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Cartoon of the Day: Over Fed

Cartoon of the Day: Over Fed - Fed cartoon 10.24.2014

 

Our unelected central planners just can’t seem to get enough quantitative easing (QE).

 

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Invite | Ebola Forecasting & Containment Call with Dr. Jeffrey Shaman

Invite | Ebola Forecasting & Containment Call with Dr. Jeffrey Shaman - 1

 

Hedgeye will be hosting a specialist call with Dr. Jeffrey Shaman on Tuesday, October 28th at 1:00pm EDT to learn more about  the real and perceived risks of the current ebola virus situation.

 

Dr. Shaman will provide his informed perspective to better understand recent developments, including the global response in Africa, the handling of confirmed cases in the U.S., as well as what we should expect in the immediate future.

 

We will discuss Dr. Shaman's research on forecasting and containment of the ongoing ebola outbreak in Africa, the probability of a significant outbreak outside of Africa, and the timeline for bringing the disease under control, which Dr. Shaman estimates will take another 12 to 18 months.   

 

 

CALL DETAILS

  • Date/TIme: Tuesday, October 28th 1:00pm EDT
  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 651216#
  • Materials: CLICK HERE

 

ABOUT JEFFREY SHARMAN, PhD

Dr.Shaman is an Associate Professor in the Department of Environmental Health Sciences, a junior faculty fellow of the Earth Institute, a faculty fellow of the Institute for Social and Economic Research and Policy, and a member of the Center for Environmental Health in Northern Manhattan. He is also affiliated with the International Research Institute for Climate and Society.  Dr.Shaman received a BA in biology from the University of Pennsylvania,and an MA,M.Ph.and PhD in climate science from Columbia University.  He was a NOAA post-­-doctoral fellow in climate and global change at Harvard University.

 

His research interests include: infectious disease, vector and pathogen ecology, health in the indoor and built environment,large-­-scale climate dynamics,the hydrologic cycle, and climate and disease forecast. Much of his present research focuses on developing model-­-inference systems for the forecast of infectious diseases, including influenza, West Nile virus and Ebola. 

 


Invite | Ebola Forecasting & Containment Call with Dr. Jeffrey Shaman

Invite | Ebola Forecasting & Containment Call with Dr. Jeffrey Shaman - 1

 

Hedgeye will be hosting a specialist call with Dr. Jeffrey Shaman on Tuesday, October 28th at 1:00pm EDT to learn more about  the real and perceived risks of the current ebola virus situation.

 

Dr. Shaman will provide his informed perspective to better understand recent developments, including the global response in Africa, the handling of confirmed cases in the U.S., as well as what we should expect in the immediate future.

 

We will discuss Dr. Shaman's research on forecasting and containment of the ongoing ebola outbreak in Africa, the probability of a significant outbreak outside of Africa, and the timeline for bringing the disease under control, which Dr. Shaman estimates will take another 12 to 18 months.   

 

 

CALL DETAILS

  • Date/TIme: Tuesday, October 28th 1:00pm EDT
  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 651216#
  • Materials: CLICK HERE

 

ABOUT JEFFREY SHARMAN, PhD

Dr.Shaman is an Associate Professor in the Department of Environmental Health Sciences, a junior faculty fellow of the Earth Institute, a faculty fellow of the Institute for Social and Economic Research and Policy, and a member of the Center for Environmental Health in Northern Manhattan. He is also affiliated with the International Research Institute for Climate and Society.  Dr.Shaman received a BA in biology from the University of Pennsylvania,and an MA,M.Ph.and PhD in climate science from Columbia University.  He was a NOAA post-­-doctoral fellow in climate and global change at Harvard University.

 

His research interests include: infectious disease, vector and pathogen ecology, health in the indoor and built environment,large-­-scale climate dynamics,the hydrologic cycle, and climate and disease forecast. Much of his present research focuses on developing model-­-inference systems for the forecast of infectious diseases, including influenza, West Nile virus and Ebola. 


Early Look

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**NEW Materials Link: YELP Flash Call

 

Participant Dialing Instructions

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 349752#
  • Materials: CLICK HERE

**NEW Materials Link: YELP Flash Call - HE IM YELP death

 

Hedgeye's Internet & Media Team, led by Sector Head Hesham Shaaban, will be hosting an update call to their SHORT Yelp (YELP) Best Idea.  YELP's business model is broken; we're already seeing signs of deterioration, which will only get worse in 2015.

    

Join us as we update our bearish thesis and why we see an additional 30%+ downside from here today Friday, October 24th at 1:00pm EDT.

 

 

KEY TOPICS WILL INCLUDE  

  • Extreme Attrition Rate: It will only get worse from here
  • Insufficient TAM: YP.com is not the low-hanging fruit, it's a pipe dream
  • 2015 Will Be Much Worse: Consensus estimates are unattainable

EVENT: YELP Flash Call at 1pm EDT

Takeaway: Dial-in Info below

EVENT: YELP Flash Call at 1pm EDT - HE IM YELP death

Hedgeye's Internet & Media Team, led by Sector Head Hesham Shaaban, will be hosting an update call to their SHORT Yelp (YELP) Best Idea.  YELP's business model is broken; we're already seeing signs of deterioration, which will only get worse in 2015.

    

Join us as we update our bearish thesis and why we see an additional 30%+ downside from here today Friday, October 24th at 1:00pm EDT.

 

 

KEY TOPICS WILL INCLUDE  

  • Extreme Attrition Rate: It will only get worse from here
  • Insufficient TAM: YP.com is not the low-hanging fruit, it's a pipe dream
  • 2015 Will Be Much Worse: Consensus estimates are unattainable

 

Participant Dialing Instructions

Toll Free Number:

Direct Dial Number:

Conference Code: 349752#

Materials: CLICK HERE


Target: Temporary "Free Shipping" is a Very Bad Precedent For All

Takeaway: Don’t let this ‘free shipping’ promo sneak under the radar. It ushers Retail to a place where few can be profitable. TGT is not one of them.

This note was originally published October 23, 2014 at 07:18 in Retail

Conclusion: Target offering free shipping over the holidays accelerates a trend that we think will play out over two years -- which is that almost all retailers offer free shipping and free returns. Only those with the highest basket size (Nordstrom) can win at this game. Other retailers are likely to follow TGT over the near term. The math does not look good.

 

 

DETAILS

Every year there seems to be a new strategy the retailers embrace to gain share of wallet as the Holiday's approach.  With many stores now open all day on Thanksgiving and staying open 24/7 in the final stretch in December, there's not much more (aside from price) that the retailers can do to get more people to shop at the stores. But Target has an interesting, albeit costly, idea.

 

TGT is offering free shipping on all items in the store for online customers beginning yesterday, and lasting through Dec 20th. This is a huge event for retail -- at least how we see it.  And it does not result in profitability going up, unfortunately.

 

Common perception is that e-commerce margins are higher than brick & mortar. That might be true for content owners like Ralph Lauren, Nike and UnderArmour -- who can side step a wholesaler and capture 100% of the margin. But for retailers like Target, Macy's, Kohl's and JC Penney, e-commerce is not margin accretive.

 

Take KSS, for example. It's e-commerce gross margins are about 25% -- 1,200 basis points below the company average. The big culprit is the triangulation of lower-value (commodity) product, low basket size, and fixed shipping costs.

 

In the example below, you can see that a company like Nordstrom, which is the only retailer that offers free shipping and free returns, has a big enough basket size due to very defendable brands and price/points such that it can still print a superior e-commerce gross margin. Other retailers -- even Macy's, which is known for being a trailblazer in e-commerce (we don't particularly agree) has an extremely high threshold for free shipping ($99), and still does not have a superior e-commerce margin.

Target: Temporary "Free Shipping" is a Very Bad Precedent For All  - TGT 10 23 chart1

 

 

Our concern about this move by TGT is that it currently has a $50 'free shipping' threshold. Over the next two months, if you want to buy a package of q-tips for $3.89, or a package of pacifiers for $5.89, you get them delivered for free.   Unfortunately, the shipping cost on those items is about double the gross profit that Target would otherwise record.

Target: Temporary "Free Shipping" is a Very Bad Precedent For All  - TGT 10 23 chart2

 

 

Another angle on shipping costs is that a by-product of a 'free shipping' threshold is that it causes many consumers with a low basket size to come in to the store to pick up the product to avoid a $5-$10 shipping charge. According to Target, 14% of its digital sales are picked up in stores, and then about 20% of those customers buy additional items. What happens now that shipping is free?

 

We're not as concerned about this event as a negative for Target, but we are definitely concerned that (almost) all retailers are gravitating to a very unprofitable place -- that's free shipping and free returns. Free shipping is kind of like a dividend -- once you give it, you really can't take it away without severe repercussions.

Target: Temporary "Free Shipping" is a Very Bad Precedent For All  - TGT 10 23 chart3


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%
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