VIDEO | Hedgeye’s Brian McGough Explains Why $KATE Is a Winner

Hedgeye’s Retail Team added KATE to our Best Ideas List as a long in early October. Sector Head Brian McGough hosted an institutional conference call yesterday ahead of earnings, detailing his bullish thesis and highlighting why KATE’s growth story is widely misunderstood. In the excerpt below, McGough outlines his 3 key points.

For access to the video in its entirety, contact


Daily Trading Ranges, Refreshed [Unlocked]

This is a complimentary look at our proprietary buy and sell levels on major markets, commodities and currencies sent to subscribers every weekday morning by CEO Keith McCullough. It was originally published November 06, 2014 at 07:40. Click here to learn more and subscribe.

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TODAY 1pm EST FLASH CALL - Top Russia Insider to Discuss Developments Inside Putin’s Russia

TODAY 1pm EST FLASH CALL - Top Russia Insider to Discuss Developments Inside Putin’s Russia - HE M putin


In light of the continuing crash of its currency and stock market, we are receiving considerable customer interest on the question: “What’s going on with Russia?”


As a result, Hedgeye’s Macro Team is hosting a special “Behind the Curtain” conference call TODAY, November 6th at 1:00pm EST with Michael McFaul, one of the world’s foremost experts on Russia and Vladimir Putin. Until earlier this year, McFaul was the U.S. Ambassador to Russia and held closed-door meetings with Putin and his top lieutenants before finally stepping down out of concern for his family and his own safety.


Mr. McFaul has been called, “the leading scholar of his generation, maybe THE leading scholar, on post-Communist Russia.” He was President Obama’s chief advisor on Russia through his first term and was a main policy architect of “Reset” in U.S. - Russian relations.


A high-profile figure during his time in Moscow, McFaul was harassed and accused of orchestrating a coup. Perhaps in light of his considerable work and reputation as an expert on anti-dictator movements and revolutions, Putin reportedly stared at McFaul across a meeting table and remarked, “We know that your Embassy is working with the opposition to undermine me.” 


*The New York Times recently ran an intriguing article, “Former U.S. Envoy to Moscow Says Russians Are Still Spying on Himon McFaul detailing how Russia is still spying on him.


McFaul will provide 30 minutes of prepared remarks, followed by open Q&A moderated by Hedgeye’s analyst Matt Hedrick.




  • What are the roots of ‘Putinism’ and where is the country economically heading?
  • How do weaker energy prices influence the Kremlin’s strategy (economic, political, and social)?
  • How is the East-West battle over Ukraine resolved?
  • What are the impacts of sanctions on Russia and the West and how might they evolve?
  • Can Russia successfully pivot to the East?



  • Toll Free Number:  
  • Direct Dial Number:  
  • Conference Code: 441871#

Ping for more information.





McFaul is the former U.S. Ambassador to Russia (from January 2012 to February 2014). Prior to this, McFaul worked three years for the U.S. National Security Council as Special Assistant to the President and Senior Director of Russian and Eurasian Affairs.  


He holds a BA in international relations and Slavic Languages and an MA in Slavic and East European Studies from Stanford University in 1986. He spent time in the Soviet Union as a student in the 1980s. He was later awarded a prestigious Rhodes scholarship to Oxford where he completed his Ph.D. in International Relations in 1991.


Born and raised in Montana, McFaul is fluent in Russian, and is currently a professor of Political Science at Stanford University and a fellow at the Hoover Institution.


He is the author and co-author of numerous books, including:  Revolution in Orange: The Origins of Ukraine's Democratic Breakthrough (2006); Between Dictatorship and Democracy: Russian Postcommunist Political Reform (2004); After the Collapse of Communism: Comparative Lessons of Transitions (2004); and Russia's Unfinished Revolution: Political Change from Gorbachev to Putin (2001), among many others. 

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Believing Anything

“Never believe anything, until it has officially been denied.”

-Claud Cockburn


For those of you who didn’t know that Cockburn was a British journalist and proponent of communism, now you know. His aforementioned quote was cited by Jim Rickards at the beginning of an excellent chapter titled “Prophesy” in The Death of Money.


BREAKING: “Bundesbank investigating whether it can block sovereign QE”


Pardon? I know. I know. What is up with the London Telegraph dropping that anti-money-printing (QE) bomb on my laptop while I was sitting pretty at the epicenter of inequality’s Social #Bubble (San Francisco) after the US stock market close last night? 

Believing Anything - campfire cartoon 10.31.2014


Back to the Global Macro Grind


Now I’m sure that Europe’s un-elected-central-planner-in-Chief (Draghi) will officially deny anything that remotely resembles that headline being true at today’s ECB (European Central Bank) meeting… but that’s the point.


What if the Germans have legal grounds to tell the Italian jobber to #PoundSand?


Pardon my hockey-talk, but believing anything that you hear about what the Japanese, European, and American central planning agencies can do to stock markets these days is a very dangerous premise.


What happens if:


  1. People (as in market expectations) don’t believe Policies To Inflate asset prices work anymore? (hint: #deflation)
  2. Or, maybe more importantly, that they aren’t allowed to legally execute on them anyway?


Bueller? Or is it “spoos and chartreuse” while Ed is saying that every time the “surveys” get growth wrong “QE will get the perma bulls paid” anyway?


Admittedly, as global growth slows (again), it’s getting harder and harder to keep track of what it is, precisely, that has consensus right bulled up about chasing the all-time #bubble high in the SP500.


As Rickards appropriately summarizes in the same chapter, “when it comes to betting on a sure thing, greed trumps common sense.” (The Death of Money, page 25).


In other news…


Utilities (XLU), +2.3% on the day to +22.3% YTD, led the US stock market’s no-volume charge to all-time highs yesterday. I know. Everyone nailed that and Energy (XLE) being -3.1% YTD too.




  1. Japan’s economic implosion finally ended the 3-day central planning rip, with the Nikkei closing -0.9%
  2. European Equities are doing nothing while they await the 2nd coming of the 3rd and 4th coming of Draghi
  3. US Equity futures are down, well, because maybe they won’t go up on the jobs report tomorrow


As for me… after spending most of the week in California, I am back in the saddle in Connecticut wondering what changed, fundamentally, since the Russell 2000 was -10% lower (120 points) less than a month ago…


Other than mostly every growth and inflation metric in our model being slower today than it was then, I guess the answer is that those who are permanently predisposed to be long of US stocks will believe almost anything, other than common sense.


Our immediate-term Global Macro Risk Ranges are now:


UST 10yr Yield 2.24-2.38%


RUT 1110-1181

Nikkei 141

Yen 109.68-116.12

WTI Oil 76.12-80.29

Natural Gas 3.88-4.27


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Believing Anything - ISM

Slow- Growth #YieldChasing

Client Talking Points


The chitter “chatter” about “BOJ buying” just couldn’t keep the Japanese currency burning experiment ball in the air into the close (Nikkie -0.9%) – was that it? The risk range for the Nikkei is wacky wide now = 14560-17161, #enjoy.


Oil had a 1-day bounce and then went right back down again, -0.3% to $78.48 as #Quad4 deflation sinks into the psyche of those who have been net long of oil carry trading since The Bernanke introduced it in 2008; intermediate-term risk range now $64-84.


Utilities (XLU) were up +2.3% yesterday to, get this, +22.6% year-to-date with the Russell 2000 flat on the year. We know – everyone nailed that. But this is what you get as bond yields crash (UST 10YR Yield -23% year-to-date) – bond proxy ramps in equity land.

Asset Allocation


Top Long Ideas

Company Ticker Sector Duration

The Vanguard Extended Duration Treasury (EDV) is an extended duration ETF (20-30yr). U.S. real GDP growth is unlikely to come in anywhere in the area code of consensus projections of 3-plus percent. And it is becoming clear to us that market participants are interpreting the Fed’s dovish shift as signaling cause for concern with respect to the growth outlook. We remain on other side of Consensus Macro positions (bearish on Oil, bullish on Treasuries, bearish on SPX) and still have high conviction in our biggest macro call of 2014 - that U.S. growth would slow and bond yields fall in kind.


We continue to think long-term interest rates are headed in the direction of both reported growth and growth expectations – i.e. lower. In light of that, we encourage you to remain long of the long bond. The performance divergence between Treasuries, stocks and commodities should continue to widen over the next two to three months. As it’s done for multiple generations, the 10Y Treasury Yield continues to track the slope of domestic economic growth like a glove. We certainly hope you had the Long Bond (TLT) on versus the Russell 2000 (short side) as the performance divergence in being long #GrowthSlowing hit its widest for 2014 YTD (ex-reinvesting interest).


Restoration Hardware remains our Retail Team’s highest-conviction long idea. We think that most parts of the thesis are at least acknowledged by the market (category growth, real estate expansion), but people are absolutely missing how all the pieces are coming together to drive such outsized earnings growth over an extremely long duration. The punchline of our real estate analysis is that a) RH stores could get far bigger than even the RH bulls seem to think, b) Aside from reconfiguring 66 existing markets, there’s another 19 markets we identified where the spending rate on home furnishings by people making over $100k in income suggests that RH should expand to these markets with Design Galleries, and c) the availability and economics on large properties for all these markets are far better than people think. The consensus is looking for long-term earnings growth of 28% -- we’re looking for 45%.  

Three for the Road


Restaurant owner Chuy's $CHUY sinks 30% in worst day ever … via @YahooFinance

*** @HedgeyeHWP went short on 10/28



Someday is not a day of the week.

-Denise Brennan Nelson


According to the Energy Information Administration, in 2013 a full 68% of Russian exports, or more than $350 billion dollars, came from energy, with more than half of that from crude oil. In 2009, after crude oil declined by 80% in 2008, that the Russian economy shrunk by 7.8% in 2009, the most of any G20 economy.

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