Giving Back

 “We make a living by what we get. We make a life by what we give.”

-Winston Churchill


I’ve been grinding on one steamer of a roady this week (96 degrees in a suit in Dallas yesterday), so now I’m looking for some love. I’m proud to announce that our team’s charity outreach program is hosting its 2nd annual Hedgeye Cares Charity Golf Challenge on Tuesday, July 21st at GlenArbor Golf Club in Bedford, NY. 


For a 2nd straight year we’re honored to be donating 100% of the proceeds from the tournament to support our area’s underprivileged youth through the Bridgeport Caribe Youth Leaders (BCYL), a 501(c)(3) organization. Here’s a short video we put together featuring kids in the program explaining how BCYL has changed their lives and what BCYL has meant to them:


We’re also extremely thankful to The Lincoln Motor Company for its title sponsorship for a second year running.  Lincoln is a great American luxury brand that recognizes the importance of giving back to communities across the country and makes a significant effort to give back.  To learn more and to Check out the All-New 2016 Lincoln MKX and the Continental Concept, visit


Giving Back - Golf Challenge


It’s not too late to support our tournament and donate to BCYL. For more details on how you can contribute please email Josefine Allain at . We still have a few foursomes left (I cannot confirm or deny that there will be NHL hockey talent at the event - so please be aware of errant 315 yard drives).


You can also follow all of the day’s action (from Lincoln test drives before tee-off to photos from the course) on twitter via the handles @LincolnMotorCo and @Hedgeye. Thanks again to all of our event sponsors and participants for their generous donations! 


Back to the Global Macro Grind


Slow --> Halt --> Ramp!


  1. USD – Draghi did the double-whatever-it-takes yesterday and the Euro dove to the low-end of my immediate-term $1.08-1.11 risk range; that finally puts USD Index immediate-term TRADE overbought in what continues to look like a #deflationary redo for certain asset prices, earnings, etc.
  2. #Deflation – most obviously you can see this in both commodities themselves this week and their equity market links – Copper and Russia (stocks) both down -0.5-1% again this morning and a lot of these “inflation expectations” things are close to 3 month lows with USD at 3 month highs
  3. EQUITIES – European and Chinese halts worked (Greece is still halted) and the US Equity ramp came right after SP500 (Index + Emini) net SHORT position (CFTC futures/options contracts) peaked at -162,467 at the July US equity market low! Risk ranges are now as wide as they’ve been all year


What does a widening risk range mean?


It means my risk management model is signaling a wider range of probable immediate-term outcomes. In other words, it usually portends rising volatility (since volatility is the variance of a price series over time) from this VIX 12 level.


There’s also a widening range of consensus opinion (vs. mine) on A) whether the Fed hikes in 2015 or not and B) whether or not moving forward with that would be a good or bad thing.


Here’s the latest Wall Street Journal Poll:


  1. 82% of economists polled see a SEP hike (vs. 72% last month)
  2. 15% of economists polled see a DEC hike (vs. 9% last month)
  3. 71% see it as a “risk” that the Fed hikes “too late”; 29% see it as a risk that they hike “too early”


Wow. Not only are whoever these “economists” are now completely ignoring Mr. Macro Market’s opinion (Fed Fund Futures imply less than a 15% chance of a SEP hike), but they are at complete odds with me on the risk of raising rates into a slowdown.


At least since the last two Wall Street tops (2000 and 2007), the Fed has only eased during slowdowns. Remember the man before Draghi at the ECB helm, Jean-Claude Trichet? He raised rates in 2011 and pretty near blew up the capital market world.


Ah, what do I know about buying cyclicals and/or tightening at the end of a cycle? It’s probably different this time. Post a 6yr equity ramp shouldn’t you pay 351x earnings for Netflix or chase QQQs?


I’m hearing the charts “look good.” They did in 2000 and 2007 too.


Our immediate-term Global Macro Risk Ranges (and intermediate-term TREND views in brackets) are now:


UST 10yr Yield 2.20-2.46% (bearish)

SPX 2038-2130 (neutral)
RUT 1 (neutral)
Nikkei 20105-20759 (bullish)
VIX 11.01-20.06 (bullish)
USD 96.40-97.91 (bullish)
EUR/USD 1.08-1.11 (bearish)
YEN 122.41-124.56 (bearish)
Oil (WTI) 50.06-53.64 (bearish)

Nat Gas 2.66-2.94 (bearish)

Gold 1140-1161 (bearish)
Copper 2.45-2.59 (bearish)


Best of luck out there today,



Click image to enlarge 

Giving Back - z chart of day 07.17.15 chart


July 17, 2015

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Cartoon of the Day: 7.0!

Cartoon of the Day: 7.0! - China GDP cartoon 07.16.2015

"Magically, the Chinese reported an alleged 7.0% GDP for Q2 after 7.0% in Q1 - not 6.8; not 7.2 - straight 7.0..." -Hedgeye CEO Keith McCullough in a tweet yesterday after China's head-scratching GDP report.

Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

HOLX: Adding Hologic to Investing Ideas

Takeaway: We are adding Hologic to Investing Ideas today.

Please note we are adding Hologic (HOLX) to Investing Ideas today. Below is a brief explanation from Hedgeye CEO Keith McCullough. Our Healthcare team led by Tom Tobin will provide additional color going forward.


HOLX: Adding Hologic to Investing Ideas - z gg


Buy signals in HOLX have been hard to come by (the stock hasn't gone down much), but a sell-side firm downgraded it today so it's tapping the low-end of our immediate-term risk range. Tom Tobin remains The Bull.


On Wednesday July 22 we are hosting a conference call and live studio event for institutional subscribers to review our outlook for HOLX.  We first added HOLX to the Hedgeye Best Idea List as a long in April 2014 when the stock was in the low $20s.  


Since then, our original thesis has played out, with the stock doubling as we predicted, and many of the fundamental and sentiment drivers maturing on schedule.   We will review the path into the $50s on our call next week ahead of HOLX earnings report July 29.


Buy red,



Earlier this afternoon, we hosted a live conference call on China which detailed our revised outlook for the Chinese economy, our expectations for monetary and fiscal policy, as well as the associated investment implications.


Watch the video replay of the presentation below.


CLICK HERE to download the associated presentation in PDF format.




  • Section One: Correction or Collapse? (slides 4-33)
    • Summary: China’s secular growth outlook is likely more dour than the average “China bear” is willing to admit, which implies the recent margin-fueled melt-up in Chinese equities is little more than a bubble that has now popped. Conversely, the outlook for capital markets reform in China is supportive of expectations for much higher share prices over the intermediate-to-long term. While we view these conflicting forces as a fair fight, we are inclined to side with the stated reform drive of Chinese policymakers and believe the key decision an investor has to make with respect to adopting a bullish or bearish stance on Chinese equities from here is how much they believe in the efficacy of the “Beijing Put”. All told, we are happy sheep – for now at least.
  • Section Two: Asset Class “Re-Rotation” Risk (slides 34-63)
    • Summary: Our analysis is picking up on a positive inflection in the Chinese property market. To the extent this nascent recovery is sustained, we expect two things to occur: 1) mainland Chinese investors are likely flow capital back into real estate in lieu of stocks, at the margins; and 2) Chinese economic growth is likely to stabilize and potentially inflect higher from a cyclical perspective. The latter is key risk for the Chinese equity market(s) in terms of reduced expectations for fiscal and monetary stimulus.
  • Section Three: RMB Internationalization Impact (slides 64-73)
    • Summary:  Ahead of this year’s likely rebalancing, Chinese policymakers have lobbied strongly in favor of the yuan to be included in the IMF’s Special Drawing Rights (SDR) basket. Regardless of any near-term success with this initiative, we believe Chinese policymakers are serious regarding their pledge(s) to accelerate capital account reform. We believe an incrementally deregulated Chinese capital account will prove to be a positive influence upon both the Chinese and global economy.
  • Associated Investment Implications (slide 74)
    • Summary: Over the intermediate term, we think H-Shares represent an active opportunity on the long side but are cognizant of the elevated spillover risk resulting from another potential leg down in the A-Shares. Longer term, however, we think both markets are poised to trade materially higher amid the confluence of key capital markets and capital account reforms. Meanwhile, China’s secular growth outlook should continue to impart deflationary pressure upon commodity prices and the nominal exchange rates of commodity-producing nations.


As always, please feel free to follow up with any questions. There are lots of moving parts here to discuss.


Kind regards,


The Hedgeye Macro Team

Builder Confidence | Optimism Builds

Takeaway: Builder confidence in July remains at 10-year highs with Lot & Labor shortages topping the list of concerns.

Our Hedgeye Housing Compendium table (below) aspires to present the state of the housing market in a visually-friendly format that takes about 30 seconds to consume.


Builder Confidence | Optimism Builds - Compendium 071615


Today's Focus: July NAHB HMI (Builder Confidence Survey)

Builder Confidence in July held flat at an index reading of 60 against upwardly revised June estimates (revised from 59 to 60), marking the highest level in builder confidence since November 2005 (116 months).  With SF Starts and Pending, Existing and New Home Sales all at or near post-crisis highs in recent months, the sustained build of positive sentiment among builders comes as little surprise inclusive of the recent back-up in rates. 


Across the survey indicators the +1 pt gains in Current Sales and +2 pt gain in 6M Expectations was offset by a -1pt decline in Current Traffic of Prospective Buyers.  Geographically, the Northeast (+3), Midwest (+2) and West (+2) all showed modest gains sequentially while the -1 pt decline in the South was the first retreat in sentiment in 5 months for the region.   


On our Call with NAHB Chief Economist David Crowe (Slide Deck: HERE) back in June, he highlighted the re-emergence of Lot and Labor shortage concerns  being reported by builders – a challenge he reiterated alongside this morning’s HMI release. 


While Lot availability and affordability is, indeed, an emergent concern, we’d take an equivocal-to-positive view of the reported labor tightness.  


While the symptom of a tighter residential construction labor market in the form of upward pressure on wages could be viewed negatively, the cause (rising demand) is a fundamentally positive development for the industry and historical episodes of labor tightness have corresponded to strong periods of construction activity and equity performance.  In short, from a top-down perspective, it’s hard to take a fundamentally negative view on rising demand. 


In regards to NAHB commentary around the July data: 


NAHB Chairman Tom Woods commented: 

“The fact that builder confidence has returned to levels not seen since 2005 shows that housing continues to improve at a steady pace…As we head into the second half of 2015, we should expect a continued recovery of the housing market.”


NAHB Chief Economist David Crowe added: 

“This month’s reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth….However, builders still face a number of challenges, including shortages of lots and labor.”



Bottom-line:  The cycle high in builder confidence in June/July accords with the rash of positive industry data reported for 2Q-to-date and the ongoing improvement in domestic labor/income fundamentals  – a trend which should extend at least through the reported June housing data before volume comps begin to steepen progressively into the back-half of the year. 



Builder Confidence | Optimism Builds - HMI LT


Builder Confidence | Optimism Builds - HMI Indicators


Builder Confidence | Optimism Builds - HMI Regional


Builder Confidence | Optimism Builds - HMI vs NHS


Builder Confidence | Optimism Builds - Housing Confidence HMI vs Univ Mich




Builder Confidence | Optimism Builds - HMI Optimism Spread 



About the NAHB HMI:

The Housing Market Index (HMI) is based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. The monthly survey has been conducted for 30 years. The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next 6 months as well as the traffic of prospective buyers of new homes. The HMI is a weighted average of separate diffusion indices for these three key single-family series. The HMI can range from 0 to 100, where a value over 50 implies conditions are, on average, improving, a value below 50 implies conditions are worsening, and an index value of 50 indicates that the housing market is neither improving nor worsening.



Joshua Steiner, CFA


Christian B. Drake