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Commodities Weekly Sentiment Tracker

Note: Using the z-score in the tables below as a coefficient of variation for standard error helps us flag the relative market positioning of the commodities in the CRB Index. It is not intended as a predictive signal for the reversion to trailing twelve month historical averages. For week-end price data, please refer to “Commodities: Weekly Quant” published at the end of the previous week. Feel free to ping us for additional color.    



1.       CFTC Net Futures and Options Positioning CRB Index: The Commodities Futures Trading Commission (CFTC) releases “Commitments of Traders Reports” at 3:30 p.m. Eastern Time on Friday. The release usually includes data from the previous Tuesday (Net Positions as of Tuesday Close), and includes the net positions of “non-commercial” futures and options participants. A “Non-Commercial” market participant is defined as a “speculator.” We observe the weekly marginal changes in the overall positioning of “non-commercial” futures and options positions to assess the directionally-biased capitulation risk among those with large, speculative positions.


The WHEAT, GOLD, and SUGAR markets experienced the most BULLISH relative positioning change in the CRB week-over-week

The COTTON, SOYBEANS, and COCOA markets experienced the most BEARISH relative positioning change in the CRB week-over-week


Commodities Weekly Sentiment Tracker - chart 1 CFTC sentiment


2.       Spot – Second Month Basis Differential: Measures the market expectation for forward looking prices in the near-term.

  • The NATURAL GAS, CORN, and SUGAR markets are positioned for HIGHER PRICES near-term
  • The HEATING OIL, COTTON, and RBOB GASOLINE markets are positioned for LOWER PRICES near-term

Commodities Weekly Sentiment Tracker - chart2 spot 2nd month basis


3.       Spot – 1 Year Basis Differential: Measures the market expectation for forward-looking prices between spot and the respective contract expiring 1-year later.

  • The CORN, SUGAR, and WHEAT markets are positioned for HIGHER PRICES in 1-year  
  • The LEAN HOGS, LIVE CATTLE, and NATURAL GAS markets are positioned for LOWER PRICES in 1-year  

Commodities Weekly Sentiment Tracker - chart3 spot 1yr basis


4.       Open Interest: Aggregate open interest measures the amount of opened positions in all actively traded futures contract months. Open interest can be thought of as “naked” or “directionally-biased” contracts as opposed to hedgers scalping and providing liquidity. Most of the open interest is created from large speculators or participants who are either: 1) Producers/sellers of the physical commodity hedging their cash market exposure or 2) Large speculators who are directionally-biased on price.


Commodities Weekly Sentiment Tracker - chart4 agg. open interest         


Ben Ryan



Retail Callouts (11/24): NKE, UA, M, GPS, AMZN

Takeaway: NKE opens 1st women’s store (for 2nd time). Patriots AF1 snubs Brady/UA. Newsflash: Lundgren bullish on Holiday. Zappos goes brick&mortar.



NKE - Nike Opens First Women's Store (Again)


Retail Callouts (11/24): NKE, UA, M, GPS, AMZN - nke 11 24


Takeaway: Those who were around a decade ago know that this is not the first time Nike launched a women's concept. The company started a concept called 'Nike Goddess' about 12-years ago under Mindy Grossman. There were both stand-alone stores and shop-in-shops at higher-end department stores. After about two years, the company changed the name to Nike Women -- as the 'Goddess' label landed with a big thud. Ultimately, Nike realized that the product wasn't right -- and that a retail concept with sub-par product makes no sense. So it worked out a deal for Finish Line to assume its leases.  The difference this time, as we see it, is that the Nike Women's product is finally right. It has great momentum in both apparel and footwear across a broad spectrum of categories (training, yoga, dance, athletic-inspired). Does it make sense to open a dozen stores to see if it is a profitable way to grow its reach? Yes, it does. That's especially the case given that women generally opt for a more sophisticated retail experience (i.e. LULU, Athleta) as opposed to the average man -- who might be comfortable buying at Foot Locker or Dick's.


AMZN - A Zappos pop-up shop becomes a test to change the nature of mom-and-pop retail



Takeaway: We expected a Zappos branded DSW-esque shop when Zappos finally decided to build its brick and mortar presence. But, instead the new concept is going to focus primarily on apparel. That makes sense from a brand building sense. Everyone knows that Zappos sells shoes, but most of the other categories are after thoughts. More interesting than the store itself is the partner AMZN is teaming with called OrderWithMe. It allows mom and pop shops to partner together to increase buying power and expand inventory diversity. Or so they say. To us it seems like Zappos is building a web of integrated distribution centers across the country that it can use as it scales up same/next day delivery.


NKE, UA - Robert Kraft teamed up with Nike to design special Air Force 1s to benefit charity


Retail Callouts (11/24): NKE, UA, M, GPS, AMZN - 11 24 chart2


Takeaway: This is not a real money maker for Nike, but it helps keep the profile of its venerable Air Force 1 product where it belongs (in the stratosphere). The $150 price point is nearly double the AF1 average of $75, which is a plus. Though we think the biggest thing Nike gets from this -- which was very much intended -- is that it was paired up with the Patriots throughout the entire game on Sunday when they trounced the Lions. Remember that Nike cut Tom Brady in 2010 and UnderArmour picked him up as it's first major endorsee. UA has gotten most of the Patriot-related limelight in recent years. That at least temporarily went back to Nike. Beyond the petty one-off athlete deals, this program with the patriots shows how Nike is using its broader deal with the NFL to extend the reach of the brand. 


M - Macy’s Will See Benefit From Lower Gas Prices, CEO Lundgren Says



  • "'We expect to benefit from the lower gas prices,' Lundgren said in an interview with Fox News’ Maria Bartiromo. 'We have much higher expectations for the fourth quarter.'"


Takeaway: This is right in line with Macy's 2-3% comp store sales guidance for 4Q, which is an acceleration from the -1.4% level it saw in 3Q. But let's be clear about something...Lundgren is a salesman if there ever was one. He doesn't get out in front of investors at all -- not even on quarterly conference calls. He gets in front of the audience he thinks is more important -- the millions of consumers that consume mass media. Every year before Black Friday he steps up his public outreach and waves the Macy's flag (as he should). Something you'll never hear him say "This will be a lousy holiday. Consumers are not likely to spend much, and we think our merchants did a mediocre job of merchandising relative to last year." We're not saying that those things are true, but simply that it's his job to be as promotional as possible to Main Street.


GPS - Fashion chain Gap in deal with online retailer Zalando



Takeaway: This is an interesting deal for the Gap Brand, as it will allow Zalando, Europe's largest dedicated online fashion retailer, to extend the Gap brand to consumers that currently can't access Gap -- either in stores or online. Now...that says nothing about whether consumers will actually want the brand, so there's a lot of wood to chop from a brand and consumer awareness perspective. But this is at least a marginally positive move for the perennially zero-growth Gap.





WMT - Walmart in huge solar project; 400 systems over four years



NRF urges president to step into West Coast port issue



Aldi goes into high growth mode; will open 650 U.S. stores by end of 2018



Richemont Shares Climb Following Net-a-Porter IPO Speculation



FINL, NKE - Finish Line Unveils New Store in The Mall at Millenia



  • "The Finish Line, Inc. announced the grand opening of its newly revamped store within The Mall at Millenia in Orlando to include an enhanced in-store experience and the addition of the latest Nike Track Club shop-in-shop."


NKE - Nike Doesn’t Sell U.S. Women’s National Soccer Team Jerseys to Men



Google Program Lets Readers Pay a Buck a Month to Block Ads



WFM  - Whole Foods CEO Confirms Aggressive Canadian Expansion



Pascal Cagni in Lead for CEO Spot at Net-a-porter



  • "Internet veteran Pascal Cagni, former general manager and vice president of Apple Europe, Middle East and Africa (EMEA), has been working at Net-a-porter Group in London in a consultancy capacity, and could be a candidate for the role of chief executive officer"





  • "The company anticipates a continuing rollout that will include stores in cities like Mexico City, Guadalajara, Cancun and Playa Del Carmen."

European Banking Monitor: Financials Swaps Widen

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 mostly widened in Europe last week, although the median change was only 2.3%.  Portugal's Banco Espirot Santo swaps led the rise, gaining 48 bps to end the week at 500 bps.  Sberbank of Russia and Austria's Erste Group Bank followed, gaining 33 bps and 10 bps respectively.


European Banking Monitor: Financials Swaps Widen - chart1 Euro Financials CDS


Sovereign CDS – Sovereign swaps mostly tightened over last week. German sovereign swaps tightened by -6.8% (-1 bps to 19 ) and Italian sovereign swaps widened by 0.8% (1 bps to 138).  Japanese CDS widened by 10.7% (+6 bps to 60) on news that Japan is in recession and Prime Minister Shinzo Abe will delay a tax hike by one year.  The delay has caused investors to worry about the country's solvency.


European Banking Monitor: Financials Swaps Widen - chart2 sovereign CDS


European Banking Monitor: Financials Swaps Widen - chart3 sovereign CDS11 24 2014 8 54 38 AM


European Banking Monitor: Financials Swaps Widen - chart4 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 9 bps.


European Banking Monitor: Financials Swaps Widen - chart5 euribor.ois spread


Matthew Hedrick



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Monday Mashup: YUM, RUTH and More

Monday Mashup: YUM, RUTH and More - 1


Recent Notes

11/17/14 Monday Mashup: LOCO, BLMN and More

11/18/14 MCD: An Activist's Dream? Not So Fast.

11/19/14 Jack and Qdoba

11/20/14 DRI: Still Lacking Direction

11/21/14 Please Join Hedgeye for Holiday Cocktails & Appetizers


Events This Week

Tuesday, November 25th

  • CBRL earnings call 11am EST


Chart of the Day

Monday Mashup: YUM, RUTH and More - 2


Recent News Flow

Monday, November 17th

  • LOCO commenced a proposed public follow-on offering of its common stock.  The lead book-running managers (Jefferies and Morgan Stanley) in the IPO waived a lock-up restriction for shares held by certain selling stockholders, including some directors and officers of El Pollo Loco.
  • RUTH announced its agreement to sell Mitchell's Restaurants to Landry's for $10 million.  In the deal, Landry's will receive 18 Mitchell's Fish Market restaurants as well as three Cameron's Steakhouse restaurants.  RUTH purchased Mitchell's Restaurants in February 2008 for $92 million.
  • CMG The Chipotle Cultivate Foundation awarded a $500,000 grant to the International Rescue Committee in show of its continued support.  The grant is intended to help finance the expansion of IRC's MicroProducer Academy, which aims to help "refugee farmers adapt existing agricultural skills to an urban American environment and marketplace, all while improving their access to healthy, locally grown foods."
  • WEN announced the return of its Bacon Portabella Melt on Brioche for a limited-time.  The sandwich will be available for a recommended price of $4.99.

Tuesday, November 18th

  • BOBE initiated buy at APB Financial with a $75 PT.
  • PLKI announced the release of four new Coca-Cola Limited Edition Holiday Collector Cups.  The cups will be free with any 32 oz. beverage purchase and will be available through December 31st.
  • BJRI announced the opening of its newest restaurant in Fort Meyers, FL (Gulf Coast Town Center).  The 7,300 sq. ft. restaurant seats approximately 225 guests.  This marks BJ's 11th restaurant opening this year and its 19th restaurant in Florida.

Wednesday, November 19th

  • JMBA launched Jamba eGifting, which allows customers to purchase Jamba Juice gift cards online. 

Thursday, November 20th

  • YUM upgraded to buy at Janney Capital with an $88 PT.
  • CMG launched a new mobile app for smart phones and tablets that allows job applicants to apply from their phones.  The company reportedly received 5,000 mobile applications within the first week of its launch.
  • LOCO announced the pricing of its public follow-on offering by selling stockholders of 6 million shares of common stock at $27.00 per share.
  • HABT The Habit Restaurants IPO opened at $30 on the Nasdaq.  The 5 million share IPO was originally priced at $18.00 per share, above its expected $14.00 to $16.00 range.
  • CBRL announced it expects to serve approximately 1.4 million meals over the nine day Thanksgiving holiday season, noting that Thanksgiving is typically the busiest day of the year for its restaurants. 
  • SONC announced a multi-year endorsement agreement with the Oklahoma City Thunder, and NBA Superstar, forward Kevin Durant.  Durant is expected to serve as a national brand ambassador, to aid in the development of balanced menu, and to promote co-branded philanthropic efforts.
  • TXRH announced a quarterly dividend of $0.15 per share, payable on January 2, 2015 to shareholders of record by December 17, 2014.
  • BOBE announced a quarterly dividend of $0.31 per share, payable on December 15, 2014 to shareholders of record by December 1, 2014.
  • YUM announced the authorization of up to $1 billion in share repurchases through May 31, 2016.  The company has repurchased 9.4 million shares, totaling $691 million, year-to-date.
  • DENN announced the reopening of its remodeled Las Vegas Casino Royale restaurant.  It is historically Denny's highest volume company-owned restaurant and now features an updated look and feel with expanded capacity to accommodate approximately 300 guests.

Friday, November 21st

  • PZZA announced two new limited-time offers, the Philly Cheesesteak Pizza and the Red Kettle Cookie, that will be available on the menu from November 24 through December 28.


Sector Performance

  • The XLY (+1.2%) performed in-line with the SPX (+1.2%) last week, as both casual dining and quick service stocks, in aggregate, underperformed both benchmarks.


Monday Mashup: YUM, RUTH and More - 3


Monday Mashup: YUM, RUTH and More - 4


XLY Quantitative Setup

From a quantitative perspective, the sector remains bullish on an intermediate-term TREND duration.


Monday Mashup: YUM, RUTH and More - 5


Casual Dining Restaurants

Monday Mashup: YUM, RUTH and More - 6


Monday Mashup: YUM, RUTH and More - 7


Quick Service Restaurants

Monday Mashup: YUM, RUTH and More - 8


Monday Mashup: YUM, RUTH and More - 9


Howard Penney

Managing Director


Fred Masotta



Client Talking Points


The bull case for European Equities has successfully transitioned (for now) from growth accelerating to #GrowthSlowing + QE (consensus suggesting official QE announcement at the DEC 4th meeting); Spain’s 10yr breaking 2.0%.


The Long Bond read last week’s trifecta of Japan/Europe/China stimulating for what it was (global #GrowthSlowing) and remains in crash mode at 2.33% (down -23% year-to-date). We still like the Long Bond vs. RUT short.


The Russell 2000 was flat for the 3rd straight week last week with pretty much everything equities going straight up; immediate-term risk range there is now 1153-1188 (with 1188 being intermediate-term TREND resistance).

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).


The U.S. is in Quad #4 on our GIP (Growth/Inflation/Policy) model, which suggests that both economic growth and reported inflation are slowing domestically. As far as the eye can see in a falling interest rate environment, we think you should increase your exposure to slow-growth, yield-chasing trade and remain long of defensive assets like long-term treasuries and Consumer Staples (XLP) – which work decidedly better than Utilities in Quad #4. Consumer Staples is as good as any place to hide as the world clamors for low-beta-big-cap-liquidity.

Three for the Road


GOLD: -0.5% this am to $1195 with an immediate-term risk range of $1142-1212 $GLD



In matters of style, swim with the current; in matters of principle, stand like a rock.

-Thomas Jefferson


The Galaxy S5 sold 40% fewer units than projected, is said to have sold 12 million units in its first three months on sale which is roughly 4 million fewer than its predecessor. Sales were reportedly down over 50% in China (Wall Street Journal).

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