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Post Labor Day Mashup - CHART 1

RECENT NOTES

9/04/15 GIS | Sends the Jolly Green Giant Packing

9/02/15 HSY | THE CURRENT SET UP IS LEANING LONG

8/31/15 HAIN | LOW QUALITY & INCREASED BUSINESS RISK

8/28/15 GIS | Time to Close this Deal

8/21/15 WWAV | DON’T PANIC, BUY MORE…HAIN | PANIC, SHORT MORE

RECENT NEWS FLOW

Thursday, September 3

GIS / BGS | B&G Foods agrees to acquire Green Giant from General Mills for $765mm (click here for Hedgeye note)

 

Wednesday, September 2

MDLZ | Opened a new $30mm manufacturing line in Poland, in an effort to take advantage of the growth opportunity in European snacking (click here for article)

GIS | Upgraded to equal-weight from underweight at Morgan Stanley, the firm sees improved visibility from the company’s increased efforts to manage costs

 

Monday, August 31

BETR | Initiated neutral at Goldman Sachs, price target is $18, current price is $12.27, GS ran the IPO for BETR

SECTOR PERFORMANCE

Food and organic stocks that we follow outperformed the XLP last week. The XLP was down -2.4% last week, the top performer on a relative basis from our list was B&G Foods (BGS) posting an increase of +20.9%, after their acquisition of the Green Giant assets from General Mills. Worst performing company on a relative basis on our list was Hain Celestial (HAIN), which was down -4.0%.

Post Labor Day Mashup - CHART 2

QUANTITATIVE SETUP

From a quantitative perspective, the XLP is bearish on a TRADE and TREND duration.

Post Labor Day Mashup - CHART 3

Food and Organic Companies

Post Labor Day Mashup - CHART 4

Post Labor Day Mashup - CHART 5

Post Labor Day Mashup - CHART 6

Keith’s Three Morning Bullets

Dovish Fed article out of @WSJ as another wanna be hawk (Williams) fades alongside stocks:

  1. VIX – does an explicitly more dovish Fed tone down short-term volatility here? My risk range model actually implies it could as the top-end of my range on front-month VIX no longer has a 4-handle in front of it (range still elevated, but 22-36)
  2. FX – Down Dollar = Up Yen = Nikkei Down (another -2.4% overnight), so not everyone is a winner; risk ranges are narrowing though as volatility across asset classes does this am (risk range for EUR/USD narrows to $1.10-1.14)
  3. RATES – UST 10yr dropped to 2.11% on the slowest rate of change in Non-Farm Payrolls since the Labor Cycle gains peaked in FEB, then back up this morning to 2.15% with Spanish 10yr +7bps approaching parity w/ UST at 2.14%

SPX immediate-term risk range = 1; UST 10yr 2.07-2.19%

 

Please call or e-mail with any questions.

Howard Penney

Managing Director

Shayne Laidlaw

Analyst