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Call Invite | Patience or Pre-emption? Contextualizing the Domestic Labor Market

Call Invite | Patience or Pre-emption? Contextualizing the Domestic Labor Market - HE M domesticlabor

The Hedgeye Macro team will be hosting a conference call on Tuesday, March 17th at 11:00AM EST to discuss the current state of the domestic labor market and the implications for the path of monetary policy. 


We'll present a comprehensive review of the current domestic labor market dynamics, profile the prevailing trends and contextualize the recent data within the context of the labor and economic cycles over the last half-century.   




  • The Cycle:  We'll detail where we are in the current cycle and what's the likely trajectory for labor fundamentals from here.
  • Wage Inflation:  While leading labor metrics are approaching levels of peak improvement, wage inflation remains the notable holdout.  We'll discuss the dynamics underpinning the ongoing stagnation in wage growth and the outlook for this key input in the Fed's policy calculus. 
  • Patience or Pre-emption?  We'll conclude with a detailed scenario analysis regarding the outlook for U.S. monetary policy. 



  • Toll-Free Number:
  • Toll Number:
  • Conference Password: 13604172


***As always, there will be an audio-visual replay distributed after the call.***


Kind regards,


The Hedgeye Macro Team

In Case You Missed It | Axler: Two ‘Significantly Overvalued’ Stocks Investors Should Short

Last week, activist short-seller and forensic financial researcher Ben Axler, founder of Spruce Point Capital Management, joined Hedgeye Industrials Sector Head Jay Van Sciver to discuss two stocks ripe for a big fall and his reasoning why. 

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Click image below to launch the interview.


In Case You Missed It | Axler: Two ‘Significantly Overvalued’ Stocks Investors Should Short - ax1

[HEDGEYE UNLOCKED] Initial Claims: Strong

Takeaway: This morning's strong claims print reinforces the conclusion that the labor market remains on solid footing for now.

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

The last few weeks saw claims rising steadily, but that changed in the latest week of data. Claims fell by a momentous 36k on a single week SA basis, bringing them back below 300k. Meanwhile, the rolling data improved WoW by 4k to 302k. The YoY RoC in NSA rolling claims slowed to 8.3% this week, but this isn't suprising as YoY RoC should be converging towards zero as we get closer to lapping the frictional floor of 300k. All in all, the data this morning is strong and paints a picture of ongoing stability/improvement in the US labor market.


For the last few months we've been calling out the energy sector as an area of acute weakness amid the broader backdrop of strength for labor. The update there this week is that the energy state complex was relatively flat relative to the rest of the country. 


[HEDGEYE UNLOCKED] Initial Claims: Strong - JOSH


The Data

Prior to revision, initial jobless claims fell 31k to 289k from 320k WoW, as the prior week's number was revised up by 5k to 325k.


The headline (unrevised) number shows claims were lower by 36k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -3.75k WoW to 302.25k.


The 4-week rolling average of NSA claims, another way of evaluating the data, was -8.3% lower YoY, which is a sequential deceleration versus the previous week's YoY change of -8.8%


[HEDGEYE UNLOCKED] Initial Claims: Strong - Claims2


[HEDGEYE UNLOCKED] Initial Claims: Strong - Claims3


[HEDGEYE UNLOCKED] Initial Claims: Strong - Claims6

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#EmergingOutflows Round II: March 2015 Update

Takeaway: We reiterate our bearish bias on Emerging Markets, a view we have held since late September. Feel free to email us with follow-up questions.

Watch an audio-visual update of our #EmergingOutflows theme below.


CLICK HERE to download the associated presentation in PDF format (29 slides).


CLICK HERE to access the latest version of our Tactical Asset Class Rotation Model (TACRM). Quantitatively speaking, slowing global growth and falling inflation expectations continue to be priced into global financial markets -- both of which continue to be material headwinds to EM asset prices.


Best of luck out there,




Darius Dale


Keith's Macro Notebook 3/12: USD | Japan | Russell 2000


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

Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales

Takeaway: KSS/Industry read throughs on Comps & Margins. MW 4Q-Remains on Long Bench. WMT wage ripple effects. China factory strike. FEB Retail Sales.


Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 9 chart2







Takeaway: BONT isn't a name we talk about a lot, but we took a few interesting tidbits away from the company's press release this morning.

1) Comps -- the company posted a 4.3% number (+5.3% through Nov/Dec and -1.4% in January). That's the best comp number this company has posted in 8.5 yrs. Yea since 2006. Could it be that this company has found its mojo. It's possible, but this is a bottom tier regional department store chain operating in a category that's grown sales at a -2% CAGR over the past 20yrs. If poor quality retailers like BONT (we could list about 10 more concepts) are putting up record numbers we think that's very solid proof that the +3.7% KSS comp number is more telling of the retail environment in 4Q than the 'Greatness Agenda'.

2) Margins - The company took a 130bps whack on the chin because of the 'highly promotional' retail environment and distribution related e-comm expenses in the quarter. E-comm sales grew 25% for the year to $167mm (6% of sales). That's a big headwind for such a small piece of the business. BONT currently has no free shipping threshold in place, meaning that consumers must pay shipping for each order. But we should note that the company is currently running a free shipping at $25 spend promotion. Companies do this all the time, but as retailers move to protect market share online (the only real growth driver in the industry) we think the one-offs become standard moving the threshold towards $0.

Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 12 chart3


MW - 4Q14 Earnings


Takeaway: All in a very good quarter for MW. Comps looked strong across the portfolio in the quarter which was enough for 1% beat on the top line, though we should note that on a 2yr basis all concepts were flat to down sequentially. Margins looked good and the 66% sales growth leveraged into a 92% increase in adjusted EPS. Run rate synergies ended the year at $35mm with $50-$55mm guide for 2015. We think management is sandbagging on the $100mm it's thrown out to the street. MW remains on our long bench while we vet the bigger investment thesis.

Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 12 chart1


WMT, TJX - At Home comfortable with wage increase



Takeaway: At Home operates 83 stores centered mostly in the Mid West and South. Think a bigger version of Pier 1 or maybe an Ashley Furniture. If you want to see what the WMT wage increase ripple effect looks like across the industry look no further than At Home. The company is raising hourly wages for full time workers to a $10 minimum and $9 for part-timers. It's not a concept that one would think would have to compete with WMT for employees, but sure enough here it is. WMT employs about 1.4mm people in the US. That's about 16.5% of the workforce in the Food & Beverage, Health/Personal Care, Clothing, and General Merchandise categories. Or, put another way…the company swings a big stick.


NKE, VFC - Chinese Labor Strike: 5,000 Workers Strike At Factory Making Shoes For Nike, Timberland, Kenneth Cole; Police Dogs Deployed



Takeaway: This does not impact high-profile 'Launch' footwear for Nike, as it dual and triple-sources those products in different countries to diversify against risks such as this -- which seem to come along every 2-3 years. But truth be told, the plant would need to be closed down permanently to be a  shock to Nike's financial model -- and it'd only be a temporary one at that.




Takeaway: This confirms what we've seen from company's monthly sales numbers in Feb and the ICSC trend line. Sales decelerated on both a 1yr and 2yr basis to the lowest rates we seen in 12-13 months.

Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 12 chart4






Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 12 chart5


PETM - BC Partners Completes Acquisition of PetSmart, Inc, Appoints Michael J. Massey as its President and Chief Executive Officer



TJX - TJX, Bluestar Eye Jones New York



APP - Robert Mintz Exits American Apparel



PLCE - Barington Capital, Macellum Advisors Urge Changes at Children’s Place



WMT - Women-owned logo arrives on Walmart shelves



GME - GameStop expands gift card trade-in program



UA - Under Armour opens digital center in Austin, Texas



In the Works: Four new retail concepts



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

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