am: Bank of England’s Carney speaks in Parliament
  • 10am: Wholesale Inventories m/m, July, est. 0.5% (prior 0.3%)
  • 10:30am: DOE Energy Inventories
  • 1pm: U.S. to sell $21b 10Y notes

 

GOVERNMENT:

    • 9:30am: Senate Homeland Security Cmte hearing on Islamic State terrorism and cybersecurity
    • 10am: House Ways and Means Chairman Dave Camp, R-Mich., CEA Chairman Jason Furman speak at “Tax Reform: Lessons Learned and the Path Forward” discussion at Business Roundtable
    • 12:30pm: Rep. Mike Fitzpatrick, R-Pa., holds conf. call on legislation introduced to “squeeze” financial assets of Islamic State
    • 2pm: House Financial Services subcmte holds hearing on credit reporting system
    • 9pm: President Obama speaks to nation from White House about strategy to degrade, destroy Islamic State terrorist group
    • U.S. ELECTION WRAP: Presidential Failure; Udall Misstep; Ads

 

WHAT TO WATCH:

  • Microsoft said to near $2b deal to buy Minecraft maker
  • Dollar General will make hostile Family Dollar bid, Reuters Says
  • EU weighs more Russian sanctions amid fragile Ukraine cease-fire
  • TransFirst said to draw interest from TSYS after IPO filing
  • Sprint CEO deploys ‘IPhone for Life’ plan to win back customers
  • Hertz seen taking $200m writedown on aging vehicle fleet
  • Detroit reaches Syncora deal that may change bankruptcy plan
  • Vivendi said to eye Italy comeback via Mediaset pay-TV stake
  • China said to consider letting car dealers sell multiple brands
  • Japan’s Recruit plans $1.7b IPO to fund deals, expansion
  • AngloGold raising $2.1b amid international split plan
  • Ferrari chief Montezemolo steps down after clash with Fiat

 

EARNINGS:

    • Empire Co (EMP/A CN) 7:31am, C$1.35
    • Five Below (FIVE) 4:01pm, $0.14
    • Lands’ End (LE) 7am, $0.17
    • Men’s Wearhouse (MW) 4pm, $1.06
    • Restoration Hardware (RH) 4:02pm, $0.64
    • Vera Bradley (VRA) 8am, $0.19
    • Wet Seal (WTSL) 4:05pm, $(0.15)

               

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Industrial Metals Extend Drop on China Concern and Dollar Rally
  • Brent Trades Below $100 for Longest Run in 16 Months on Surplus
  • Steaks for Argentines Mean EU Diners Eat Uruguayan: Commodities
  • Philippine House Ore Export-Ban Debates Unlikely Until Late 2015
  • Corn to Soybeans Trade Near 4-Year Lows on Record Crop Outlook
  • No Named Storms First Time in 22 Years as Hurricane Season Peaks
  • White Sugar Declines for Fifth Day as Arabica Coffee Rebounds
  • Former Obama Aide Summers Backs End of U.S. Crude Oil Export Ban
  • Olam Hires Alex Tan as Head of Palm Oil Trading From Golden Agri
  • Goldman Calls End to Iron Age After ‘Dramatic’ Drop in Ore Price
  • Gold Is Little Changed Near Three-Month Low on Stronger Dollar
  • Ivory Coast Cocoa-Growing Areas Got Increased Rainfall Last Week
  • China Province to Cut Irrigated Wheat to Save Water: Heibei News
  • Philippine Ore Ban Bill Not Priority for President, Senator Says

 

THE HEDGEYE DAILY OUTLOOK - 5

 

CURRENCIES


THE HEDGEYE DAILY OUTLOOK - 6

 

GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 3

 

THE HEDGEYE DAILY OUTLOOK - 4

 

EUROPEAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 7

 

ASIAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 8

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - 9

 

 

The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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LULU – More Ways To Win Than Lose

Takeaway: Great category, solid brand, weak company, and a horrendous mgmt team. But in the $30s, we think there are more ways to win than lose.

DETAILS

We like LULU, but it is not for the typical reasons we traditionally look for in a long. We added the name to our best ideas list on June 15 because of our view that things were so pathetically bad at LULU, that it would lead to positive change. Add on what we thought was capitulation by the sell-side (LULU currently has its lowest Buy ratio in history), and very defendable downside in the low-mid $30s due to attractive LBO/acquisition math, we think that this is ripe for a restructuring.  Even most LULU bears would probably admit that this is a very strong brand in a superior category with global appeal – they’ll probably just argue that the competition is too fierce and LULU is ill equipped to face it head-on. We actually agree with that logic. That’s why it needs to be changed radically from what we see today.  Yeah, John Currie is on his way out as CFO – that’s a plus. Also, Chip Wilson sold half his stake to Advent, and we think that the rest of his stake is on the way out.  But, we think the change we’ll see will be a lot bigger than that. The problem is that this is a global mid-cycle growth company approaching $2bn in sales, but it has a management team that is appropriate for a sub-$500mm localized brand.

 

As for what’s next on the ‘change agenda’, we think that the speed of change depends on the company’s own financial results. If the next couple of quarters pan out as we think – which is not very good – then we think the most probable outcome is that the Board fires Laurent Potdevin – the CEO it hired just 8 months ago. He’s simply not the right guy for the job. Never was, and never will be. He’s only led small brands like Toms and Burton, but he simply does not have the skill set to make LULU a great global brand with efficient operations across multiple distribution channels. Our view is that the only reason the Board approved Laurent is because Chip simultaneously agreed to give up his Chairman title if Potdevin was named CEO. That move left Wilson powerless (no Chair, no CEO, no majority, NO power), which led to him unwinding his stock. It also suggests that the Board is not married to Potdevin, and we think it will make the right call in replacing him if need be. We think that there’s an 80% chance that Potdevin is gone in a year’s time. 

 

There are a lot of other changes as well beyond human resource management. Other changes should be made regardless of who is at the helm – like developing a competitive pricing process. LULU is the worst company that we’ve seen in many years when it comes to appropriately changing the prices on its product as the selling season progresses. It needs the information systems, potentially physical outlets, and definitely a more sophisticated system to sell aged inventory online and ship directly from stores. And yes, it might even need a wholesale model. These are all decisions that should be vetted by the management team LULU deserves – but does not have.

 

So basically, if trends weaken further and it is clear that this management team cannot create value and grow this business profitably, then we think we’ll see a completely new executive team put in place to make it happen. Advent did not buy back 14.8% of LULU for $845mm after all these years to passively watch it die on the vine. So in this case, we think Bad News = Good News. If by chance (and we think it would be sheer luck) that this management team gets this engine running, then that’s probably good for the stock as well.  Good News = Good News.

 

We’re very careful about these ‘things are so bad that it’s good’ calls, because they usually have a way of missing even lowered expectations and destroying value.  But that mattered to us when the stock was near $70, and even earlier this year when it was in the $50s. But with the stock in the high $30s, sentiment worse than it has ever been (EVER is a long time), and value investors increasingly coming out of the woodwork exploring with us what the trough earnings number is for LULU (it’s $1.50, by the way), we’re simply not as concerned at current levels.  Could it trade down on horrible print? Yes, but we think things are bad, not horrible.  In a perverse way, we’d like to see LULU faceplant this quarter. Because we don’t think the equity market would punish it commensurately to the economic impact of the miss itself, but it would be an event that would likely cause the Board to shake things up.  Ultimately, there is $4bn in revenue to be realized here – likely at a high-teens margin. That’s $3-$3.50 in EPS power. At $38, that’s 11.6x earnings, and 7.5x EBITDA. Sounds pretty defendable to us. We just need a team in place that can deliver.

 

LULU – More Ways To Win Than Lose - lulusentiment1

 

 

THINGS TO CONSIDER FOR THE QUARTER

  • In LULU’s 28 quarters as a public company it has beat estimates 27 times by an average of 16.5%. Over the past 8 quarters the average beat was 7%. There have been pre-announcements and guide downs along the way, especially over the past 12 months, but in general LULU doesn’t miss.
  • Luon Recall was 3/18/13 and Luon was back on shelves 6/4/13 about a month into the 2nd quarter last year
  • Chip comments on Bloomberg fell at the start of the 4th quarter (11/5/13)

 

Revenue

  • Internet traffic rank which takes into account organic visits and page views per visit was up 25% relative to all other sites on the internet.
  • Monthly traffic improved sequentially in June and July from trough levels in May and was up 68% in the quarter. A 2000bps improvement sequentially from 1Q14. The improvement could be driven by LULU jamming more inventory through the e-pipe. That could have negative margin implications, or if it does not result in better e-comm sales it could simply mean that the company did a lousy job converting. But the trends initially look decent.

 LULU – More Ways To Win Than Lose - LULU2

 

LULU – More Ways To Win Than Lose - lulu3

 

Gross margin – key negative driver here are product margins

  • Over the past 5 quarters (1Q13 -1Q14) product margins have been down by 90bps, 220bps, 220bps, 270bps, and 310 bps respectively. Two year comp in 1Q, -200bps. Management guided margins down another 300bps for the upcoming quarter that would assume product margins down 200bps, 50bps from fx, 30 – 40bps hit from new Ohio DC. Much of deleverage comes from mix away from core to seasonal which has lower IMU due in part to inefficient supply chain and inventory chase.

SG&A

  • Investments listed below and 14 pop-up shops adding an incremental $10mm in SG&A

Revenue Drivers

Near term stop gap measures intended to drive ‘traffic and sales’. These all seem weak at best. But it’s what LULU has called out.

1) Allocating additional floor space to men’s at store locations in Santa Monica, Vancouver, and Miami

2) London – on track to do in excess of $2,200 per square foot in year one

3) A social media platform focused on Brand Ambassadors

4) In-store tablets allowing guests to shop online inventory

5) Paid search advertisement

6) 14 pop up shops across the US and Canada open from April through September

 

Long term (these make more sense to us, but only partially address LULU’s problems)

1) Additional 120 stores to be added across North America

2) 40 international stores (20 Europe, 20 Asia) by the end of 2017 in addition to anything added on top of 30 store base in Australia and NZ

3) Go to market calendar – Spring/Fall 2015

4) Rebalance of core and seasonal product – Starts in 2H14 but won’t be fully implemented until 2Q15

5) Revamped product engine – 1Q16

 

Guidance Considerations

Getting within spitting distance of management guidance for the quarter is not terribly heroic. To get to the mid-point of guidance and in line with consensus for the quarter calling for revenue of $375mm - $380mm and EPS of $0.28-$0.30 we need to assume the following…

1) Revenue growth of 9.6%. Square footage growth of 20% YY, -4.3% consolidated comp (-9% store and +22% DTC).

2) Gross margins down 300bps and flat sequentially from the first quarter on the 2yr trend line

3) SG&A up 25%, implying 440bps of deleverage

4) EBIT margins down 738bps YY.

5) EPS growth of -26%

 

A little tougher to get to annual guidance. To get to the mid-point of guidance and in line with consensus for the full year calling for revenue of $1.77bil - $1.80bil and EPS in the range of $1.71-$1.76 we need to assume the following…

1) Revenue growth of 12%. Square footage growth of 18%. Flat consolidated comps (-5% store and +24% DTC).

2) Gross margins down 170bps to 51%.

3) SG&A up 24%, implying 300bps of deleverage

4) EBIT margins down 465bps

5) EPS growth = -10%


NICKEL: A Ban on Unprocessed Nickel Ore from the Philippines Looks Several Years Away

Please see the conclusion of this note for recent changes in the expectation of supply-side dynamics in the base metal complex.

 

Indonesia’s move to ban the exporting of unprocessed minerals in January has undoubtedly helped propel nickel prices +~40% YTD:

  • Indonesia previously the largest exporter of nickel ore
  • Decrease of ~$3Bn in annual exports
  • Indonesia previously accounted for 1/5th of global supply (largest producer)
  • China and Japan were two largest buyers:
    • China consumed 47% of nickel produced globally in 2013

The Indonesian government has no plans to lift its ban of unprocessed nickel ore. Jakarta believes producing, refining, and smelting domestically will be much more lucrative moving forward. Miners have now been forced to develop this capacity:

A report from Indonesia’s Investment Coordinating Board indicates they are in fact investing in the second-leg of the production process:

  • $8Bn spent to build three alumina refineries and two ferronickel projects
  • 102 Nickel Smelters in the process of being constructed

On August 28th we published a note outlining the new exemptions created for the exporting of unprocessed copper bauxite, but Jakarta doesn’t appear willing to move in the same direction for nickel:

 

Is Indonesia's Export Ban on Copper Bauxite Nearing Resolution?

 

With the Nickel Ore supply from Indonesia cut-off, both China and Japan were forced to turn elsewhere for raw minerals:

 

  • Chinese imports of nickel ore from the Philippines have more than tripled since Indonesia’s ban
  • The Philippines is now the LARGEST Nickel Ore supplier to China
  • THE Philippines has supplied 61% of China’s unprocessed nickel ore for pig-iron production YTD; iron ore can also be used
  • Pig iron a common ferrous metal used by the steel and metal casting industries  

 

On August 27th the Philippine House Natural Resource Committee proposed a bill to ban raw mineral exports following Indonesia’s move in January. The logic for the proposal echoes Jakarta’s reasoning in that building the infrastructure for the domestic capacity for the second-leg of the production process is a more lucrative venture than just exporting the raw mineral itself.

 

Congressman Erlpe John Amante estimated Indonesia’s revenue from exports would triple if miners were forced to refine the raw minerals (implement this second stage of the production process).  

 

The speculation fueled heavy buying late last week:

 

Thursday (09/04): +2.85%

Friday (09/05):    +1.67% on volumes +34/51/46% above 1/3/6-month averages

Monday (09/08): +92bps on volumes +26/39/34% above 1/3/6-month averages

 

The market pulled back significantly late in the day London time after a statement from Jakarta (-4.9% in late trading):

  • Philippine congressman Erlpe John Amante stated today that a mineral ban may not actually be in place for an estimated 7 years
  • 2 years before proposed bill is put into law
  • 5 Year reasonable grace period for miners to adapt

 

THE INDONESIAN EXAMPLE….

 

  • Indonesia moved to pass the bill in 2009 which gave the government the POWER to implement the ban which
  • Most miners wrongfully assumed the bill would not be signed into law
  • The move in January forced the necessary cap-ex and infrastructure spending. As mentioned above, this is now happening with the 102 Nickel smelters now being developed across Indonesia

 

CONCLUSIONS: THE QUANT SET-UP REMAINS BULLISH IN THE BASE METALS COMPLEX

 

1)      QUANT: The quant set-up is the most bullish of all commodities in TACRM, and we will continue to manage the risk of the range with a bullish intermediate-term TREND bias on the China catalyst.

 

2)      LONG-TERM: Late cycle cap-ex spend from miners will continue bringing an increasing supply of copper, nickel, and iron ore that will have to be met with a sustained increase in demand (China in particular).

 

SUPPLY-SIDE DYNAMICS

 

  • The implementation of a nickel ore export ban from the Philippine government appears less threatening on the margin over the next several years
  • Chinese coal imports hit 18-month low in August (China consumes 1/4th of coal globally)
  • Chinese iron ore Imports from Port Hedland, Australia reach a record 32M tons in August in as BHP and Rio Tinto increasing production
  • Indonesia lifts the ban of unprocessed copper ore bauxite:
    • A shipment of 10,000 tons of copper concentrate left Indonesia for China on Aug. 8
    • Meanwhile more of a push elsewhere to diversify supply lines:
      • China’s MMG closed on a $7Bn acquisition of the Las Bambas copper project in Peru in July
      • Chinese backers are now behind one-third of all Peru’s new mining investments by value

 Please feel free to ping us with questions or additional color. 

 

  NICKEL: A Ban on Unprocessed Nickel Ore from the Philippines Looks Several Years Away - TACRM Table

 

     

Ben Ryan

Analyst

 


Supply Side Stagnation: A Few Quick Charts

Takeaway: Decline in NFIB Hiring agrees w/ the sequential deceleration in the NFP and ADP data in Aug. Measures of labor slack continue to tighten.

We discussed the burgeoning divergence between actual consumption and capacity for consumption yesterday  >> FIVE-FECTA: CONSUMER CREDIT GROWTH ACCELERATES (AGAIN) IN JULY

 

Today’s small business confidence and labor turnover data reflected sequential deceleration in employment, agreeing with the sequential declines reported in the ADP and NFP releases for August.  

 

Meanwhile, measures of labor slack continue to point toward ongoing, albeit slow, tightening in labor market conditions – lending some incremental support to the emergent view of supply-side barriers to hurdling secular stagnation.      

 

NFIB/EmploymentHeadline Small Business Confidence increased for a second consecutive month, rising +0.4pts in August.  Job Openings and Outlook for General Business Conditions led the upside but Hiring Plans and Sales Expectations dropped -3 and -4 pts, respectively. 

 

Private payroll growth continues to run ~2%+, which matches peak growth in the last cycle and may be as good as it gets given the demographic and labor supply headwinds and the secular slowdown in employment growth over the last 30 years.

 

Supply Side Stagnation: A Few Quick Charts - NFIB Hiring plans Aug

 

Supply Side Stagnation: A Few Quick Charts - NFP Private YoY 090914

 

Supply Side Stagnation: A Few Quick Charts - NFIB Table

 

 

(Declining) SLACK:  Both the Jobs Hard to Fill and the Compensation Indices rose to new cycle highs in August (NFIB data) while Total Job Openings, Total Hires, and Quits moderated sequentially but held at 13 year highs in July (JOLTS data). 

 

Further, the share of short-term unemployed continued to rise in August while labor supply (total available workers per job opening) remains just north of pre-recession averages. 

 

In short, while signs of moderate sectoral shift and employment hysteresis remain, the labor market remains moderately tighter than the FED officialdom gives lip service to. 

 

Whether the acceleration in hourly earnings for nonsupervisory and production employees to a 4-year high of  +2.5% in August is evidence of that tightening being passed through in the form of accelerating wage inflation remains TBD.   

 

Supply Side Stagnation: A Few Quick Charts - NFIB compensation Aug

 

Supply Side Stagnation: A Few Quick Charts - NFIB Hard to Fill Aug

 

Supply Side Stagnation: A Few Quick Charts - Short term unemployment    of Total

 

Supply Side Stagnation: A Few Quick Charts - Jobs per available worker

 

 

Cycle Accounting:  Historically, over the last half century, initial claims and peak monthly NFP gains have led the peak in equities and the peak in the economic cycle by 3 months and 7 months, respectively.   

 

Whether the recent trough in claims in early August or the Apr-June NFP gains represented peak improvement in those measures remains to be seen, but it’s worth monitoring given the fairly consistent temporal sequence in the labor --> equity market --> economy over the last half century.  

 

Supply Side Stagnation: A Few Quick Charts - Initial Claims Months from Trough

 

Supply Side Stagnation: A Few Quick Charts - Laobr cycle half table

 

 

Christian B. Drake

@HedgeyeUSA

 


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 80.65%
  • SHORT SIGNALS 78.64%
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