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THOUGHT LEADER CALL INVITE | NUS | ON NOTICE

Nu Skin (NUS) is on our Hedgeye Consumer Staples Best Ideas list as a SHORT.

 

THOUGHT LEADER CALL

Today, November 24th, at 11:00AM ET we will be hosting a thought leader call with Jarrel Price of The Capitol Forum. Jarrel has been deeply engrained in the controversy surrounding Nu Skin and he has some differentiated views that will shed additional light on the issues at hand. It will be structured as a fireside chat, with the ability for subscribers to submit questions to .

 

Topics we will discuss:

  • Unfair Deceptive Acts and Practices act
  • Is VitaMeal a ticking time bomb
  • Websites run by Su Skin and their distributors continue to misrepresent the sale of VitaMeal
  • Nu Skin is already under investigation for charitable contributions made in China, the scope of that investigation could widen

 

CALL DETAILS

Toll Free:

Toll:

Confirmation Number: 13625346

Materials: CLICK HERE

 

The Justice Department, along with federal partners brought the hammer down on the dietary supplement industry in a news conference on November 17th (link to the release can be found HERE).  As part of a year-long process government agencies pursued civil and criminal cases against more than 100 makers and marketers of dietary supplements. “In each case, the department or one of its federal partners allege the sale of supplements that contain ingredients other than those listed on the product label or the sale of the products that make health or disease claims that are unsupported by adequate scientific evidence.”

 

The primary case that the DOJ announced was a criminal case charging USPlabs LLC and several of its corporate officers. The report went on to say, “the USPlabs case and others brought as part of this sweep illustrate alarming practices the department found – practices that must be brought to the public’s attention so consumers know the serious health risks of untested products.” In addition to the allegations against USPlabs, there were a number of civil cases that are going after different companies for their attempts to defraud the consumer, making false claims about products and deceptive advertising among others. 

 

We have found an abundant amount of evidence that Nu Skin Distributors have marketed VitaMeal in a way to deceive consumers. This would be in violation of the Unfair Deceptive Acts and Practices (UDAAP) act, which is exactly what these governmental agencies are attempting to prevent.

 

The walls are clearly closing in on Nu Skin, now on top of the current SEC investigation looking into their charitable giving’s in China; multiple governmental agencies are poking around the nutritional supplement category for deception and misrepresentation. We believe that it is only a matter of time until their name comes across one of these agencies desks and it catches their eye.

 

JARREL PRICE BIO

Jarrel "JP" Price helps lead The Capitol Forum's coverage of consumer finance and consumer protection issues. Prior to The Capitol Forum, Mr. Price led a team of analysts at the U.S. Department of Defense’s Task Force for Business and Stability Operations (TFBSO), focused on facilitating foreign direct investment in Afghanistan’s energy sector. Prior to TFBSO, Mr. Price was a Partner at Height Analytics, a Washington, DC-based investment research firm, where he covered a variety of consumer protection issues.

Mr. Price is a Founding Partner of The Park Advisors Group, which helps public and private sector clients manage investment risks in frontier and post-conflict markets. Mr. Price also serves as the President of the Young Professionals in Foreign Policy (YPFP). Mr. Price is a frequent contributor to a variety of national media outlets including CNBC, The Wall Street Journal, Bloomberg News, and NPR. 

 

 

Please call or e-mail with any questions.

 

Howard Penney

Managing Director

 

Shayne Laidlaw

Analyst

 

 

 


The Macro Show Replay | November 24, 2015

 


November 24, 2015

 

  • Bullish Trend
  • Bearish Trend
  • Neutral

INDEX BUY TRADE SELL TRADE PREV. CLOSE
UST10Y
10-Year U.S. Treasury Yield
2.34 2.18 2.25
SPX
S&P 500
2,022 2,107 2,086
RUT
Russell 2000
1,140 1,189 1,180
COMPQ
NASDAQ Composite
5,013 5,152 5,102
NIKK
Nikkei 225 Index
19,015 19,966 19,879
DAX
German DAX Composite
10,623 11,229 11,092
VIX
Volatility Index
14.31 20.46 15.62
DXY
U.S. Dollar Index
98.55 100.18 99.86
EURUSD
Euro
1.05 1.07 1.06
USDJPY
Japanese Yen
122.03 123.91 122.82
WTIC
Light Crude Oil Spot Price
39.32 43.75 41.99
NATGAS
Natural Gas Spot Price
2.05 2.30 2.33
GOLD
Gold Spot Price
1,060 1,089 1,068
COPPER
Copper Spot Price
1.96 2.11 2.02
AAPL
Apple Inc.
112 120 117
PCLN
Priceline.com Inc.
1,218 1,302 1,264
VRX
Valeant Pharmaceuticals International, Inc.
65.76 92.31 87.41
FB
Facebook, Inc.
103 110 106
BABA
Alibaba Group Holding Ltd.
75.19 82.61 81.31
NKE
Nike, Inc.
128 134 132

 

 


Early Look

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Cartoon of the Day: Lions And Tigers!

Cartoon of the Day: Lions And Tigers! - Rate hike cartoon 11.23.2015

 

"The spike in the U.S. 2-year continues to 0.93% this morning as the Fed abandons the “data dependence” thing and goes with whatever the SP500 is doing instead," wrote Hedgeye CEO Keith McCullough in a note to subscribers early this morning. "The US Dollar and short-term rates say December hike – so does the Yield Spread, compressing 9bps last week, which reads as a hike perpetuating both #Deflation and #GrowthSlowing."


Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities)

The restaurant industry macro picture is continuing to deteriorate. According to Black Box Intelligence numbers, restaurant traffic growth has been negative for nine straight months, going back to February 2015. In this type of environment one must be very selective on LONG calls, while we continue to see a growing number of SHORT opportunities. Commodity deflation will be an interesting dynamic in 2016. It will help the margins of many restaurant companies, especially those focused on beef, as we highlighted in our THOUGHT LEADER call regarding #BEEFDEFLATION. But on the other hand, the consumer will see a widening divergence between the cost to eat out and the cost to cook for themselves.  

 

Black Box Sales, Traffic

Black Box released same-restaurant sales and traffic estimates for the month of October that showed a steep deceleration sequentially as the YoY trend continues to deteriorate. Same-restaurant sales posted negative growth for the first time since June 2014, posting a down -0.2% number, which is a 100bps sequentially decline. Same-restaurant traffic decreased -2.8%, a 50bps sequential decline, and down 320bps YoY.

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 1

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 2

 

Restaurant price increases were down slightly in October. As you can see from the chart below, the convergence between the operators taking price and a decline in traffic that we had been seeing deteriorated in October as traffic trends began to turn south.

 Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 3

 

Knapp October Sales Trends

Knapp reported that comparable restaurant sales in October 2015 were -0.7% for same-store sales and –2.9% for guest counts.  October comparable restaurant sales represent a 170bps sequential slowdown, additionally traffic was down 220bps sequentially.  On a 2-year basis, sales slowed to +0.6% and traffic declined -1.4%. 

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 4

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 5

 

Consumer confidence slowing

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 6

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 7

 

Employment Growth Continuing to Slow

In the month of October we saw a marked deceleration in the employment trend, driven by a decline within the 20-24 YOA cohort. The downward trend that we were concerned about seems be getting worse. This continued slowdown across age cohorts points to troubling labor picture.

 

October Employment Growth Data:

  • 20-24 YOA -0.35% YoY; -151.3bps sequentially
  • 25-34 YOA +1.73% YoY; -50.9bps sequentially
  • 35-44 YOA +1.15% YoY; +9.8bps sequentially
  • 45-54 YOA +0.05% YoY; -7.4bps sequentially
  • 55-64 YOA +1.78% YoY; +54.5bps sequentially

 

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 8

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 9

 

Commodities

In 2016, as many restaurant companies have been speaking to, we are headed for commodity basket deflation. With major proteins such as beef expected to have down years, this could be a great tailwind for restaurant companies. In addition to beef, corn, wheat, live hogs and soybeans are trending below year-ago levels.

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 10

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 11

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 12

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 13

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 14

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 15

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 16

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 17

Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities) - CHART 18

 

Please call or e-mail with any questions.

 

Howard Penney

Managing Director

 

Shayne Laidlaw

Analyst

 


The Biggest Stock Market Risk Summed Up In One Word

 

In this brief excerpt from The Macro Show this morning, Hedgeye CEO Keith McCullough answers a subscriber's question on what he considers the biggest risk to U.S. stocks right now.

 

 

Subscribe to The Macro Show today for access to this and all other episodes. 

 

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