Retail Callouts (10/28): ICSC, COH, CROX, KSS, WMT, M, JCP, LOW, AMZN

Takeaway: ICSC trend continues to slow on the margin. COH 'broken brand' not equal 'broken stock'. KSS-It'll Miss Again. WMT with an oops.



Wednesday (10/29)

  • KSS - Investor Day: 9:00am
  • RL - Earnings Call: 9:00am
  • HBI - Earnings Call: 4:30pm


Thursday (10/30)

  • SHOO - Earnings Call: 8:30am
  • COLM - Earnings Call: 5:00pm




Takeaway: We can't help but callout the bifurcation we've seen over the past few weeks between the numbers reported by ICSC and the retail comp numbers we've seen out of those accountable to the public markets. The relative strength we've seen out of the ICSC (which we would note has been slowing on the 2 year trend line since early August) has not been reflected in the sales numbers we've seen coming out of the 3rd quarter. We'd point to WMT, GPS, URBN, KSS, and to a lesser extent JCP as levered names to the US consumer that we would expect to benefit. That certainly hasn’t been the case.



Retail Callouts (10/28): ICSC, COH, CROX, KSS, WMT, M, JCP, LOW, AMZN - 10 28 chart1




COH - 1Q15 Earnings


Takeaway: This was the first time in over three years that we weren't bearish headed into a COH print.  To be clear, the fundamental story is absolutely broken and this change in direction has nothing to do with any near term upside we see in the business model. In fact our numbers 2-3 years out are 25% below consensus. We think the absolute best-case downside is about $5, which is hardly enough with the stock trading at $36. The truth is that we'd need to see the company face-plant on its recently announced Brand repositioning, and there are no expectations for any meaningful results for another 1-2 years. Until then, the company has a hall pass to be subpar.


Retail Callouts (10/28): ICSC, COH, CROX, KSS, WMT, M, JCP, LOW, AMZN - 10 28 chart2


CROX - 3Q14 Earnings


Retail Callouts (10/28): ICSC, COH, CROX, KSS, WMT, M, JCP, LOW, AMZN - 10 28 chart3


KSS - Kohl’s Corporation to Host 2014 Investor Conference and Updates Guidance



  • "Kohl’s Corporation expects comparable sales to decrease 1.4% in the third quarter. October sales have been softer than the balance of the quarter. Geographically, the Company expects sales to be consistent across all regions. E-Commerce sales are expected to increase over 30%."
  • "By line of business, the Company expects Children’s to report comparable sales increases for the quarter. Accessories, Footwear and Men’s are expected to report lower sales, but to outperform the company average. Home and Women’s are expected to underperform the company average."
  • "Based on actual sales to date, the Company expects its 2014 diluted earnings per share to be at the low end of its prior guidance, which was previously $4.05 - $4.45 per diluted share."


Takeaway: For the full text of our note, 'KSS-It'll Miss Again', from this morning click here: LINK


WMT - Walmart Apologizes for Advertising ‘Fat Girl Costumes’ on Its Website



  • "Retail giant Walmart caused a stir on Monday, after a listing for plus-size Halloween outfits appeared on their website under the heading 'Fat Girl Costumes.'"
  • "The retail chain quickly backtracked, issuing an apology before changing the heading to 'Women’s Plus-Size Halloween Costumes.'"


Retail Callouts (10/28): ICSC, COH, CROX, KSS, WMT, M, JCP, LOW, AMZN - 10 28 chart4


Takeaway: How does this make it past quality control?




M - Macy's to Open in Abu Dhabi



  • "Macy’s will open a 205,000-square-foot, four-level store at Al Maryah Central, described as a 'super-regional shopping destination' under development on Al Maryah Island in Abu Dhabi."
  • "A 230,000-square-foot Bloomingdale’s will also open in Al Maryah Central, marking that retailer’s second overseas store. The first opened in Dubai in 2010."
  • "Bloomingdale’s and Macy’s, both divisions of the $28 billion Macy’s Inc., plan to open their Abu Dhabi locations in 2018. They will be operated under license by Al Tayer Group, which already operates the licensed Bloomingdale’s store in Dubai."


WMT, JCP, KSS, M - Traffic At Los Angeles Ports Backed Up For 2 Weeks, Threatens Holiday Season



  • "'This is really a perfect storm,' Port of Los Angeles Executive Director Gene Seroka told the Los Angeles Times.
  • "The pre-holiday surge of cargo for retailers like Wal-Mart, JC Penney, Macy’s, and Kohl’s has always been a busy time of year, but it’s made worse this year by the use of massive container ships. These larger vessels can be up to one-third larger than Los Angeles and Long Beach ports have the capacity to handle. The root of the problem, though, is likely due to a shortage of trucking equipment."
  • "'We have a meltdown on the harbor,' said Robert Curry, president of California Cartage Co., a trucking firm serving both ports. 'Every day it gets worse.'"


LOW - Lowe’s to enter Manhattan with smaller-store format



  • "Lowe's announced that it will enter its first two stores in Manhattan. The home improvement giant has two locations slated to open in the second half of 2015, one at 2008 Broadway at West 68th Street, and a second at 635 6th Avenue at West 19th Street."


AMZN - Amazon to buy first Indian start-up QwikCilver Solutions, a gift card tech firm 



  • "Amazon India is in advanced talks to buy a minority stake in gift card technology and retail firm QwikCilver Solutions, according to three people aware of the development. The deal, if successful, will mark the first investment in an Indian startup by the Seattle-based firm which is battling rivals Flipkart and Snapdeal for primacy in India's online retail industry."


Takeaway: Oct share shifts likely due to hold. However, VIP volumes could be moving away from the US operators in the coming months

VIP share shifts coming? Read on...



Please see our note:

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.


Takeaway: Our Macro Playbook is a daily 1-page summary of our core ETF recommendations, investment themes and proprietary quantitative market context.

CLICK HERE to view the document. In today’s edition, we highlight:


  1. Why the nature of the bounces across various sectors, style factors and country exposures throughout the DM Equities space portend poorly for consensus expectations of a year-end rally
  2. Quantifying and contextualizing the breakdown in across various segments of the energy complex in advance of our 11am call with Dr. Leonardo Maugeri; ping for access


Best of luck out there,


Darius Dale

Associate: Macro Team

#Nice Behavior

This note was originally published at 8am on October 14, 2014 for Hedgeye subscribers.

“It would be nice to think that such bad behavior will never happen again.”

-Daniel Alpert


Some people are nice in this business. Some people are mean. I tend to be nice to subscribers, children, and dogs. I guess I have a not so nice tweet-streak in me for pundits who aren’t accountable. Hockey players can be mean that way.


The aforementioned quote comes from a non-hockey-non-consensus economics book I have been waiting to review called The Age of Oversupply, by Dan Alpert from Westwood Capital. It’s an outside the box, but reasonable way to consider #deflation.


Dan is one of the nice guys who holds himself accountable to his clients. He is also on a short list of people who were appropriately bearish on things like supply in 2008. The main contention in his book is that oversupply is here to stay. That appears right, for now.


Back to the Global Macro Grind


Some of the #MoBros on Twitter have been calling me a meany for calling their levered-long-momentum positions in small cap and/or social (non profit publicly listed companies) stocks #Bubbles. But Dan is down with that – he calls them what they are too.


The Great Credit Bubble may have burst, but the age of oversupply hasn’t ended – and won’t anytime soon. Abundant labor, excess capital, and cheap money are here to stay.” (The Age of Oversupply, pg 18)


By my math, the only way to unwind the excess and stupid-valuation-storytelling associated with these cheap moneys is via lower prices for #bubble stocks. Yesterday’s US stock market volume was revealing on that front:


  1. Total US Equity Market Volume (total exchange + OTC + OTCBB) was +6.2% vs. its 3 month average
  2. Total Exchange Volume was +44% vs. its 3 month average
  3. Total Traded Value (Russell 3000) was +30% vs. its 4 month average


That’s three different ways we try to look at equity market volume in real-time. When it comes to the pick-toggling junk bond #bubble, finding real-time volume read-throughs is more like finding Waldo.


Today’s Chart of The Day (exhibit 51 in our Q4 Macro Themes deck) is a picture of what I am trying to hammer home in terms of the relationship volume has with inflated prices – Total Exchange Volume vs Russell 3000 TTM P/E multiple.


Punch-line: this is the most expensive and illiquid market since the caveman.


“So” how does expensive illiquidity sync with oversupply of labor, capital, etc.? Unfortunately, when Japanese, European, and US growth is slowing (all at the same time), I think what that means is pretty straightforward:


  1. Deflation of illiquid equity bubbles
  2. Re-flation of premiums paid for liquidity (JGBs, Bunds, Treasuries)
  3. And a whole whack of revisionist sell-side economics excuse-making along the way


You see, until this market snapped the backs of the Moving Monkeys (point and click single-factor time/price charts using things like the “50 and 200 day” moving averages), they didn’t have to pay attention to things like books, volume, or volatility.


After a +138% rip in US equity volatility (VIX since the Russell #Bubble topped on July 7th, 2014), they need to start reading!


To be clear on timing, since we’re now probing:


A)     Immediate-term TRADE overbought signals in VIX (risk range = 17.78-24.98)

B)      Immediate-term TRADE oversold signals in SPX and RUT (SPX risk range = 1849-1937)


I don’t want you to be shorting US stocks and buying TLT with the 10yr Yield at its YTD lows (2.21%) today.


I just want you to, objectively, rewind the risk management tapes and learn something from what a baseline 3-factor model (price, volume, and volatility) was signaling for, well, most of 2014.


For OCT to-date, the #Quad4 deflation in US equity sector styles levered to inflation and/or growth expectations looks like this:


  1. Energy Stocks (XLE) down -10.65%
  2. Basic Material Stocks (XLB) down -9.03%
  3. Industrial Stocks (XLI) down -6.79%


That’s precisely what you should see in #Quad4. Mr. Market is telling you that both growth and inflation expectations are slowing, at the same time. Unless you are overweight Cash, Treasury Bonds, and Munis, that is not #nice portfolio behavior.


Our immediate-term Global Macro Risk Ranges are now:


UST 10yr yield 2.20-2.39%

SPX 1849-1937

RUT 1042-1081

VIX 17.78-24.98
USD 84.99-86.64

Gold 1211-1241


Best of luck out there today,



#Nice Behavior - 10.14.14 Volume vs. Russell PEs


TODAY’S S&P 500 SET-UP – October 28, 2014

As we look at today's setup for the S&P 500, the range is 140 points or 6.15% downside to 1841 and 0.99% upside to 1981.                               













  • YIELD CURVE: 1.89 from 1.88
  • VIX closed at 16.04 1 day percent change of -0.43%


MACRO DATA POINTS (Bloomberg Estimates):

  • FOMC starts 2-day meeting
  • 7:45am: ICSC weekly sales
  • 8:30am: Durable Goods, Sept, est 0.5% (pr -18.2%, rev -18.4%)
  • 8:55am: Redbook weekly sales
  • 9am: S&P/Case-Shiller 20 City m/m, Aug., est. 0.18% (pr -0.5%)
  • 10am: Consumer Confidence Index, Oct., est. 87 (prior 86)
  • 10am: Richmond Fed Mfg Index, Oct., est. 11 (prior 14)
  • 11:30am: U.S. to sell 4W bills
  • 1pm: U.S. to sell $29b 2Y note
  • 4:30pm: API weekly oil inventories



    • 8:30am-4pm: U.S. Chamber of Commerce hosts cybersecurity summit
    • 9am: Interior’s Jewell delivers keynote remarks at National Congress of American Indians Annual Convention; Atlanta
    • 9:30am: U.S. Chamber of Commerce releases report on risk-based pricing in consumer lending
    • U.S. ELECTION WRAP: Runoff Scenarios and Senate Control; Polls



  • Ackman’s $5.3 Billion Allergan Bet Examined Before Ouster Vote
  • Apple’s Cook, Alibaba’s Ma Talk Marriage of Mobile Payments
  • Alibaba’s Ma Targets Hollywood Studio Partners in Content Push
  • T-Mobile Raises 2014 Subscriber Forecast After Beating Ests.
  • Regal Entertainment Exploring Alternatives; 3Q Adj. EPS Beats
  • GM to Build Volt Electric Drive, Invest $300m in Michigan
  • Twitter CEO Says Adding Users Top Priority as Growth Slows
  • Sanofi SlumPS on Forecast for Flat Diabetes Sales Next Year
  • Madison Square Garden Mulls Plan to Split Into 2 Companies
  • Money Mkts Split With Economists on Fed Interest-Rate Outlook
  • Largest U.S. Banks See Worst Outflow of Money in ETF Since 2009
  • Detroit to Learn Fate of $7 Billion Debt-Cutting Plan Nov. 7
  • CDC Toughens Monitoring Guidelines for People With Ebola Risk



    • Aetna (AET) 6am, $1.58
    • Agco (AGCO) 8am, $0.63
    • Alere (ALR) 7:30am, $0.52
    • Ametek (AME) 7am, $0.61
    • Arch Coal (ACI) 7:45am, ($0.41) - Preview
    • AutoNation (AN) 7:30am, $0.86
    • Centene (CNC) 6am, $0.99
    • CIT (CIT) 6:30am, $0.89
    • Coach (COH) 7am, $0.45 - Preview
    • Consol Energy (CNX) 6:45am, $0.18 - Preview
    • Corning (GLW) 7:15am, $0.38
    • Cummins (CMI) 7:30am, $2.28 - Preview
    • Ecolab (ECL) 8:05am, $1.20
    • EI du Pont de Nemours (DD) 6am, $0.53 - Preview
    • FirstMerit (FMER) 7:30am, $0.37
    • Freeport-McMoRan (FCX) 8am, $0.61 - Preview
    • Harris (HRS) 6:30am, $1.09
    • HCA (HCA) 8:30am, $1.17
    • Laboratory of America (LH) 6:41am, $1.75
    • Marsh & McLennan (MMC) 7am, $0.53
    • Martin Marietta (MLM) 8:20am, $1.70
    • MeadWestvaco (MWV) 7:25am, $0.54
    • MSC Industrial Direct (MSM) 7:30am, $1.01
    • Noble Energy (NBL) 7:27am, $0.36 - Preview
    • Paccar (PCAR) 8am, $0.96 - Preview
    • Parker-Hannifin (PH) 7:30am, $1.67 - Preview
    • Pfizer (PFE) 7am, $0.55 - Preview
    • PG&E (PCG) 9:02am, $1.14
    • Schnitzer Steel (SCHN) 8am, $0.31
    • Sensata Technologies (ST) 6am, $0.62
    • Sherwin-Williams (SHW) 7am, $3.22
    • Sirius XM (SIRI) 7:01am, $0.02 - Preview
    • Spirit Airlines (SAVE) 6am, $0.97
    • Starwood Hotels (HOT) 6am, $0.65
    • Synergy Resources (SYRG) 6am, $0.13
    • TD Ameritrade (AMTD) 7:30am, $0.36
    • Timken (TKR) 7:25am, $0.66
    • TRW Automotive (TRW) 7am, $1.69
    • United Therapeutics (UTHR) 6am, $1.79
    • Vishay Intertechnology (VSH) 7:30am, $0.28
    • Wabtec (WAB) 7:56am, $0.89
    • Waddell & Reed Finl (WDR) 6:59am, $0.92
    • Whirlpool (WHR) 6am, $3.13
    • Xylem (XYL) 7am, $0.52 - Preview



    • Aflac (AFL) 4:06pm, $1.43
    • AGL Resources (GAS) 5:30pm, $0.30
    • American Financial (AFG) 5pm, $1.14
    • Ameriprise Financial (AMP) 4:07pm, $1.96
    • Anadarko Petroleum (APC) 4:05pm, $1.27
    • Arthur J Gallagher (AJG) 4:13pm, $0.68
    • Aspen Technology (AZPN) 4:10pm, $0.27
    • CH Robinson Worldwide (CHRW) 4:15pm, $0.81
    • Chemtura (CHMT) 4:37pm, $0.30
    • Cincinnati Financial (CINF) 4:02pm, $0.71
    • CNO Financial (CNO) 4:05pm, $0.32
    • Dun & Bradstreet (DNB) 4:15pm, $1.72
    • Dyax (DYAX) 4:01pm, ($0.06)
    • Eagle Materials (EXP) 4:15pm, $1.03
    • Edison Intl (EIX) 4pm, $1.35
    • Electronic Arts (EA) 4:01pm, $0.53 - Preview
    • Equity Residential (EQR) 4:53pm, $0.33 - Preview
    • EXCO Resources (XCO) 4:08pm, $0.01
    • Express Scripts (ESRX) 4:25pm, $1.29 - Preview
    • Facebook (FB) 4:05pm, $0.40 - Preview
    • Fiserv (FISV) 4:01pm, $0.84
    • Gilead Sciences (GILD) 4:05pm, $1.93 - Preview
    • Green Plains (GPRE) 4:48pm, $0.96
    • Hatteras Financial (HTS) 4:02pm, $0.58
    • InvenSense (INVN) 4:06pm, $0.16
    • Kimco Realty (KIM) 4:01pm, $0.14
    • Macerich (MAC) 4:01pm, $0.20
    • Marriott Intl (MAR) 4:30pm, $0.62
    • McKesson (MCK) 4pm, $2.73
    • Mueller Water Products (MWA) 4:25pm, $0.12
    • Newfield Exploration (NFX) 4:01pm, $0.50
    • Owens-Illinois (OI) 4:04pm, $0.73
    • Panera Bread (PNRA) 4:05pm, $1.42
    • PriceSmart (PSMT) 4pm, $0.73
    • SM Energy (SM) 5:15pm, $1.47
    • SolarWinds (SWI) 4:07pm, $0.43
    • Total System Services (TSS) 4pm, $0.52
    • Trinity Industries (TRN) 4:05pm, $0.86
    • TriQuint Semiconductor (TQNT) 4:02pm, $0.24
    • UDR (UDR) 4:01pm, $0.06
    • United States Steel (X) 4:10pm, $1.20
    • Verisk Analytics (VRSK) 4:10pm, $0.64
    • Vertex Pharmaceuticals (VRTX) 4:01pm, ($0.65)
    • Western Digital (WDC) 4:15pm, $2.04
    • Willis (WSH) 4:30pm, $0.17
    • Wynn Resorts (WYNN) 4:05pm, $1.82



  • Russian Mining Tycoons Seek to Trim Debt as Sanctions Sting
  • Soybean Meal Climbs to Four-Month High on Demand to Fatten Hogs
  • Crop Slump Sending Farmers to Wheat as Best Option: Commodities
  • Gold Trades Above Two-Week Low on Fed Outlook to Physical Buying
  • Nickel Advances in London Following Six Sessions of Declines
  • Rice Drops 3.1% in Chicago Trading to Lowest Since October 2010
  • Wheat Gains for Second Day on Australian, Russian Crop Concerns
  • Steel Rebar Holds Losses as Iron Ore Futures Slump to Record Low
  • Goldman Sees Nickel Rally Following a Drop in Pig Iron Output
  • Palm Oil Jumps Most in Seven Weeks on Malaysia Biodiesel Demand
  • Alpiq’s Former Head of Trading Erik Saether Joins Sweden’s Sweco
  • Cocoa Falls to Three-Month Low in London; Arabica Coffee Slides
  • Japan’s Sendai Vote Signals Quickening Pace on Reactor Restarts
  • Rice Exports From India Seen Plunging 30% as Harvest Contracts

























The Hedgeye Macro Team


















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