Takeaway: We are removing Kate Spade from Investing Ideas today.
Please note we are removing Kate Spade (KATE) from Investing Ideas today. According to Hedgeye CEO Keith McCullough:
This is a PM’s call. Our Retail Sector Head Brian McGough’s research view hasn’t changed. But I’d much rather come back to an idea like this once the style factors and macro risks to the #LateCycle consumer play out.
While I'm glad I didn't have you capitulate and sell last week's lows in KATE, I'll be less glad if we don't take this bounce to lower-highs as a selling opportunity. Small cap, high beta - not the Style Factors in the market I want to be chasing and/or holding onto here.
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After spending almost four years being bearish on McDonald’s, Hedgeye Managing Director and Restaurants Sector Head Howard Penney has turned positive on shares of MCD.
Penney recently presented his granular Best Long Idea Black Book outlining his bullish case for the company. His bullish call is predicated on three key points:
Penney sees approximately 15%-30% upside in McDonald’s from here.
***If you’re an institutional investor and would like to see the MCD Black Book from July 10th or any other additional research from Howard please email firstname.lastname@example.org
Takeaway: Medicaid spending still strong through 2Q15, positive for earnings.
The data through 2Q15 shows a persistent positive consumption trend driven by the Medicaid expansion under the ACA. Per enrollee spending remains elevated, which is consistent with pent-up demand of the newly insured. Below, we forecast Medicaid enrollment through 2016 using the rate of change for the most recent months of enrollment data. We expect growth of Medicaid enrollment to slow into 2H15 while continuing to monitor per enrollee spending for signs of a reversion to Pre-ACA levels. Slowing enrollment and negative per enrollee spending in future periods remains a key risk for the US Medical Economy.
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WATCH THIS PRESENTATION LIVE BELOW
This Thursday, July 16th at 1:00PM ET, we invite you to join us live for a conference call on China. Led by senior macro analyst Darius Dale, the call will detail our revised outlook for the Chinese economy, our expectations for monetary and fiscal policy, as well as the associated investment implications.
KEY DISCUSSION TOPICS:
Also, for those of you who cannot join us live, we will be distributing a replay video of the call shortly after it concludes.
The Hedgeye Macro Team