prev

VIDEO: McCullough: 'Bull Market Narrative Is Getting Ridiculous'

Hedgeye Risk Management CEO Keith McCullough and JonesTrading chief market strategist Michael O’Rourke discuss geopolitical risk and whether the bull market in stocks is getting long in the tooth on Fox Business' "Opening Bell." According to McCullough, "the real bull market is in bonds, gold, and anything slow-growth, yield-chasing that reflects a slower economy."



MACAU: PLACEHOLDER FOR WEEK 3 OF JULY

The 3rd week of July provides us with the placeholder table revenue figure of HK$5,425 million or HK$775 million per day.  Thus, we would caution investors not to rely on this number.  The fourth and fifth (stub) weeks should provide some volatility to catch up on the placeholder 3rd week.  

 

Our full month projection is for July YoY GGR growth down low single digits.

 

In terms of market share, Galaxy continues to crush it at the expense of MPEL and MGM.  We remain negative on the Macau stocks general but like the long setup here for Galaxy

 

MACAU: PLACEHOLDER FOR WEEK 3 OF JULY - macau

 

MACAU: PLACEHOLDER FOR WEEK 3 OF JULY - macau2


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 80.73%
  • SHORT SIGNALS 78.79%

Retail Callouts (7/21): Ideas List, WWW, KATE

Takeaway: Hedgeye Retail Ideas List. WWW - international opportunity. KATE talks e-comm strategy.

HEDGEYE RETAIL IDEAS LIST

 

Retail Callouts (7/21): Ideas List, WWW, KATE - Chart1 7 21 2014

 

COMPANY NEWS

 

WWW - In Person: Jim Zwiers Takes Wolverine To New Heights

(http://www.wwd.com/footwear-news/people/in-person-jim-zwiers-takes-wolverine-to-new-heights-7805959)

 

  • Entering into your new position, what are your priorities?
    • JZ: "The first is to lever the brands in the portfolio. Right now, our mix is about 50-50 in terms of U.S. pairs versus international pairs, and so that’s heavily weighted to the brands that were in the portfolio prior to the Performance & Lifestyle Group acquisitions [from Collective]."
  • Will expansion into additional overseas markets be a priority?
    • JZ:" Every once in a while, we ask whether there’s any other countries and territories left. [Laughs.] We definitely have scope; what we need to continue to drive now is scale. We have not achieved our optimal market share in any market in any region. We have a long ways to go to get to where we think we can get to in terms of operational excellence, in terms of demand planning and demand creation, but we’re taking steps in that direction, and it’s beginning to show some strong results."
  • Sperry Top-Sider was lauded as one of the biggest overseas opportunities for Wolverine at the time of the acquisition. How much progress has that brand made internationally? 
    • JZ: "When you take some of our most penetrated brands, they’d be well above 50 percent of their pairs being sold globally. We’ve not committed to when that will happen for Sperry, but we know the trajectory and we’ve been able to execute it with many brands. We’re still in the first inning with Sperry international. Sperry is priority No. 1, with both new distributor sign-ups and in our owned operations."

 

Takeaway: At the time of the PLG acquisition in 2012, WWW was the most global footwear company in the world with over 60% of its unit sales coming outside the US, while International accounted for just 5% of sales for the four brands it acquired (Sperry, Saucony, Keds, and Stride-Rite). Over the next 5 years we see $600mm in International revenue opportunity for the acquired PLG brands as WWW layers these brands on to its global infrastructure spanning 200+ markets and 10,000+ points of distribution.

 

KATE - Kate Spade's Mary Beech Talks Brand Storytelling

(http://www.wwd.com/media-news/marketing/mary-beech-kate-spade-new-york-7806158?module=Business-latest)

 

  • "[Mary Beech, Chief Marketing Officer] said when Kate Spade launched e-commerce, which accounts for more than 20 percent of sales, the brand committed to content and commerce. 'But the content wasn’t editorializing our products, it is true content — dance lessons, or recipes, or great tips for when you visit another place. The lifestyle side of Kate Spade was of equal importance to sales,' she said."
  • "Illustrating the value of brand storytelling, Beech said the opening of Kate Spade’s first London store was a 'missed opportunity.' The unit opened in London with brick- and-mortar only...The company quickly added a worldofkatespade.com site that had no e-commerce element, but rather offered customers information about the brand. E-commerce in the U.K. is set to launch before the end of the year, and Beech said as the brand enters new markets, it would lead with digital storytelling, over and above physical locations."

 

Takeaway: KATE is a brand that built a strategy around selling product across multiple categories (handbags, accessories and apparel, etc…), to multiple affluent consumers (Kate Spade, KS Saturday, and Jack Spade) in several channels of distribution (wholesale, retail, dot.com, and concessions) in several regions of the world. These characteristics might be expected from a multi-billion dollar company. But keep in mind that KATE was less than $800mm in sales in FY13.

 

OTHER NEWS

 

LULU - Lululemon seeks a leg up on knockoffs

(http://www.theglobeandmail.com/report-on-business/lululemon-seeks-a-leg-up-on-knockoffs/article19680632/)

 

  • "Lululemon Athletica Inc. has filed a lawsuit in a U.S. federal court in Illinois targeting a sealed list of unidentified defendants that it says are China-based knockoff artists selling fake versions of its ubiquitous yoga pants and other merchandise online."

 

Herman Miller to acquire Design Within Reach

(http://www.chainstoreage.com/article/herman-miller-acquire-design-within-reach)

 

  • "Herman Miller has entered into an agreement to acquire high-end furniture retailer Design Within Reach Inc. (DWR) for about $154 million in cash."
  • “'This combination expands our reach in the higher margin consumer sector and we have identified multiple points of strategic leverage that will benefit our other segments and operations, as well as DWR’s own growth plans,' Walker said."

 

TGT - YouTube Stars Sell Target to College Set

(http://www.nytimes.com/2014/07/21/business/media/youtube-stars-sell-target-to-college-set.html?partner=yahoofinance&_r=0)

 

  • "TODRICK Hall, Ann Le, Tiffany Garcia and Michael Balalis, a.k.a. Mikey Bolts, are unlikely to be household names in households of consumers in their 30s, 40s or 50s. But Target is hoping those monikers mean money as it seeks to reach members of the millennial generation who are shopping for apparel, electronics and home furnishings as they head to college."
  • "Target is featuring the group, known for video clips they create for YouTube, in four online video shows. Composed of four episodes each, they will be available on Target’s YouTube channel."

 

Tesco - Appointment of Chief Executive Officer and Trading Update

(http://www.tescoplc.com/index.asp?pageid=188&newsid=1026)

 

  • "Tesco plc announces that Dave Lewis will join the Board of Tesco on 1 October, 2014 as Chief Executive Officer in succession to Philip Clarke.  Philip Clarke will continue as Chief Executive until that date when he will step down from the Board but will continue to be available to support the transition until the end of January 2015."

 

AMZN, BKS - Amazon Starts $9.99-a-Month Service for Unlimited E-Books

(http://www.bloomberg.com/news/2014-07-18/amazon-starts-9-99-a-month-service-for-unlimited-kindle-e-books.html)

 

  • "Amazon.com Inc. introduced a $9.99-a-month service for unlimited Kindle e-book downloads, letting customers devour books like they binge on TV services like Netflix Inc. and Amazon Prime.
  • Kindle Unlimited includes more than 600,000 Kindle books and thousands of audiobooks from Audible Inc., Amazon said today in a statement. Readers can access titles like “The Hunger Games” and “The Lord of the Rings” without paying for them individually."

European Banking Monitor: Sberbank Swaps Widen on Conflict

Below are key European banking risk monitors, which are included as part of Josh Steiner and the Financial team's "Monday Morning Risk Monitor".  If you'd like to receive the work of the Financials team or request a trial please email .

 

--- 

 

European Financial CDS - Swaps across Europe were narrowly changed with one exception: Russia's Sberbank, which widened +35 bps to 265 bps. 

 

European Banking Monitor: Sberbank Swaps Widen on Conflict  - chart 1 Financials CDS

 

Sovereign CDS – Sovereign swaps were little changed last week as the largest move came from Italy at +3 bps, while the average move was 0 bps. 

 

 European Banking Monitor: Sberbank Swaps Widen on Conflict  - chart 2 sovereign CDS

 

European Banking Monitor: Sberbank Swaps Widen on Conflict  - chart3 sovereign CDS

 

European Banking Monitor: Sberbank Swaps Widen on Conflict  - chart 4 sovereign CDS

 

Euribor-OIS Spread – The Euribor-OIS spread (the difference between the euro interbank lending rate and overnight indexed swaps) measures bank counterparty risk in the Eurozone. The OIS is analogous to the effective Fed Funds rate in the United States.  Banks lending at the OIS do not swap principal, so counterparty risk in the OIS is minimal.  By contrast, the Euribor rate is the rate offered for unsecured interbank lending.  Thus, the spread between the two isolates counterparty risk. The Euribor-OIS spread tightened by 1 bps to 13 bps.

 

European Banking Monitor: Sberbank Swaps Widen on Conflict  - chart 5 sovereign CDS

 

Matthew Hedrick

Associate

 

Ben Ryan

Analyst

 


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

next