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A Picture Is Worth 1,000 Jobs (A Quick Look At U.S. Energy States' Labor Market Deterioration)

Labor market improvement slowed this week with jobless claims showing a slowdown in labor market improvement. Seasonally adjusted claims rose 31,000 week over week to 313,000, exceeding consensus (290K) by 23,000.  


The labor market in energy states continues to deteriorate relative to the rest of the country.  Even as oil prices have bounced modestly off their recent $45 lows, their sustained low level inflicts pain on energy-heavy states. 

Check out the chart below.

(Click to enlarge.)

A Picture Is Worth 1,000 Jobs (A Quick Look At U.S. Energy States' Labor Market Deterioration) - keithchart

McCullough: Fed's Bullard Is 'Exhibit A' Of Central Planning Bubble


On today's Morning Macro Call, Hedgeye CEO Keith McCullough pulls no punches when calling out the contradictory rhetoric of James Bullard, President of The Federal Reserve Bank of St. Louis.


Watch today's full 30-minute Morning Macro Call here.

Why the Heck Is the U.S. Dollar Up So Much Today?

Takeaway: We think #deflation is the root cause of U.S. dollar appreciation.

At 8:25am EST, the DXY was trading at 94.492. It’s since shot up in a straight line in conjunction with the release of fairly dovish inflation data. Insert Viagra joke HERE:


Why the Heck Is the U.S. Dollar Up So Much Today? - 2 26 2015 11 05 40 AM

Source: Bloomberg L.P.


Why the Heck Is the U.S. Dollar Up So Much Today? - CPI


So why the heck is the dollar up so much today? One possible explanation Keith and I are discussing on the desk is the stabilization in Core CPI in JAN. Perhaps this is a harbinger of prospective stabilization in Core PCE Inflation, which will be released Monday morning at 8:30am EST.


Why the Heck Is the U.S. Dollar Up So Much Today? - CORE CPI


Why the Heck Is the U.S. Dollar Up So Much Today? - CORE PCE


If stabilization in the Fed’s preferred inflation metric turns out to be the case, that would allow the Fed to look through the persistent weakness in Headline CPI, which should bottom in/around JUN (assuming no material incremental weakness in commodity prices). I believe the word you’re looking for is “transitory”...


Why the Heck Is the U.S. Dollar Up So Much Today? - HRM Commodity Price Sample YoY vs. CPI YoY


Why the Heck Is the U.S. Dollar Up So Much Today? - CRB YoY vs. CPI YoY


But is that an accurate assessment of what is actually occurring? Looking at Fed Funds futures curve, rates have only moved up +2bps and +3bps on the JUL ’15 and DEC ’15 maturities, respectively, on the day. That would seem to support another explanation Keith and I just discussed: today’s melt-up in the DXY isn’t all about a hawkish Fed.


Why the Heck Is the U.S. Dollar Up So Much Today? - FFF JUL  15


Why the Heck Is the U.S. Dollar Up So Much Today? - FFF DEC  15


So then, what is driving today’s bout of material USD strength?


We think it’s about #deflation. And the realization that real interest rates in the U.S. should continue to move higher, not lower, over the intermediate term. What you’re seeing today is not necessarily unlike what occurred in Japan for much of the past 30 years as the currency strengthened amid persistent deflation despite various Policies To Inflate.


Why the Heck Is the U.S. Dollar Up So Much Today? - 9

Source: Bloomberg L.P.


We reiterate our intermediate-to-long term bullish bias on the U.S. Dollar, having been there since last August. Please don’t short the EUR down here, though. The former is pinned at its immediate-term TRADE line of support at 1.12. The USD/JPY cross has a full big figure to go to its immediate-term TRADE line of resistance at 120.33.




Darius Dale

Associate: Macro Team

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McCullough: Central Bankers Have Lost Control, Setting Stage For Market Crash


In this brief excerpt from today's Morning Macro Call, Hedgeye CEO Keith McCullough says the Fed has "certifiably lost control" and reveals what he’s seeing now which could ignite a significant market correction.


Watch today's full 30-minute Morning Macro Call here.


Takeaway: Strong quarter and solid guidance. Story still intact.


  • 4Q REVPAR:  +10.3% - driven by 21k more corporate group nights vs last year
  • 4Q: Transient room nights up 7.9% YoY; transient ADR up $7.25 or 3.9% YoY
  • Bought National Harbor 192 room hotel in December:  Reflagged under AC brand.   Reopening expected by end of 1Q 2015
  • 2Q typically the best quarter
  • 4Q 2014:  booked 870k gross room nights for all future years +12.7% YoY. booked 775k net room nights +21.6% YoY.  December was best production month on record. Best bookings quarter since 2005 (2nd best ever)
  • Group segment very healthy
  • Aim for company properties to have a little over 80% occupancy
  • Opryland: room renovation will be unveiled in 2Q 2015
  • 2015 guidance:  have slightly more group nights booked than 2014. 
  • Group:  Prospects up 8% and tentatives up 10%.  Will have material impact on 2016-2017.  
  • 2016 Group book revenues up 5% YoY 
  • Raised menu pricing in 2014.  Banquets particularly did well.
  • Create value by settling convertible notes for cash and buy back stock
  • Q4: Modest increase in attrition/cancellations 
  • 2013 corporate EBITDA comp: positively impacted for $3.4m due to change in corporate deferred compensation plan.
  • Plan to complete repurchase of warrants by 1Q 2015 
  • AFFO: no longer deducting capex
  • New dividend policy: “The Company plans to pay a quarterly cash dividend to shareholders in an annualized amount equal to at least 50% of Adjusted Funds from Operations (Adjusted FFO) less maintenance capital expenditures, or 100% of REIT taxable income, whichever is greater.”
  • EBITDA guidance for AC hotel: $2-3m
  • 2Q 2015 and 4Q 2015:  strongest revenue and EBITDA growth quarters
  • 1Q 2015 impacted by norovirus outbreak at Opryland and weather effects
  • 1Q 2015 total REVPAR guidance: flat

Q & A

  • Limit group nights to have higher transient business? Want to leave open weekends/holidays opportunities for transient business.
  • Gaylord National:  market will continue to grow. 
  • Nashville:  bought a building 9 months ago in a great location. Looking to build a high-quality entertainment venue.
  • Gaylord Texan:  66k more group room nights on the books than this time last year.  Will have an excellent 2015. 
  • DC:  property will continue momentum.  Well-positioned.  
  • Orlando:  humming along. Expect slight growth YoY 
  • Will look potential asset purchases - want the right multiple

Keith's Macro Notebook 2/26: Germany | UST10YR | USD

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

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