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INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973?

Takeaway: SA claims just hit their lowest level since 11/24/73. The labor market faces extreme resistance against improving much further from here.

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 

 

Multi-Decade Lows & Energy Re-Coupling

The chart below shows that seasonally adjusted initial claims just hit 255k, the lowest level in forty two years. The last time claims were lower was November 24, 1973, when the reading came in at 233k. While this exemplifies extreme strength in the labor market, it also represents a point of extreme resistance against claims going any lower.

 

We continue to point out that this party has an expiration date, which we estimate to be about five quarters from now. In the last three cycles, once claims dipped below 330k they remained there for 24 months, 45 months, and 31 months, in the late 1980s, late 1990s/early 2000s, and 2006-2008 period, respectively before the economy went into recession. In the current cycle, claims have been below 330k for a little more than 16 months and counting. The average of these last three cycles is 33 months, which would translate to another ~5 quarters of track.

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims20 normal

 

While we were hesitant last week, given holiday distortion, to make a definitive statement on improving energy state claims, the improvement has sustained itself through the week ending July 11. The chart below shows that since the week ending June 27, the spread between indexed energy state claims and the country as a whole has tightened from 15 to 3. 

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims18 normal

 

The Data

Initial jobless claims fell 26k to 255k from 281k WoW. The prior week's number was not revised. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -4k WoW to 278.5k.

 

The 4-week rolling average of NSA claims, another way of evaluating the data, was -7.8% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -9.1%

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims2 normal

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims3 normal

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims4 normal

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims5 normal

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims6 normal

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims7 normal

 

 

Joshua Steiner, CFA

 

Jonathan Casteleyn, CFA, CMT

 

 



McCullough: Apple Is the Most Over-Owned Stock In Human History

Editor’s Note: Below is an exchange between Hedgeye CEO Keith McCullough and a reporter from London’s City A.M. who asked McCullough his thoughts on Apple, tech stocks, and whether we’re in another bubble. To read the original City A.M. article click here.

*  *  *  *  *

McCullough: Apple Is the Most Over-Owned Stock In Human History - z app

 

1. Do you think Apple and tech stocks in general are overvalued?

 

A) Apple isn’t a value stock – it’s the most over-owned stock in human history where “valuation” comes into the debate on down days. It’s actually a product-cycle stock, and all cycle stocks should look relatively “cheap” at the peak of a cycle

 

B) What Morgan Stanley calls “New Tech” trades at an average P/E of 149.5x forward earnings. Overvalued is an understatement. It’s obviously a bubble.

 

2. Is there potential for tech firms across the world to lose a lot of value?

 

Yes.

 

If/when product cycles slow, multiples compress. Most people don’t realize that advertising is a #LateCycle revenue gainer. As the economic cycle slows, advertising slows – and so will some “social tech” ad revenues.

 

3. In Europe there was a big drop across equity markets today, driven largely by tech performances - do you see this potentially continuing? Is there a risk to European and Asian tech stemming from Apple and other US stocks' performances?

 

Yes.

 

#EuropeSlowing is a Top 3 Global Macro Theme @Hedgeye right now. Consensus is confusing the political panic in Europe with the causal factor that is economic growth slowing. “Old” (or Industrial) Tech is slowing as the global cycle does.

 

4. Is this another tech bubble? Does this look like the dotcom bubble?

 

Yes (see above).

 

Across market histories, from tulips to dot.bombs, every bubble is unique. Instead of the internet, I think we’ll call this one the cloud of expectations.

*  *  *  *  *

McCullough discussing Apple with Maria Bartiromo on Fox Business. 


INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973?

Takeaway: SA claims just hit their lowest level since 11/24/73. The labor market faces extreme resistance against improving much further from here.

Multi-Decade Lows & Energy Re-Coupling

The chart below shows that seasonally adjusted initial claims just hit 255k, the lowest level in forty two years. The last time claims were lower was November 24, 1973, when the reading came in at 233k. While this exemplifies extreme strength in the labor market, it also represents a point of extreme resistance against claims going any lower. We continue to point out that this party has an expiration date, which we estimate to be about five quarters from now. In the last three cycles, once claims dipped below 330k they remained there for 24 months, 45 months, and 31 months, in the late 1980s, late 1990s/early 2000s, and 2006-2008 period, respectively before the economy went into recession. In the current cycle, claims have been below 330k for a little more than 16 months and counting. The average of these last three cycles is 33 months, which would translate to another ~5 quarters of track.

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims20

 

While we were hesitant last week, given holiday distortion, to make a definitive statement on improving energy state claims, the improvement has sustained itself through the week ending July 11. The chart below shows that since the week ending June 27, the spread between indexed energy state claims and the country as a whole has tightened from 15 to 3. 

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims18

 

The Data

Initial jobless claims fell 26k to 255k from 281k WoW. The prior week's number was not revised. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -4k WoW to 278.5k.

 

The 4-week rolling average of NSA claims, another way of evaluating the data, was -7.8% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -9.1%

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims2

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims3

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims4

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims5

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims6

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims7

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims8

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims9

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims10

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims11

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims19

 

Yield Spreads

The 2-10 spread fell -11 basis points WoW to 161 bps. 3Q15TD, the 2-10 spread is averaging 170 bps, which is higher by 12 bps relative to 2Q15.

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims15

 

INITIAL JOBLESS CLAIMS | PARTY LIKE IT'S 1973? - Claims16

 

Joshua Steiner, CFA

 

Jonathan Casteleyn, CFA, CMT

 


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.

TODAY @ 1PM ET: Internet INVESTMENT IDEAS Quarterly Call

Takeaway: Please join us for our call today at 1:00pm EDT. Dialing instructions below, and posted within the calendar invite link directly below

link: OUTLOOK CALENDAR INVITE W/ CALL DETAILS

 

We will be hosting our quarterly INTERNET INVESTMENT IDEAS Update Call today.  We will be reviewing the major themes and incremental developments to our Best Idea Short theses (YELP, P), our Short thesis on TWTR, and our Bearish thesis on BABA (covered).  The emphasis of this call will be to highlight our view over various durations as well as the upcoming catalyst calendar; identifying the major risks and catalysts to each position over the near-to-intermediate term.  In addition, we will preview our new Best Idea Long thesis on LNKD ahead of our upcoming Blackbook.

 

Please join us for our call today at 1:00pm EDT.  Dialing instruction below.

 

KEY TOPICS WILL INCLUDE

  • Review of major themes and incremental developments to our thesis on YELP, P, TWTR, and BABA.
  • Highlighting our view over various durations as well as the upcoming catalyst calendar: Risks & Catalysts to each position over the NTM.
  • We will also provide an overview of our new Best Idea Long thesis on LNKD

 

Participating Dialing Instructions

  • Toll Free:
  • Toll:
  • Confirmation Number: 13615250
  • Materials: CLICK HERE

 

 

Hesham Shaaban, CFA

@HedgeyeInternet 


Keith's Daily Trading Ranges [Unlocked]

This is a free look at today's Daily Trading Ranges - our proprietary buy and sell levels on major markets, commodities and currencies sent to subscribers weekday mornings by CEO Keith McCullough. Click here to subscribe.

Keith's Daily Trading Ranges [Unlocked] - Slide1

BULLISH TRENDS

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

BEARISH TRENDS

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
Keith's Daily Trading Ranges [Unlocked] - Slide12


LEISURE LETTER (07/23/2015) - RCL, CCL

TICKERS: RCL, CCL

headline news

Macau June Visitation - The Statistics and Census Service (DSEC) reported the following visitation statistics for June:

  • Visitor arrivals totaled 2,248,281 in June 2015, down by 7.6% YoY and 11.8% month-to-month. 
  • The average length of stay of visitors increased by 0.2 day YoY to 1.2 days; overnight and same-day visitors had an average stay of 2.2 days and 0.2 day respectively.
  • Visitors from Mainland China decreased by (10.1%) YoY to 1,435,189; those travelling under the Individual Visit Scheme dropped by (4.2%) YoYto 644,207. 
  • Mainland visitors came primarily from Guangdong Province (632,449), Fujian Province (66,804) and Hunan Province (59,448). 
  • Visitors from Taiwan (80,272), the Republic of Korea (31,406) and India (21,428) decreased by (5.9%), (24.8%) and (3.3%) YoY respectively, while those from Hong Kong (523,789) and the Philippines (22,222) increased by 2.0% and 6.5%. 

LEISURE LETTER (07/23/2015) - RCL, CCL - 3

 

ARTICLE HERE 

Takeaway: Soft visitation numbers across the board for June - continues to be a major hole in the Base Mass growth thesis promoted by the Macau bulls. 

EVENTS   

July 23 9am:  PENN 2Q CC

July 23 5pm: BYD 2Q CC ; PW: 1397357

July 24 11am-2pm:  PENN Plainridge tour and investor day

July 28 8:30am: WYN 2Q CC ; PW: WYNDHAM

July 29 10:00am: HLT 2Q CC ; PW: 74328196

July 30 9:00am: HST 2Q CC

July 30 10:00am: MAR 2Q CC ; PW: 66506287

July 30 1:00pm: HOT 2Q CC ; PW: 69941686

August 1

  • Wild Rose Jefferson opens
  • St Regis Macau opens

August 4: 11:00am: MGM 2Q CC ; PW: 0575269

August 4: 5:00pm: AWAY 2Q CC

August 6: 8:30-1pm: RCL INVESTOR DAY (NYSE)

COMPANY NEWS      

CCL - announces 6 ships will be based in China for 2016, increasing its capacity there by 58%.

  • 2 Princess ships: 1) Golden Princess ship to northern China, sailing out of Tianjin on a seasonal basis, with itineraries visiting a variety of desirable destinations in northern Asia; 2) Sapphire Princess, which has been homeported in Shanghai since 2014 and will start sailing year-round in China in 2016.
  • 4 Costa ships: Costa Fortuna, Costa Serena, Costa Atlantica, Costa Victoria

Takeaway: Before this announcement, Asia/Australia accounted for 13% of CCL's total capacity in 2016 - this number included 4 Costa ships and 1 Princess ship sailing out of China. 

 

CCL - Carnival Corporation signed an agreement with Port Authority of Barcelona to build and operate a new cruise terminal in Europe's largest port. 

  • The agreement with the Port Authority of Barcelona constitutes a more than 30 million euros investment to build and operate its second private cruise terminal at the Port of Barcelona, which is used by seven of the company's 10 cruise line brands as both a destination and home port. 
  • As part of the agreement, the Port Authority granted Carnival Corporation administrative concessions to operate the cruise terminal and all-new parking facility at Europe's largest port and the fourth busiest port in the world.
  • With the agreement, Carnival Corporation has been granted approval to begin the final design process and start construction of the new terminal in 2016. Scheduled to open as early as 2018 in the Port's Adossat wharf, the new terminal will be one of Europe's largest at 11,500 square meters.

RCL- A fire had been reported aboard a Freedom of the Seas but officials said it was quickly extinguished.  There were no reports of injuries. 

ARTICLE HERE 

INDUSTRY NEWS 

CIA/FBI Suspected Involvement in Macau - China suspected that US intelligence agencies were working with American owned casinos in Macau to trap and blackmail Chinese officials, an investigative report by The Guardian revealed today. 

  • The report marked with a warning that it was not to be introduced to mainland China, was uncovered by the Investigative Reporting Program at the University of California, Berkeley. It was among a trove of Sands documents filed with a Las Vegas court which is hearing a civil action by the former head of its Macau casinos who is suing for wrongful dismissal, the Guardian reports.
  • The report said that Sands Macao “is the primary subject” of claims by Chinese officials of collusion with US intelligence services.
  • “A reliable source has reported that central Chinese government officials firmly believe that Sands has permitted CIA/FBI agents to operate from within its facilities. These agents apparently ‘monitor mainland government officials’ who gamble in the casinos,” the report said.

ARTICLE HERE

Takeaway: We've heard the Macau (Beijing) government is not happy with disclosures taking place in US courts regarding Macau operations. LVS was reluctant to give any opinions on last night's call regarding potential Macau gov't actions with the smoking ban and transit visa. Is it related? 

 

Florida GGR June - Total: 3.12% YoY, SSS: 5.61% YoY 

 

MACRO 

 

Hedgeye Macro Team is incrementally bearish on U.S. consumption growth, based on the consumer's continued efforts to deleverage their household balance sheet combined with the peaking of consumer confidence and stagnating labor productivity.   

Takeaway:  For now, US regional gaming slowed in June but North American cruise pricing still doing well.


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