Takeaway: Macau posted the worst comp in almost 2 years.


The latest numbers from Macau continue to reach new weekly lows in 2014. While this was expected given the forthcoming visit by the Chinese President this Friday/Saturday, estimates will continue to be revised lower until the bleeding stops. 


We remain below the Street for Q4 and 2015 for all the operators. The good news is that the Street is finally cutting estimates but the bad news is that the Street is still not low enough. 


Please see more details in our note: CLICK HERE


Takeaway: The Athletic Black Book-call details and time change. Hedgeye Retail Idea List (LULU, ZQK, RL, WSM, WMT). PETM pods justify multiple.

The Athletic Black Book (***Please note date and time change)


On Thursday, December 18 at 1:00pm EST, Hedgeye's Retail Team will be hosting a call to review our next Black Book, which will be focused on the Athletic footwear and apparel space.  


Specific names include Nike (NKE), Adidas (ADDYY), UnderArmour (UA), Foot Locker (FL), Hibbett (HIBB), Dick's Sporting Goods (DKS), and Finish Line (FINL) - which collectively offer up a good mix of longs and shorts.

Retail Callouts (12/15): ATHLETIC BLACK BOOK, IDEA LIST, PETM, LULU, ZQK, RL, WSM, WMT - 12 15 chart2


Call Details

Toll Free Number:

Toll Number:

Password: 13597073

Materials: CLICK HERE




Retail Callouts (12/15): ATHLETIC BLACK BOOK, IDEA LIST, PETM, LULU, ZQK, RL, WSM, WMT - 12 15 chart1B


We made the following changes to our idea list this week.

  • LULU: Still on our Best Idea list, but the stock is up 35%, and the reality is that the management team has really done little to deserve it. We're taking it down a couple of notches on our list below RL and NKE for now. We should be seeing better growth in the business as LULU laps its product and PR gaffes from last year. We still think that there will be big changes at the company, which will likely come after the new CFO starts (within 3 months). We rarely put so much stock in one individual, but for several reasons, we think it makes sense with LULU. See our note LULU - Long, But On A Short Leash from last week for more details.
  • ZQK off of our Long Bench.  We've been holding out hope that what once appeared to be a rock star management team would start to deliver, and that a $2 stock would prove to be a great call option. But the reality is that this team can't get it together. Not worth our time.
  • RL: moved it two notches higher on our idea list. No change in the model, but the risk/reward relative to other names on the long sheet is looking better.
  • WSM: moved two notches higher on our Short Bench, as we're getting that much closer to the point where RH will begin to compete with WSM in kitchens. Perhaps not a negative earnings event for WSM immediately, but it won't help the multiple.
  • WMT: Off our Short Bench. No reason other than the fact that it has been on our bench for most of 2H14. We don't see a company-specific reason to press this one, and with oil in a free fall, it only helps WMT.




Retail Callouts (12/15): ATHLETIC BLACK BOOK, IDEA LIST, PETM, LULU, ZQK, RL, WSM, WMT - 12 13 chart3





PETM - Consortium led by BC Partners to Acquire PetSmart for $83.00 per Share in Cash



Takeaway: Nothing unexpected here given all the activism over the past year, and the fact that the stock spiked to the high-$70s in mid-November. What's interesting is that the take-out is about 9x EBITDA, which at face value looks cheap compared to other bids like what we've seen at FDO -- a lesser quality company but with bids as high as 12x EBITDA.   That said, PETM is one of the select few retailers that never put up a negative annual comp. But it's on track to break that trend this year -- with negative comps in 2 of the three quarters-to-date. At the same time peak productivity is rolling over, the company is sitting at peak Gross Margins, trough SG&A margins, and obviously peak EBIT mgns. With that context, the 9x EBITDA multiple seems a lot more fair.




H&M - November Sales +10% vs Consensus  +7%


AMZN, AAPL - Apple Heads to Court Monday in E-Book Appeal



DG, FDO, DLTR - Delayed merger vote is all about the almighty ‘Dollar’



AMZN - Expands Delivery Options; Introduces Amazon Pickup Points for Customers Across Canada



Jim Wiggett Named Chief Executive Officer of bebe stores, inc.



Labor Board Rules to Speed Union Elections


Hedgeye Morning Macro Call with CEO Keith McCullough: This is Why We're Not Going To Be In Barron's

On this morning’s institutional Macro Call, Keith urged you to steer clear of the Russell 2000, the Barron’s Forecasters, and  Johnny Manziel.


***This is a complimentary peek behind-the-macro-scenes of our daily Morning Macro Call for institutional subscribers.***


Attention Students...

Get The Macro Show and the Early Look now for only $29.95/month – a savings of 57% – with the Hedgeye Student Discount! In addition to those daily macro insights, you'll receive exclusive content tailor-made to augment what you learn in the classroom. Must be a current college or university student to qualify.

European Banking Monitor: Financials and Sovereigns 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 




Key Takeaway:


Continuing to highlight Russia, the country's Sberbank CDS continue to drastically widen (+64 bps WoW, +204 bps MoM).  The ruble continued to fall alongside the drop in oil prices last week, even with Russia's central bank decision to lift its key interest rate.


Greece re-entered the risk spotlight with banks CDS widening by more than +200 bps; the country's snap presidential election rekindled investor worries about the country's recovery.


European Financial CDS - Swaps mostly widened in Europe last week.  The average move was a drastic +14.8%.  The only two institutions whose CDS tightened were Portugal's Banco Espirito Santo and the UK's HBOS.  HBOS' swaps tightened by only -1 bps.  Banco Espiroto Santo's swaps continued to tighten after the December 4 news that the bank was nearing a sale of some of its parts.


Greek bank swaps blew out last week, with CDS widening +216 bps on average, on the announcement of a snap presidential election.  The announcement sparked fresh investor fears over how long-lasting and/or effective Greek fiscal reform will be.


European Banking Monitor: Financials and Sovereigns Widen  - chart1 financial CDS


Sovereign CDS – Sovereign swaps widened across the board last week. Spanish sovereign swaps widened by 26.8% (22 bps to 105), while Portuguese swaps widened by 37 bps.  The global theme last week was derisking as the Global Dow fell -4.43% and CDS nearly universally widened. 


European Banking Monitor: Financials and Sovereigns Widen  - chart2 sovereign CDS


European Banking Monitor: Financials and Sovereigns Widen  - chart3 sovereign CDS


European Banking Monitor: Financials and Sovereigns 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 widened by 1 bps to 9 bps.


European Banking Monitor: Financials and Sovereigns Widen  - chart5 euribor OIS spread


Matthew Hedrick 



Ben Ryan






Keith's Macro Notebook 12/15: Japan | UST 10YR | Sentiment


Hedgeye CEO Keith McCullough shares the top three things in his macro notebook this morning.

Call Today | Abenomics Round II: Risk Is GROSSLY Mispriced

Takeaway: Join us on a conference call today at 1pm to discuss our revised outlook for Japan and the associated investment implications.

The LDP/NKP coalition election victory this weekend has major implications for the global economy and the financial markets that underpin it.  


Please join the Hedgeye Macro Team on a conference call today at 1:00pm EST for an overview of these implications and how we think you should position your portfolio to profit from these macro catalysts.




  • Where we stand vs. consensus RE: Abenomics
  • Our intermediate-term outlook for Japanese monetary and fiscal policy
  • The elevated risk of a global deflationary spiral


In summary, we anticipate ~20% downside in the Japanese yen vis-à-vis the U.S. dollar over the NTM. This compares to -5% and unchanged, respectively, for the Bloomberg consensus EOY '15 forecast and the current 4Q15 USD/JPY forward rate.


A linear regression model based on the trailing 2Y correlation would suggest our forecast of a re-test of the August 1998 highs on the dollar-yen cross implies a level of ~25,300 on the Nikkei 225 Index – or potential upside of +48% from today's closing price! 


If these forecasts sound crazy to you, that's a good thing [to us]. We sounded equally as crazy making a similar call in November 2012 (i.e. before Abe even took office).


Call Today | Abenomics Round II: Risk Is GROSSLY Mispriced - Thinking Through a Potential Currency Crisis In Japan




  • Toll Free Number:
  • Toll Number:
  • Conference ID/Password: 13597789
  • Materials: CLICK HERE


As always, there will be a live Q&A session at the end of the call. Please email to submit a question to the queue.


We look forward to having you join us!


Darius Dale

Associate: Macro Team

get free cartoon of the day!

Start receiving Hedgeye's Cartoon of the Day, an exclusive and humourous take on the market and the economy, delivered every morning to your inbox

By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails.