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Oil, XLE and VIX

Client Talking Points

OIL

Oil led yesterday’s intraday U.S. equity ramp (every S&P Sector ramped > 1%), closing the day +3.1% WTI (post a -7.9% down week). Oil really isn’t seeing any follow through this morning as the Dr (formerly known as Copper) breaks down to fresh new #Deflation lows at $2.10/lb.

XLE

Energy stocks up +3.3% (XLE) led the rally so apparently “reflation” hopes from both JUL and OCT (both major headfakes) = the big beta the market wants to chase on up days. We are watching levels, USD, and the commodity very closely here as beta in general is a bearish style factor.

VIX

The VIX ramped from 14 to 22, then back to 18 yesterday, but the bullish TREND call we’ve had on volatility (since July 2014) is firmly intact – immediate-term risk range for front-month VIX = 16.59-20.25.

 

**Tune into The Macro Show with Hedgeye CEO Keith McCullough at 9:00AM ET - CLICK HERE

Asset Allocation

CASH 61% US EQUITIES 5%
INTL EQUITIES 2% COMMODITIES 0%
FIXED INCOME 29% INTL CURRENCIES 3%

Top Long Ideas

Company Ticker Sector Duration
MCD

Restaurants Sector Head Howard Penney attended MCD's investor meeting in New York City early last week. His takeaway from the meeting was that it was "very very bullish" for investors. Expectations were high, but CEO Steve Easterbrook came to NYC with big changes which have ultimately exceeded those expectations. "The big smile on Steve Easterbrook's face when talking about the current quarter was very telling," Penney writes. "He could not hide the enthusiasm." MCD increased the dollar value returned to shareholders by $10 billion. Penney and his team still see +30% upside from here.

RH

Restoration Hardware (RH) shares got caught up in the tumultuous selloff of other high-end retailers. But we're still bullish on RH. Here's why. RH Tampa has just opened. That makes 4 new Full Line Design Galleries in 90 days. And all will be open before the start of holiday shopping season and just in time to house the new product lines RH Modern and Teen. Add up the four stores and we’re looking at about 210k square feet. That alone represents about 25% growth in square footage.

 

When all is said and done, we still think this company has $11 in earnings power 4-years out, which is nearly double the consensus. We remain convinced that the debate should not be ‘if or when’ the stock hits $115, but rather is it going to $200 or $300? We’ll be looking at an earnings CAGR of 40-50% over five years. What kind of multiple does that deserve? 20x? 25x? 30x? We’d argue the higher end.

TLT

It was a nasty end to the week for the “growth is back” bulls. It was an equally nasty end to the week in equity markets. The S&P 500 was “going to all-time highs” Tuesday before retreating over 3% from Wednesday to Friday.

 

With continued data-driven confirmation that growth is slowing:

  • PPI (producer price index) printed -1.6% Y/Y for October
  • On a m/m basis, PPI declined -0.4% 
  • Declines in the energy component certainly bring the index lower, but PPI ex. Food and energy only printed +0.1% Y/Y which is ugly

Three for the Road

TWEET OF THE DAY

In today's Early Look "Macrocosm" I preview our inaugural Global Macro conference (to be held tomorrow in CT)

@KeithMcCullough

QUOTE OF THE DAY

No man is happy who does not think himself so.

Publilius Syrus

STAT OF THE DAY

Total U.S. Equity Market Volume was down yesterday -12% vs. its 1 year average.


November 17, 2015

We've made some updates and enhancements to Daily Trading Ranges. You'll now receive risk ranges for 20 tickers each day -  the last five of which will be determined by what's flashing on Keith's screen and by what names you're asking about. Contact support@hedgeye.com if you have any questions or feedback.

 

  • Bullish Trend
  • Bearish Trend
  • Neutral

INDEX BUY TRADE SELL TRADE PREV. CLOSE
UST10Y
10-Year U.S. Treasury Yield
2.36 2.17 2.27
SPX
S&P 500
2,020 2,073 2,053
RUT
Russell 2000
1,139 1,167 1,156
COMPQ
NASDAQ Composite
4,921 5,065 4,985
NIKK
Nikkei 225 Index
18,910 19,991 19,394
DAX
German DAX Composite
10,610 11,001 10,713
VIX
Volatility Index
16.59 20.25 18.16
DXY
U.S. Dollar Index
97.99 100.08 99.54
EURUSD
Euro
1.05 1.07 1.08
USDJPY
Japanese Yen
121.53 123.99 123.19
WTIC
Light Crude Oil Spot Price
39.79 43.55 42.04
NATGAS
Natural Gas Spot Price
2.23 2.40 2.33
GOLD
Gold Spot Price
1,070 1,101 1,082
COPPER
Copper Spot Price
2.08 2.20 2.12
AAPL
Apple Inc.
111 118 114
PCLN
Priceline.com Inc.
1,208 1,353 1,267
VRX
Valeant Pharmaceuticals International, Inc.
68.07 83.16 73.32
FB
Facebook, Inc.
102 110 104
W
Wayfair Inc.
33.01 39.29 37.28
URBN
Urban Outfitters, Inc.
19.99 24.19 22.67

 

 


The Macro Show Replay | November 17, 2015

 

 


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.65%
  • SHORT SIGNALS 78.64%

CMG FLASH CALL INVITE | NEW BEST IDEA SHORT

new best SHORT idea: Chipotle (CMG)

watch THE REPLAY below

 

 

When we added CMG to the short list on 9/30/15, one of our primary concerns was focused on potential issues surrounding the supply chain and increased growth pressures coming from more expensive real estate and associated costs. The walls seem to be caving in on CMG, and on the call we will take you through what we see as the biggest issues.

 

We will be discussing three main points:

  1. Chipotle’s Whole Foods moment
  2. Growing pains / supply chain issues
  3. Valuation

CALL DETAILS

Toll Free:

Toll:

Confirmation Number: 13625259

Materials: To be released before the call

 

Please call or e-mail with any questions.

 

Howard Penney

Managing Director

 

Shayne Laidlaw

Analyst

 

 

 


Cartoon of the Day: Paris

Cartoon of the Day: Paris - paris

 

"I’m on the Acela train to Boston this morning and, admittedly, having a hard time thinking about macro markets as the sun rises on the East Coast of Liberty’s Colossus.

 

The New Colossus is commonly known as the Statue of Liberty poem. It’s a sonnet that was written by Emma Lazarus in 1883.  Interestingly, the poem wasn’t placed on the pedestal of the statue until 1903. History often takes time to find her truths.

 

En francais, on appelle le statue La Liberte Eclairant Le Monde. And whether your mother’s tongue is French like mine’s is this morning or not… no matter what your politics, we should all stand together to defend all that is truth, liberty, and justice in this world this morning..." -Hedgeye CEO Keith McCullough in today's Early Look


SPECIAL EXCERPT: Digging Into The Gold Mining Disconnect | $GLD

 

 In this brief excerpt from last week's Materials sector launch call, Hedgeye analyst Jay Van Sciver responds to a subscriber's question about the disconnect between gold miner company production guidance and industry forecasts.  Email sales@hedgeye.com for more information on how you can subscribe to our new research sector.  


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