• run with the bulls

    get your first month

    of hedgeye free


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. These levels were originally published December 04, 2014 at 08:19.  Click here to learn more and subscribe.


Daily Trading Ranges, Refreshed [Unlocked]   - Slide2

Daily Trading Ranges, Refreshed [Unlocked]   - Slide3

Daily Trading Ranges, Refreshed [Unlocked]   - Slide4

Daily Trading Ranges, Refreshed [Unlocked]   - Slide5



Daily Trading Ranges, Refreshed [Unlocked]   - Slide6 

Daily Trading Ranges, Refreshed [Unlocked]   - Slide7

Daily Trading Ranges, Refreshed [Unlocked]   - Slide8

Daily Trading Ranges, Refreshed [Unlocked]   - Slide9

Daily Trading Ranges, Refreshed [Unlocked]   - Slide10

Daily Trading Ranges, Refreshed [Unlocked]   - Slide11
Daily Trading Ranges, Refreshed [Unlocked]   - Slide12

Daily Trading Ranges, Refreshed [Unlocked]   - Slide13

McCullough on Fox Business: Activist Investor Rebuked CNBC Host Jim Cramer For Good Reason

Hedgeye Risk Management CEO Keith McCullough discusses activist investor Cannell Capital's highly publicized rebuke of CNBC host Jim Cramer's role at TheStreet.com on Fox Business "Opening Bell."

Draghi Didn’t Deliver the “Drugs”!

Expectations were high, but our call was right that Mario Draghi and the ECB’s governing council would remain in “assessment” mode today (no rate cut or QE announcement); our “counter-TREND” call proved correct with the EUR/USD bouncing higher and equities falling on Draghi’s decision.


Below are key take-aways from today’s press conference:

  • Draghi pushes out prospect of sovereign QE until Q1 2015 after an  assessment of concurrent programs (ABS, covered Bond, TLTRO) and economic outlook
  • Draghi gave much importance to the impact of oil on the deflationary trend in Eurozone CPI. He all but explicitly said should oil prices remain subdued, it will be necessary for the ECB to act in a big way #Sovereign QE
  • No Surprise: Eurozone economic and inflation outlook revised downward by ECB #EuropeSlowing
  • ECB cuts GDP forecasts to 0.8% in 2014 (vs 0.9% projection in September), 1.0% in 2015 (vs 1.6%) and 1.5% in 2016 (vs 1.9%)
  • ECB cuts inflation forecasts to 0.5% this year (vs 0.6%), 0.7% next year (vs 1.1%), and 1.3% in 2016 (vs 1.4%)
  • Draghi says "We don't need unanimity to proceed with QE"
  • Draghi says QE has been shown to be effective in the US and in the UK; in Japan it's more complicated #TheEurozoneIsComplicated
  • On push back from Germany on QE... Draghi says the ECB will comply with its mandate for price stability #NoAnswer


Our read through remains that Draghi is effectively telling us that everything he's tried so far hasn't worked, including his explicit Policy To Inflate that is only resulting in more #deflation. We’ll continue to stick to our playbook #EuropeSlowing, and manage risk (and price levels) created by the heavy hand of central bank intervention.


Matthew Hedrick



Draghi Didn’t Deliver the “Drugs”! - vv.  eur uuussd


Takeaway: Slow and steady wins the race. That's the characterization of the labor market right now. We continue to watch for any negatives.


The main takeaways from this week's labor report are that the trend of sub-300k claims persists, further reducing the slack in the labor market. While the y/y rate of change is slowing, this is to be expected as that series will naturally converge toward zero since 300k is the frictional bottom for claims. In other words, the data is strong and consistent even thought the rate of positive change is slowing. What we're more interested in, at this point, is any signs of an unfavorable inflection. If the rate of change begins to turn positive (i.e. rising claims) or materially diverges from the trendline then all (long) bets are off. 




The Data

Prior to revision, initial jobless claims fell 16k to 297k from 313k WoW, as the prior week's number was revised up by 1k to 314k.


The headline (unrevised) number shows claims were lower by 17k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 4.75k WoW to 299k.


The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -7.2% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -9.8%





















Yield Spreads

The 2-10 spread fell 0 basis points WoW to 172 bps. 4Q14TD, the 2-10 spread is averaging 183 bps, which is lower by -16 bps relative to 3Q14.






Joshua Steiner, CFA


Jonathan Casteleyn, CFA, CMT


Retail Callouts (12/4): PVH, DG, GIL, WMT, TGT, COH

Takeaway: PVH - 15x earnings with limited top-line growth potential doesn't get us excited. DG lose/lose. WMT stat supports need for physical stores.



PVH - 3Q14 Earnings


Takeaway: PVH turned a 1% top line miss into a 3% EPS beat, but guidance for the balance of the fiscal year leaves a lot to be desired. The $0.08 beat with the $0.10 guide down for the year translates to a $0.18 guide down on the top end of guidance for the fourth quarter. A few quick takeaways. 1) This is the 5th straight quarter where PVH has underperformed on the top line. Excluding the Bass divestiture, the top line slowed 200bps sequentially on the 1 yr and 570bps on the 2yr. Comparisons get easier (again) into the 4th quarter and guidance looks doable even with the currency headwind. But, over a slightly longer duration we have a hard time getting to the Street's numbers which call for 6% growth per annum. 2) Manny made his traditional post-earnings CNBC shop and touted how healthy the company's inventory position was. By our math, the sales/inventory spread was -8%. That's in stark contrast to the company's rhetoric.  3) Reduced interest expense and tax rate drove the 11% earnings growth in the quarter. We're cognizant of the fact that debt reduction alone will drive 3% to 4% of earnings growth. But that's not a reason for us to get excited about owning a name at 15x earnings with limited top line growth prospects when we're at the tail end of a margin cycle for its wholesale distribution channel.

Retail Callouts (12/4): PVH, DG, GIL, WMT, TGT, COH - 12 4 chart1



DG - 3Q14 Earnings


Takeaway: We'll take the FDO commentary to mean that the current 11.6x EBITDA bid isn't enough and the final offer will be closer to $80 or about 13x. When a company is looking to pay that much for such a poor quality asset, we need to really ask ourselves about the prospects management sees in its core. On the other side of that - the stock is up 14% since the bid for FDO was announced in mid-August and Dreiling committed to push off his retirement. Clearly, the Street thinks that there's some merit to DG buying FDO -- even at a higher price. We'll take the other side of that.  We still think that with DG, if it wins the FDO bid, then shareholders lose. If it loses, then the stock retraces closer to where it was before the bidding war began.



GIL - 4Q14 Earnings


Takeaway: We don't have an opinion on GIL's stock right now, but are not particularly surprised by today's disappointment. Interesting as well to see the company change up its reporting structure. Companies usually don't do that when they want to improve transparency over the near-term.  It will take a lot more than a 12% sell-off for us to get interested in this name on the long side.

Retail Callouts (12/4): PVH, DG, GIL, WMT, TGT, COH - 12 4 chart2



WMT - Report: Wal-Mart CEO says 10% of mobile orders are in-store



Takeaway: This is simply a fascinating statistic. It shows how e-commerce and brick & mortar is inextricably linked. We maintain our view that this will cause many retailers to hang on to stores that they would otherwise close due to weak productivity. Not a good margin event.





TGT - Debit, credit issues temporarily affect Target stores Canada-wide



"Customers at Target stores in Canada could only pay with cash for about 90 minutes Tuesday afternoon due to a problem with the retailers main card processor."


COH - Coach May Spend Big to Acquire Stuart Weitzman



WMT - Walmart Canada Extends Store Hours for the Holiday Season



U.K. Targets Tech Firms With ‘Google Tax’



Vineyard Vines Docks on Upper East Side



"The store had a soft opening before Thanksgiving and so far, sales are exceeding expectations. They declined to provide a volume projection for the unit, which had its grand opening on Wednesday night."


SPLS - Staples Announces Staples Exchange, Bringing More Products and Services to Customers



"Staples  announced the roll-out of Staples Exchange, a world-class platform that makes it easy for suppliers to offer products to Staples customers."

"Staples Exchange is a unified platform that allows vendors to sell through all of Staples’ e-commerce channels, with multiple integration options. Unlike other retailers, Staples does not require vendors to use a third party that charges integration fees, instead giving them a single portal to enroll with all of Staples’ sites, like Staples.com, and coming in 2015, Staples Advantage, Staples Canada and Quill.com."

Keith's Macro Notebook 12/4: Euro | Yen | Oil

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.