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FLASH CALL: CRUISE PRICING SURVEY-FEB

The Hedgeye Gaming, Lodging, and Leisure team will host a conference call on Tuesday, March 3rd at 11AM to discuss the latest findings from our proprietary cruise pricing database.

 

Points of discussion include:

  • One market experienced a surge in close-in pricing in February while another discounted summer pricing
  • New ship premiums - 1st look at Norwegian Escape premiums
  • Did the Norwegian brand continue to outperform its contemporary peers in the Caribbean and Europe?
  • Are Costa and Anthem holding their ground in Europe?
  • (NEW*) RCL pricing vs load in Asia
  • (NEW*) Same-ship pricing across different markets (e.g. Europe vs Caribbean)

Please contact for dial-in information.


March 2, 2015

On today's edition of RTA Live, Hedgeye CEO Keith McCullough runs through the Real-Time Alerts positions as of 10:15AM ET before taking subscriber questions on Gold, Bonds, and Warren Buffet.

 


Japan, The Euro and Oil

Client Talking Points

JAPAN

Another horrendous economic data point with Auto Sales -14.2% year-over-year in FEB, so Japanese stocks make another fresh 15 year high on that at +8% year-to-date for the Nikkei moving up +2.3% on the week (S&P 500 was -0.3% last week); Nikkei loves Burning Yens.

EURO

The Euro is oversold to fresh year-to-date lows of $1.11 last week (-7% vs. USD year-to-date) and bouncing small +0.2% this morning on a mixed bag of PMI prints (Italy better, Germany in line, France sucking wind) – Italian stocks +2.3% last week (+0.6% this morning) = +18.2% year-to-date!

OIL

WTI was down -2.1% last week on #StrongDollar +1.1% (back to its JAN highs) and the Oil #deflation continues this morning -1.4%  with next immediate-term TRADE support of $47.66/barrel and a risk range of 47.66-53.08 (no $60-70 price deck from us). 

Asset Allocation

CASH 41% US EQUITIES 10%
INTL EQUITIES 10% COMMODITIES 0%
FIXED INCOME 29% INTL CURRENCIES 10%

Top Long Ideas

Company Ticker Sector Duration
EDV

WTI was down -2.1% last week on #StrongDollar +1.1% (back to its JAN highs) and the Oil #deflation continues this morning -1.4%  with next immediate-term TRADE support of $47.66/barrel and a risk range of 47.66-53.08 (no $60-70 price deck from us). 

TLT

Low-volatility Long Bonds (TLT) have plenty of room to run. Late-Cycle Economic Indicators are still deteriorating on a TRENDING Basis (Manufacturing, CapEX, inflation) while consumption driven numbers have improved. Inflation readings for January are #SLOWING. We saw deceleration in CPI year-over-year at +0.8% vs. +1.3% prior and month-over-month at -0.4% vs. -0.3% prior. Growth is still #SLOWING with Real GDP growth decelerating at -20 basis points to +2.5% year-over-year for Q4 2014.The GDP deflator decelerated -40 basis points to +1.2% year-over-year.

HOLX

Hologic (HOLX), at this stage in their product cycle and in the current stage of the economic cycle, has some very impactful tailwinds emerging to their revenue growth and the implied growth in the future. A stock generally will perform really well when doubt about future growth turns to optimism while the most recent data confirms the optimism. So far, we have a little bit of both; recent positive data like the December 2014 quarter upside and consensus estimates and ratings starting to move off of multi-year lows. A less-worse trend in Pap testing and rising patient volume can combine to get us close to flat for HOX’s Cytology (Pap) business. As the growth in Cytology improves and is less of a drag, the 3D Mammography growth can flow through. We think the outlook is bright, and with a few more data points, we think a lot more investors will agree with us.

Three for the Road

TWEET OF THE DAY

In today's Early Look "Hairy Little Forecasters" I show you the flow-through from Global #Deflation to sector returns

@KeithMcCullough

QUOTE OF THE DAY

We must find time to stop and thank the people who make a difference in our lives.

-John F. Kennedy

STAT OF THE DAY

Consumer Discretionary stocks (XLY) led gainers, +0.7% on the week to +5.3% year-to-date and Energy stocks (XLE) led losers -1.9% on week-over-week at -0.2% year-to-date.


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.

CHART OF THE DAY: Beating Beta (It Isn't Easy, But It Is Achievable) $SPY $TLT

CHART OF THE DAY: Beating Beta (It Isn't Easy, But It Is Achievable) $SPY $TLT - 03.02.15 chart

 

This is an excerpt from today's Morning Newsletter written by Hedgeye CEO Keith McCullough.

 

Beating beta isn’t easy, but it is achievable. Full loaded with the February v-bottom US stocks put in after a terrible January, neither the Dow nor the SP500 (+1.7% and +2.2% YTD, respectively) are beating the Long Bond (TLT total return +3.3% YTD).

 

But that’s not new either. As you can see in the Chart of The Day, the Long Bond (TLT) has been beating CNBC’s core advertising quote (SP500) handily ever since both growth and inflation started slowing at the beginning of 2014.

 


Hairy Little Forecasters

“A foolish consistency is the hobgoblin of little minds.”

-Ralph Waldo Emerson

 

I think we all know what little minds are. If you don’t know what their foolish consistencies look like, come watch 5-7yr olds play Mite Hockey. They’ll go offside again, and again, and again – until they finally learn that the referee’s whistle stops them from scoring.

 

Do you know what a hobgoblin is? Per Wikipedia: “Hobgoblins seem to be small, hairy little men who—like their close relative, brownies - are often found within human dwellings, doing odd jobs around the house while the family is lost in sleep.”

 

That, to me, seems like a reasonable definition of what people do at the Fed. While the rest of the world is dealing with the realities of economic gravity, these little-known people continue to rummage through data, forecasting both inflation and GDP growth inaccurately.

Hairy Little Forecasters - GDP cartoon 01.30.2015

 

Back to the Global Macro Grind

 

Did you know what 2014 US GDP growth was? Per Q4 #GrowthSlowing data that was reported on Friday, US GDP growth slowed to +2.4% year-over-year in 2014, well off what seems like a perpetual consensus growth expectation of +3-4%.

 

As you know, long-term bond yields have been tracking the rate of change in year-over-year US growth. When US growth finally surprised to the upside (Q413) at +3.1% year-over-year, the 10yr UST Yield climbed over 3%.

 

With US GDP falling closer to 2%, the 10yr Yield fell that way too. If you know people who still foolishly look at the q/q SAAR GDP number (instead of y/y), send me their contact info and I’ll send them a pair of tickets to  Shakespeare’s A Midsummer Night’s Dream.

 

The best known hobgoblin has a hockey name (Puck, from Shakespeare’s aforementioned classic). I kind of like that inasmuch as I enjoyed last week’s macro moves (I was in dire need of a good week!):

 

  1. #StrongDollar – US Dollar Index ramped +1.1% back to its JAN highs at +5.6% YTD
  2. Burning Euros – EUR/USD down another -1.5% on the wk to YTD lows of -7.1%
  3. Commodity #Deflation – CRB Index -0.4% wk-over-wk to -2.6% YTD
  4. Oil #Deflation – WTI down another -2.1% last wk to -8.3% YTD
  5. Lower Rates – UST 10yr Yield -12bps on the wk to 1.99% (-18 bps YTD)

 

Not to be confused with anything other than a Global #Deflation signal (consumers like it; debtors and their banks do not), the flow-through to the US stock market last week looked a lot like it did in January:

 

  1. Energy stocks (XLE) led losers -1.9% on wk-over-wk at -0.2% YTD
  2. Financials stocks (XLF) were down -0.4% on the wk to -1.5% YTD
  3. Consumer Discretionary stocks (XLY) led gainers, +0.7% on the wk to +5.3% YTD

 

Follow the proverbial performance chasing puck (not to be confused with a furry little forecaster by the name of John Williams) and if you’ve picked your Sector Styles in the US stock market right, you’re beating your competition on both an absolute and relative basis.

 

#Congratulations!

 

Beating beta isn’t easy, but it is achievable. Full loaded with the February v-bottom US stocks put in after a terrible January, neither the Dow nor the SP500 (+1.7% and +2.2% YTD, respectively) are beating the Long Bond (TLT total return +3.3% YTD).

 

But that’s not new either. As you can see in the Chart of The Day, the Long Bond (TLT) has been beating CNBC’s core advertising quote (SP500) handily ever since both growth and inflation started slowing at the beginning of 2014.

 

In addition to picking the right sectors of the SP500 (Housing, Consumer, Healthcare = +5.3-6.8% YTD) and having an overweight position in the Long Bond, the biggest asset allocation we continue to think you should avoid is Commodities:

 

  1. Oil (WTI) is down another -1.4% this morning to $49.09 = down -7.8% YTD
  2. Natural Gas (after a -8% drop last week) is down another -1.3% today at $2.70 = down -6.3% YTD
  3. Coffee Prices #deflated another -8.1% last week and are down over -17% for 2015 YTD

 

Yep, stay with the big cap Consumer Discretionary (XLY) long that is the recipient of that last one, Starbucks (SBUX) – which, incidentally, also has over a 3% weight in the XLY consumption ETF (SBUX +13.9% YTD).

 

Nah, we’re not perma bullish or bearish on anything really. Every sector and asset allocation has a growth and inflation environment that loves them. Our job is to find the nice little furry ones that make me look more like a teddy bear than your thrashing hobgoblin type.

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.88-2.08%

SPX 2093-2115
USD 94.08-95.67
EUR/USD 1.11-1.13
Oil (WTI) 47.66-53.08
Nat Gas 2.65-2.85

 

Best of luck out there this week,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Hairy Little Forecasters - 03.02.15 chart


March 2, 2015

March 2, 2015 - Slide1

 

BULLISH TRENDS

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BEARISH TRENDS

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March 2, 2015 - Slide13

 


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