• run with the bulls

    get your first month

    of hedgeye free


This Market Move Hasn’t Happened In 27 Years

Takeaway: The Gong Show in Tokyo rages on as Currency Wars continue.

Editor's Note: This is an excerpt from Hedgeye morning research. Click here for more information on how you can become a subscriber.

This Market Move Hasn’t Happened In 27 Years - Nikkei cartoon 05.27.2015


Ahh… the smell of Japan’s currency on fire - $123.89 vs USD.


You guessed it. Another down day for the Yen to fresh, year-to-date lows. The Nikkei’s ramp on that move remains epic. Get this:  Japanese stocks are up for the 10th day in a row. (For all you home-gamers out there, that hasn’t happened in 27 years.)


This Market Move Hasn’t Happened In 27 Years - z ben japanese


The Nikkei is up over +18% year-to-date versus around 3% for the S&P 500.


Takeaway: Rolling SA claims rose for the first time in 5 weeks. However, at 272k they remain in healthy territory.

Below is the 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 


OFF THE LOWS:  After hitting a 15-year low of 262k in the week ending April 25th, the weekly SA claims figures have seen some upward movement in the last few weeks, coming in at 282k in the most recent period. Given that upward movement, the 4-week rolling SA figure posted its first increase in 5 weeks this week, rising from 267k to 272k WoW. Nevertheless, this week's print, still well below the 300k Rubicon, continues to represent strength in the labor market.


In the chart below, indexed claims in energy heavy states rose more than the country as a whole in the week ending May 16th. The spread between the two series increased from 21 to 23.




The Data

Prior to revision, initial jobless claims rose 8k to 282k from 274k WoW, as the prior week's number was revised up by 1k to 275k.


The headline (unrevised) number shows claims were higher by 7k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 5k WoW to 271.5k.


The 4-week rolling average of NSA claims, another way of evaluating the data, was -13.2% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -16.4%













Joshua Steiner, CFA


Jonathan Casteleyn, CFA, CMT

McCullough: This Is The Biggest Threat to the Stock Market


In this brief excerpt from today's edition of The Macro Show, Hedgeye CEO Keith McCullough answers a subscriber’s question about current risks to the U.S. equity market.


Subscribe to The Macro Show today for access to this and all other episodes. 


Retail Callouts (5/28): NKE, UA, ANF, KATE, DG, AMZN

Takeaway: NKE - FIFA Allegations could accrue to UA. ANF has another muddy print, we're still on the sidelines.

NKE/UA - FIFA Allegations Could Disproportionately Accrue To UnderArmour



If you haven't heard, seven FIFA officials were arrested in Switzerland yesterday as part of a global bribery scheme centered around illegal cash payments and marketing/broadcasting rights. Nike appears to be caught in the fray, identified in the indictment as 'Sportswear Company A'. For starters the relationship with the Traffic Group (NKE paid the company $30mm from 1996-99) looks questionable. The owner and founder plead guilty to racketeering and money laundering charges late last year and forfeited about $150mm. The way the scheme worked, Traffic would acquire marketing rights for large soccer events and then auction them off the broadcasting and marketing rights to the highest bidder (or best connected bidder). The fact that the relationship with Traffic kicked off just days after Nike signed a deal with the Brazilian Soccer Federation adds a little fuel to the speculation fire.


We actually view this to be not entirely dissimilar to the zoning/real estate bribery scandal Wal-Mart battled in Mexico and the fraud Reebok 'allegedly' committed in India. We'd never in a million years say that this is 'part of doing business' overseas for any multinational. But it absolutely underscores the risk management procedures that are necessary once companies move beyond US borders.


As it relates to any financial impact, we're not too worried about Nike's exposure. We're more concerned about changes in regulation around FIFA and other leagues that deal with product and broadcasting licenses. In Nike's case, regulation is bad. It has a clear financial edge over any other sportswear company anywhere in the world, which is a major asset in a deregulated licensing environment.  But if the field of play is more standardized, then we'd argue that it could accrue disproportionately to smaller brands like UnderArmour.



ANF: Another Muddy Print -- We're Still On The Sidelines

A few highlights: a) Comp improvement vs prior two quarters, despite lower promotional activity. b) Comp trends have improved in May. c) US AUR stabilizing, International AUR is down intentionally to driving better conversion. d) International DTC saw healthy growth, US DTC negative yoy (that's still a big red flag for us). e) AUC improving -- down MSD in Q1. f) Guidance: sequential comparable sales improvement into the second quarter and the second half of the fiscal year, in-line with prior guidance. Gross margin rate to be flat to slightly up, same as prior guidance. Op expenses down 40mm, guided roughly flat before.


As it relates to the stock, we have a hard time getting an edge on this one. We get the story around management, cost cuts, store rationalization, a more activist board, etc… But where we come up short is that when all is said and done, we'd still be left owning the Abercrombie brands, which are simply not relevant to what used to be the core teen consumer anymore.

Retail Callouts (5/28): NKE, UA, ANF, KATE, DG, AMZN - 5 28 chart1




KATE - Kate Spade New York looks to personalize online fit with True Fit



DG - Dollar General Board Names Todd J. Vasos as CEO



AMZN - Amazon plans to hire at least 6,000 new workers



HBC - Hudson’s Bay Intensifies Quest for Germany’s Kaufhof Chain



RL - Ralph Lauren Joins the New York Fashion Week: Men’s Schedule



COLM - Columbia Sportswear Announces Four Key Leadership Promotions


Keith's Daily Trading Ranges [Unlocked]

This is a complimentary look at Daily Trading Ranges - our proprietary buy and sell levels on major markets, commodities and currencies sent to subscribers weekday mornings by CEO Keith McCullough. It was published at 7:04am ET. 

Click here to learn more and subscribe.

Keith's Daily Trading Ranges [Unlocked] - z dtr


Keith's Daily Trading Ranges [Unlocked] - Slide2

Keith's Daily Trading Ranges [Unlocked] - Slide3

Keith's Daily Trading Ranges [Unlocked] - Slide4

Keith's Daily Trading Ranges [Unlocked] - Slide5

Keith's Daily Trading Ranges [Unlocked] - Slide6

Keith's Daily Trading Ranges [Unlocked] - Slide7

Keith's Daily Trading Ranges [Unlocked] - Slide8




Keith's Daily Trading Ranges [Unlocked] - Slide9

Keith's Daily Trading Ranges [Unlocked] - Slide10

Keith's Daily Trading Ranges [Unlocked] - Slide11

LEISURE LETTER (05/28/2015)



  • May 28: MGM Annual General Meeting: Proxy "Fight"
  • June 4: CCL special press announcement in NYC


LVS - received notice of an unsolicited mini-tender offer by TRC Capital Corporation ("TRC Capital") to purchase up to 2,500,000 shares of LVS's common stock at a price of $47.63 per share in cash, without interest.  

Takeaway: Thanks for the offer but i'll just sell into the pool of 5 million shares of LVS traded daily at the higher market price.


Stations Casino - is looking to sell shares to the public four years after leaving bankruptcy, people with knowledge of the matter said. The company, which owns or manages 21 casinos, has asked investment banks for proposals for an IPO that would take place this year. Station Casinos could be valued at more than $3.5 billion, including $2.15 billion in debt, one of the people said.


Takeaway: We'd love to see it this well run company back in the public domain. Look for the Hedgeye pre-IPO report.


Galaxy - deputy chairman Francis Lui Yiu-tung expects the company's non-gaming revenue in Macau to see a double-digit growth as the industry faces its toughest times in a decade. "It's hard to predict how big a proportion the non-gaming sector will account for as it just started in the past two years. We'll find out in three years," Lui said. 


So far, the group has invested HK$43 billion in the two phases of Galaxy Macau and Broadway Macau, nearly half of the planned HK$100 billion investment for the SAR. Lui said the group has enough cash and no debt. It will factor in changing market situations in Phases 3 and 4. Phase 2 has 7,000 employees, Lui added.


Takeaway: Please see our note out this morning on the successful Phase 2 opening. 


CCL -Jim Heaney, a financial executive with more than 25 years in the cruise and hospitality industries, including 17 years with Disney Cruise Line, will take the CFO role at Carnival Cruise Line. Most recently Heaney spent three years as CFO for SeaWorld Entertainment. Earlier he was CFO and SVP finance and travel operations at Disney Cruise Line. Prior to that, Heaney held various financial posts at Royal Caribbean Cruises; Pueblo International, which operated a large Florida-based grocery store chain; and Gould, Inc., a manufacturer of super mini-computers used primarily for military application.


April McCarran airport traffic rose 4.4% YoY

Takeaway: 20th straight month of growth for McCarran traffic


Westin Sydney sold -Singapore's Far East Organization has teamed up with its Hong Kong-listed sister company Sino Land for a A$445.33 million (S$467.72 million) acquisition of The Westin Sydney and its adjoining Heritage Retail podium. The property is being sold by GIC Real Estate. The five-star hotel features 416 luxurious rooms. The Westin Sydney continues to be managed by Starwood Hotels & Resorts under the existing management agreement.



Hedgeye Macro Team remains negative on Europe, their bottom-up, qualitative analysis (Growth/Inflation/Policy framework) indicates that the Eurozone is setting up to enter the ugly Quad4 in Q4 (equating to growth decelerates and inflation decelerates) = Europe Slowing.

Takeaway:  European pricing has been a tailwind for CCL and RCL but a negative pivot here looks increasingly likely in 2015.

Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.