The crash in crude continues with oil plummeting over 5% today, falling below $50 for the first time since the Great Recession in April 2009.
Takeaway: We are removing the Russell 2000 (IWM) from the short side of our intermediate-term thematic investment conclusions.
Q: What is the most appropriate risk management decision for an investor to make when presented with a security that is bearish TREND, bullish TAIL and smack-dab in the middle of its immediate-term risk range?
Indeed, doing nothing is sometimes the most appropriate investment strategy – which is exactly what we’re doing with respect to the Russell 2000 here.
CLICK HERE to view the ~2min video.
Moreover, we no longer anticipate meaningful enough downside in the small-cap style factor over the intermediate term to warrant keeping the IWM on our condensed list of shorts per the thematic investment conclusions listed in our daily Macro Playbook, instead opting to replace it with the iShares TIPS Bond ETF (TIP).
We have been telegraphing this change for a few weeks now, but to the extent you’re not yet familiar with our logic, please tune in to our Q1 Macro Themes call on Thursday, January 8th at 1pm EST for more details surrounding this change and changes to our other core asset allocation recommendations.
Best of luck out there,
Associate: Macro Team
We will be hosting our highly-anticipated Quarterly Macro Themes conference call on Thursday, January 8th at 1:00pm EST. Led by CEO Keith McCullough, the presentation will detail the THREE MOST IMPORTANT MACRO TRENDS we have identified for the quarter and the associated investment implications.
Q1 2015 MACRO THEMES OVERVIEW:
- Global #Deflation: Amid a backdrop of secular stagnation across developed economies, we continue to think cyclical forces - namely #StrongDollar commodity price deflation - will drag down reported inflation readings globally over the intermediate term. That is likely to weigh heavily upon long-term interest rates in the developed world, underpinning our bullish outlook for U.S. Treasury bonds.
- #Quad414: In the first quarter of 2015, we think growth in the U.S. is likely to accelerate from 4Q, aided by base effects and a broad-based pickup in real discretionary income. We do not, however, think such a pickup is sustainable, as we foresee another #Quad4 setup for the 2nd quarter. Risk managing these turns at the sector and style factor level will be the key to generating alpha in the U.S. equity market in 1H15.
- Long #Housing?: The collective impact of rising rates, severe weather, waning investor interest, decelerating HPI, and tighter credit capsized housing in 2014. 2015 is setting up as the obverse with demand improving, the credit box opening and 2nd derivative price and volume trends beginning to inflect positively against progressively easier comps. We'll review the current dynamics and discuss whether the stage is set for a transition from under to outperformance for the complex.
- Password: 13598477
- Materials: CLICK HERE (slides will be available approximately one hour prior to the start of the call)
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In this excerpt from today’s Real-Time Alerts Live show, Hedgeye CEO Keith McCullough addresses the performance of the Russell 2000 versus the S&P 500 in response to a subscriber question.
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In this excerpt from today’s Real-Time Alerts Live show, Hedgeye CEO Keith McCullough responds to a subscriber’s question about whether a U.S. recession is coming.
CLICK HERE to subscribe to Real-Time Alerts. With your subscription you'll receive all of Keith's #timestamped signals sent right to your inbox, as well as full access to this and all other RTA Live episodes.
12/22/14 Monday Mashup: BOBE, RT and More
12/23/14 Industry-Wide Comp Outlook (2015)
12/23/14 Statement Analysis (Replay)
12/29/14 Monday Mashup: 'Tis the Season
Events This Week
Tuesday, January 6th
- SONC earnings call 5pm EST
Thursday, January 8th
- RT earnings call 5:00pm EST
Chart of the Day
Recent News Flow
- BOBE upgraded to buy at Janney Capital with a $60 PT.
- DPZ upgraded to buy at Janney Capital with a $110 PT.
- LOCO upgraded to outperform at RW Baird with a $34 PT.
- PBPB upgraded to outperform at RW Baird with a $17 PT.
- BWLD PT increased to $205 from $180 at UBS.
- BWLD downgraded to neutral at RW Baird with a $180 PT.
- SBUX downgraded to neutral at Janney Capital with an $85 PT.
Monday, December 29th
- SONC announced a new agreement (with Fast Eats, LLC) for franchise development of eight new drive-ins in the Albany, NY, area over the next seven years.
- DFRG Double Eagle Steak House was named to OpenTables list of the 100 best restaurants and 100 best steakhouses in America.
- DAVE announced the closure of three restaurants in the Richmond, VA area and anticipates incurring impairment charges at up to four additional company-owned restaurants. The closure of the three Richmond locations would have been accretive to full-year diluted adjusted EPS by $0.04 and same-store sales by +0.5% had they been closed at the beginning of the year.
- COSI director Michael O'Donnell announced his departure, effective Jan. 1st. Mr. O'Donnell will be replaced by an independent restaurant expert, David Lloyd, of Highland Consumer Fund.
The XLY (-0.3%) outperformed the SPX (-1.1%) last week, as both casual dining and quick service stocks, in aggregate, outperformed the XLY.
XLY Quantitative Setup
From a quantitative perspective, the XLY remains bullish on an intermediate-term TREND duration.
Casual Dining Restaurants
Quick Service Restaurants
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