We will be hosting our highly-anticipated Quarterly Macro Themes conference call on Thursday, October 8th at 1:00PM ET. Led by CEO Keith McCullough, the presentation will detail the THREE MOST IMPORTANT MACRO TRENDS we have identified for the quarter and the associated investment implications.
Q4 2015 MACRO THEMES OVERVIEW:
Watch Keith McCullough walk through this presentation live Thursday at 1:00PM ET.
As always, our prepared remarks will be followed by a live, anonymous Q&A session. Please submit your questions to . 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
Excerpt from today's Early Look by Hedgeye CEO Keith McCullough:
"...While I’m sure the Old Wall storytelling will be epic this morning on “why the jobs number wasn’t that bad” … and “stocks closed up on the day… the bottom is in…”, blah blah blah… allow me to re-interrupt with economic cycle-realityThe jobs number sucked… and labor data will continue to suck into year-end."
This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.
Editor's Note: This an abridged excerpt from a research note written recently by our Retail team led by Sector Head Brian McGough. If you're an institutional investor and are interested in accessing our Retail research (or any of our other sector coverage areas) please email firstname.lastname@example.org.
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2015 has been less than a banner year for Walmart.
For starters, the stock is down 24% YTD as the company took one on the chin as it invested in both its people and e-comm capabilities. The new minimum wage standard at $9.00 alone will cost the company $0.24 (up from the original guidance of $0.20) add on top of investments in e-comm and Fx pressure and we get to an earnings growth rate for the year of -10% at the mid-point of the guide.
We've seen Walmart try to offset these costs over the past year by renegotiating terms with its vendors (not once, but twice), cutting some 24-hour locations, and reducing employee hours.
This 2.5% headcount reduction is just a drop in the bucket compared to the 13% cut Target (TGT) announced earlier this year. But, its pretty obvious that Walmart is scratching and clawing for every bps of margin.
That's bad news for the rest of retail.
In this brief excerpt from The Macro Show earlier this morning, Hedgeye CEO Keith McCullough offers a lighthearted take on a curious mental affliction investors are currently battling.
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9/30/15 CMG | LONG IN THE TOOTH?
RECENT NEWS FLOW
Friday, October 2
DIN | Increased quarterly dividend by 5% to $0.92 per share of common stock. Additionally, they raised the share repurchase authorization to $150mm from the currently remaining authorization of $63mm (ARTICLE HERE)
Thursday, October 1
TAST | Announced the acquisition of five Burger King restaurants in Ohio and West Virginia (ARTICLE HERE)
JMBA | CEO and Chairman James White announced his retirement (ARTICLE HERE)
Wednesday, September 30
DFRG | Announced the opening of the Hoboken Grille, this is the 21st Grille location for DFRG across the country (ARTICLE HERE)
Tuesday, September 29
PLAY | Announced proposed secondary offering of common stock, selling stockholders will receive all proceeds from the sale of these shares (ARTICLE HERE)
Monday, September 28
ZOES | Named Sunil M. Doshi their new CFO, he previously served as CFO of Fossil Americas, a $1.8bn division of Fossil Group (ARTICLE HERE)
CMG | Carnitas has returned to 90% of Chipotle restaurants, the company expects to have carnitas back in all restaurants by the end of November (ARTICLE HERE)
QSR | Announced the proposed acquisition of Quick Group, a fast food burger chain in France (ARTICLE HERE)
Casual Dining and Quick Service stocks that we follow widely underperformed the XLY last week. The XLY was up +1.6%, top performers on a relative basis from casual dining were CHUY and CBRL posting an increase of +5.6% and +0.4%, respectively, while ZOES and YUM led the quick service group this week up +6.2% and +2.2%, respectively.
XLY VERSUS THE MARKET
The XLY has fared better than most other sectors in the YTD time period and as of late especially. In the last five trading days the SPX was up +1.0% and the XLY was up +1.6%, outperformed by XLV (Healthcare), XLE (Energy), and XLB (Materials).
From a quantitative perspective, the XLY looks bearish from a TRADE and TREND perspective, TRADE support is 72.14.
CASUAL DINING RESTAURANTS
QUICK SERVICE RESTAURANTS
Keith’s Three Morning Bullets
Bad Jobs à Dollar Down, Rates Down à Energy/Basic Materials Crash/Squeeze (so much for the rate hike):
SPX immediate-term risk range = 1; UST 10yr Yield 1.94-2.09% (both Bond Yields and SPX signaling lower-highs)
Please call or e-mail with any questions.