Retail Callouts (2/17): FL, NKE, UA, AdiBok, GIL, Ports

Takeaway: Our online traffic tracking shows the divergence continues between Athletic Footwear Brands and FL in January.


Retail Callouts (2/17): FL, NKE, UA, AdiBok, GIL, Ports - 2 17 chart2





NKE, UA, AdiBok, FL - Foot Locker vs Brands Online Traffic Divergence Continues


Takeaway: We've hit on this a lot lately, but based on the numbers we just pulled down it's worth rehashing.


1.       Brick and Mortar athletic footwear sales might never be up again. The way the math works, we'd need to see sales growth in excess of 6% across the industry in the US for us to see Brick and Mortar growth. The way our model works - we have online accounting for more than 100% of the growth over the next 6 years.
Retail Callouts (2/17): FL, NKE, UA, AdiBok, GIL, Ports - 2 17 chart3 B
2.       We think that growth accrues to the brands instead of the retailers. We've seen the verbiage at NKE change meaningfully over the past few quarters relating to e-comm. One of the big drivers of that is the margin opportunity. A direct sale for Nike comes in 20 percentage points higher than a typical wholesale transaction and the EBIT dollars are about 4x.
Retail Callouts (2/17): FL, NKE, UA, AdiBok, GIL, Ports - 2 17 chart4
3.       One of the biggest points of pushback we get as it relates to the shifting dynamics in the marketplace is, when? Our answer is right now. Over the past two quarters we've seen Nike's online business accelerate to +70% and +66% respectively. That marks the first time where Nike online sales growth has outpaced its wholesale partners.
4.       And it's not just Nike. We track the visitation statistics for about 250 retailers across 4 different providers. We stacked the brands (Nike, UA, and AdiBok) up against Foot Locker. This is the indexed trend in visitation by month. We saw a meaningful divergence in April of 2014 and that's continued to accelerate into January.
Retail Callouts (2/17): FL, NKE, UA, AdiBok, GIL, Ports - 2 17 chart1





GIL - Gildan Activewear Announces Resignation of New CFO


West Coast ports dispute drags on; labor secretary to intervene



Obama makes strong appeal for public-private cooperation for cybersecurity



European Banking Monitor: Greece On An Island?

Takeaway: Greek banks are poised to default and no one seems to care.

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:

The main event remains Greece, where Greek bank swaps widened by 450-692 bps on the week and now stand at 1,416-2,274 bps. In other words, a high probability of Grexit has been priced in. Interestingly, unlike 2011, Europe doesn't really seem to care. The rest of Europe showed very little movement from sovereign to bank swaps and Euribor-OIS was essentially flat. The market seems to be saying that with EU GDP trending positively (+0.3% in 4Q14) and the ECB embarking on QE, Greece's fate just isn't that impactful for broader Europe


European Financial CDS - There's the rest of Europe, and then there's Greece. Greek banks continue to be priced for default as their swaps widened by 450-692 bps w/w and now higher by 966-1,581 bps m/m. Elsewhere in Europe, however, there was relatively little change as the median bank posted a 1 bps tightening w/w and is now 5 bps tighter m/m. Sberbank of Russia finally showed some signs of life, tightening by 47 bps  w/w to 672 bps on the news of the Russian cease-fire. 


European Banking Monitor: Greece On An Island? - chart1 euro financials CDS


Sovereign CDS – Despite modest growth in Eurozone GDP (+0.3% vs +0.2%  Q/Q), sovereign swaps mostly widened over last week. Italian sovereign swaps widened by 17.5% (19 bps to 128) and Spanish sovereign swaps widened by 10.8% (+10 bps to 104).  


European Banking Monitor: Greece On An Island? - chart2 sovereign cds


European Banking Monitor: Greece On An Island? - chart3 sovereign CDS


European Banking Monitor: Greece On An Island? - 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 10 bps.


European Banking Monitor: Greece On An Island? - chart5 euribor OIS Spread



Matthew Hedrick 



Ben Ryan





Keith's Macro Notebook 2/17: Europe | Oil | UST 10YR


Hedgeye Macro Analyst Ben Ryan shares the top three things in Keith's macro notebook this morning.

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.

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 COTTON, WHEAT, and, COCOA markets experienced the most BULLISH relative positioning changes week-over-week
  • The SOYBEANS, ORANGE JUICE, and SUGAR markets experienced the most BEARISH relative positioning changes week-over-week

Commodities Weekly Sentiment Tracker - chart1 sentiment


Commodities Weekly Sentiment Tracker - chart1A


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

  • The RBOB GASOLINE, LEAN HOGS, and COFFEE markets are positioned for HIGHER PRICES near-term
  • The LIVE CATTLE, HEATING OIL, and ORANGE JUICE markets are positioned for LOWER PRICES near-term

Commodities Weekly Sentiment Tracker - chart2 spot 2nd month basis



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

  • The NATURAL GAS, WTI CRUDE OIL, and, LEAN HOGS  markets are positioned for HIGHER PRICES in 1-year  
  • The LIVE CATTLE, COCOA, and SOYBEANS 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 open interest


Ben Ryan




  • $8-10m charge as a result of CEO transition and fulfillment of Fritz's agreement. 
  • No disagreements in corporate strategy. The change is on execution.
  • Confident 2015 expectations will be met
  • Will sell $3bn assets by 2016
  • Accelerate pipeline/footprint growth and will manage balance sheet
  • Affirm 1Q and 2015 FY EBITDA guidance and  $300-$350m share repurchase and $250m in quarterly dividends in 2015.

Q & A

  • Decision was made over the weekend
  • Formed a search committee. No timeline set.
  • #1 goal:  drive top-line growth 
  • Did you explore other strategic alternatives for the company? 
    • Want to deliver value to shareholders
  • Could do better:  Net rooms growth for 2015; 2015 EBITDA targets put out
  • Not as strong in mid-priced point segment.  Aloft/Four Points are a step in that direction but their competitors have a much bigger presence.
  • Time share spinoff nothing to do with this development
  • Aron:  Will keep outside directorship at NCLH
  • Will evaluate possible HQ move to India in the next few days

EVENT: YELP Best Idea SHORT Update Call

Takeaway: Join us on Friday, February 20th at 1:00pm EST

We will be hosting an update call to our SHORT thesis on YELP.  In short, YELP's business model is broken; we're already seeing signs of deterioration, which will only get worse in 2015.


Join us on Friday, February 20th at 1:00pm EST as we update our bearish thesis and why we see an additional 25%+ downside from here.




  • Extreme Attrition Rate: majority of customers are churning off annually.
  • Insufficient TAM: is not the low-hanging fruit, it's a pipe dream.
  • Model Breaking Down: YELP’s reported metrics flagging concerning trends.
  • 2015/2016 Consensus Estimates Unattainable: Barring another ill-advised acquisition.  



Participant Dialing Information will be provided Friday morning.




Hesham Shaaban, CFA


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 80.47%
  • SHORT SIGNALS 78.71%