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Cartoon of the Day: Alibubble

Cartoon of the Day: Alibubble - Alibaba cartoon 01.29.2015

 

Very few research firms have been cautious or negative on the BABA, but at Hedgeye, we’ve been on the other side of consensus.


GLD: Adding Gold to Investing Ideas

Takeaway: We are adding Gold to Investing Ideas.

Please note that we are adding Gold (GLD) to Investing Ideas today.

 

Our macro team will outline our bullish thesis in this weekend's edition. 

GLD: Adding Gold to Investing Ideas - Gold cartoon 07.23.2014


McCullough: Don’t Buy Most Expensive Bubble We’ve Seen Since Beginning of Mankind | $BABA

 

In today's edition of RTA Live, Hedgeye CEO Keith McCullough did not mince words when asked about Alibaba.

RTA Live is available exclusively to Real-Time Alerts subscribers.


investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

January 29, 2015

 

In today's edition of RTA Live, Hedgeye CEO Keith McCullough ran through the Real-Time Alerts positions as of 10:30AM ET and answers subscriber questions on $RH, $BABA, and more.


INITIAL CLAIMS | BACK TO Y2K, UNLESS YOU LIVE IN AN ENERGY STATE

Takeaway: The last time jobless claims were this low it was the year 2000. $45 oil, however, continues to take its toll on energy states.



Below is the detailed breakdown of this morning's initial claims data from Joshua Steiner and the Hedgeye Financials team. If you would like to setup a call with Josh or Jonathan or trial their research, please contact 

 

Claims Match Y2K Lows, While Energy State Labor Weakness Persists 

Total initial claims showed an impressive decline in the latest week, falling -80k Y/Y to 265k (SA) and putting in their lowest reading since 2000.  NSA claims, meanwhile, were lower by -22% Y/Y on a single week basis. There don't appear to be any special factors in the report.  

 

It's worth noting that while Y2K started out decently from an equity market performance standpoint, the S&P 500 was down 10% by the end of that year and went on to lose another 13% in 2001 and 23% in 2002.

 

For the last several weeks we've been calling out the performance of the eight energy states (AK, LA, NM, ND, OK, TX, WV, WY) to gauge whether labor conditions there are diverging from the country as a whole. In the latest week it appears the spread between the country and the basket of energy states remained steady at around 15 points. For reference, we've indexed the two series back to May of last year and we're interested in the spread between the two indices. The two charts below illustrate this dynamic.

 

INITIAL CLAIMS | BACK TO Y2K, UNLESS YOU LIVE IN AN ENERGY STATE - Claims18 normal

 

INITIAL CLAIMS | BACK TO Y2K, UNLESS YOU LIVE IN AN ENERGY STATE - Claims20 normal

 

The Data

Prior to revision, initial jobless claims fell -42k to 265k from 307k WoW, as the prior week's number was revised up by 1k to 308k.

 

The headline (unrevised) number shows claims were lower by -43k WoW.

Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -8.25k WoW to 298.5k.

 

The 4-week rolling average of NSA claims, another way of evaluating the data, was -9.2% lower YoY, which is a sequential improvement versus the previous week's YoY change of -8.0%

 

INITIAL CLAIMS | BACK TO Y2K, UNLESS YOU LIVE IN AN ENERGY STATE - Claims2 without trend line normal

 

INITIAL CLAIMS | BACK TO Y2K, UNLESS YOU LIVE IN AN ENERGY STATE - Claims3 normal

 

 

Joshua Steiner, CFA

 

Jonathan Casteleyn, CFA, CMT



RCL Q4 2014 CONF CALL NOTES

Takeaway: Net yields guidance uninspiring and European commentary a little tenuous

The chart below describes one reason why there was mismodeling for fuel and how the Street missed FX impact.

 

RCL Q4 2014 CONF CALL NOTES - rcl1

 

For your reference, we have reattached our past pricing survey. http://docs.hedgeye.com/HE_Cruise_Pricing_JAN2015_Wave.pdf 

 

CONF CALL

  • On track for Double-Double Program
  • Pleased with Quantum and Anthem - experienced healthy bookings and are large drivers of 2015 results
  • Oasis-class RC vessels and Solstice-class continue to improve on performance
    • That's not new. What about the pre-2006 ships?
  • Guest satisfaction at record levels in 2014
  • SkySea JV will happen in mid-2015
  • All unit cost increases in 2015 is attributable to ramping in China
  • Celebrity:  EDGE ships in 2018/2020
  • Will divest older tonnage as opportunities arise
  • Ended 2014 with best forward booking status in company history 
    • Maybe because of an earlier Wave this year
  • Close-in bookings in F4Q were more sluggish than expected.  Caribbean is the culprit.
  • 2015 Wave:  still early but overall encouraged
  • Once lap 1Q 2015, yield on all products are expected to be up mid-single digits.
  • Capital allocation tools: stock buyback and increasing dividend
  • RCL: 'at the pump' prices have lagged brent prices but have now finally caught up. Also uses inventory on FIFO basis.
  • Typically 4-6wk lag for at the pump prices for RCL
  • 4Q:  2.7% net yields (slower Caribbean, non-holiday price reductions)
    • Onboard rev:  +4.9% (strong sailings on New Year sailings and strong beverage packages)
    • NCC:  better back office costs and crew movement costs
    • Would have come in better than guidance if not for currency, net of fuel 
  • 1Q 2015
    • Caribbean capacity:  up 8% YoY (70% of capacity); promotions stimulating close-in demands.  Quantum performing well but short and 7 night Caribbean itineraries have been challenging.
  • 2Q 2015
    • RCL Caribbean capacity: -2%; industry capacity: -4% YoY
  • 2Q-4Q
    • APDs up YoY due to Australia and Asia
  • 2015
    • Caribbean capacity: up slightly (44% of capacity)
    • Bookings doing very well
  • Caribbean yields: down mid-single digits in Q1, up low single digits in Q2
  • 2015 Europe 
    • Capacity:  +5% YoY;  bookings over last few months are doing well; recent demand have been strong in US and UK bookings; expect mid-single digit yields (but this is influenced by Allure being in Europe this summer season)
      • But what about pricing?
  • 2015 Asia:  15% of total capacity
    • Expect yields up low-mid single 
  • 2015 NCC ex fuel:  +1% or better 
  • Change in presentation:  Pullmantur financials historically been reported on a 2-month lag.  Could change to real-time in 2H 2015 but the effect is immaterial.
  • 1Q 2015:  Higher marketing spending during Wave

 

Q & A

  • What happens to Double Double if FX continues to pressure earnings?
    • Not a new factor. 
  • Everything positive in the last couple of months.
  • Tone is positive. Wave is strong and typical.
  • Oil Forward curve in contango
  • 2015 onboard forecast:  driven by Quantum/Anthem.  O3b technology has helped customer spending on internet packaging. 
  • Expect Alaska pricing is doing well and bookings too
  • Australia:  a lot of capacity going there so there is some stress on yields
  • Value-added vs discounts:  more bundled packages like Celebrity 1-2-3 Go
    • Proving very popular with consumers and travel agents since it increases their commissions
    • Could have a little reduction on onboard revenue
  • Last few weeks in January:  pleased with Wave.  Seeing good volume.  Saw some declines after France attacks but only for a few days.  
  • Europe:  much more balanced view; if they had not seen 2014, they would be euphoric.
    • Right, so really hard comps - Mgmt tone shaky here.
  • European itineraries: 2/3 of European guest come from local economics
    • Shift more sourcing to North America passengers
    • Incremental demand from European customers:  a little bit of dip from Paris tragedy but demand is in-line.
  • CCL/RCL in China - need to educate Chinese consumer.  Overall industry is growing
  • Q4 2014:  more promotional than expected
  • How much did holiday shift added to Q4 yields?  Immaterial (bp point or two)
  • 4Q Other income line:  excluding the $33.5m in tax reform benefits, the rest is TUI's results

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.64%
  • SHORT SIGNALS 78.61%
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