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The Macro Show Replay | December 2, 2015

 


December 2, 2015

Hedgeye's Daily Trading Ranges are twenty immediate-term (TRADE) buy and sell levels, with our intermediate-term (TREND) view and the previous day's closing price for each name.  Click HERE for a video from Hedgeye CEO Keith McCullough on how to use these risk ranges.

 

  • Bullish Trend
  • Bearish Trend
  • Neutral

INDEX BUY TRADE SELL TRADE PREV. CLOSE
UST10Y
10-Year U.S. Treasury Yield
2.23 2.15 2.15
SPX
S&P 500
2,045 2,109 2,102
RUT
Russell 2000
1,161 1,214 1,204
COMPQ
NASDAQ Composite
5,049 5,169 5,156
NIKK
Nikkei 225 Index
19,588 20,093 20,012
DAX
German DAX Composite
10,903 11,441 11,261
VIX
Volatility Index
14.11 18.25 14.67
DXY
U.S. Dollar Index
99.04 100.39 99.84
EURUSD
Euro
1.05 1.07 1.05
USDJPY
Japanese Yen
122.37 123.88 123.89
WTIC
Light Crude Oil Spot Price
40.68 43.17 41.65
NATGAS
Natural Gas Spot Price
2.15 2.31 2.22
GOLD
Gold Spot Price
1,050 1,080 1,068
COPPER
Copper Spot Price
1.98 2.10 2.07
AAPL
Apple Inc.
115 119 118
AMZN
Amazon.com Inc.
648 686 679
PCLN
Priceline.com Inc.
1,218 1,305 1,282
VRX
Valeant Pharmaceuticals International, Inc.
69.97 100.35 98.78
MCD
McDonald's Corp.
111 116 114
MS
MOrgan Stanley
33.15 35.47 35.27

 

 


GDP, USD and the UST 10YR

Client Talking Points

GDP

In other news...consensus will try to ignore into year-end comp. The Atlanta Fed cut its GDP forecast closer to Hedgeye’s yesterday, taking Q4 to 1.4% - reminder that Q4 will be the slowest year-over-year growth rate of 2015 (half of where it was at the cycle peak) #GrowthSlowing.

USD

If the Fed was data “dependent”, they’d follow what the Bond market did yesterday. But we doubt they will – the Federal Reserve hasn’t raised rates with the ISM < 50 in 2 decades, FYI – you go Janet, you go!

USt 10YR

Smack down day for rates (post back to back 48s on PMI and ISM reports) taking the UST 10YR to 2.16% and compressing the Yield Spread to year-to-date lows of +124 basis points – as you can see in this chart, long-term risk managers have had economic gravity right #GrowthSlowing.

 

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

Asset Allocation

CASH 69% US EQUITIES 2%
INTL EQUITIES 6% COMMODITIES 0%
FIXED INCOME 15% INTL CURRENCIES 8%

Top Long Ideas

Company Ticker Sector Duration
MCD

We added McDonald's to Investing Ideas on August 11th. Since then shares of McDonald's have risen over 16% compared to a 0.2% return for the S&P 500.

 

As Restaurants Sector Head Howard Penney wrote right around the time we added McDonald's (MCD), "We continue to get more bullish every time we talk to the company, franchisees and/or customers which we have polled via conducting surveys. We are going to be looking at a much different company 1-3 years from now. Urgency has been instilled from the top down by new CEO Steve Easterbrook," according to Penney. "This ship is in gear and headed north. 2015 will be the last time this stock is below $100."

RH

We believe that RH is to Home Furnishings what Ralph Lauren is to Apparel and what Nike is to Athletic Shoes. That’s a meaningful statement given that RH has only 3% share of a $140 billion relevant market.

 

RH is the preeminent brand in the space. We think that RH is in second inning of a game that may ultimately prove to be a double header. We believe the company will add $3 billion in sales over 3-years and climb to $11 in EPS. The earnings growth and cash flow characteristics to get to that kind of number would support a 30+ multiple. In the end, we see a stock in excess of $300.

TLT

The consumption side of the economy is arguably the most important, as its 69% of U.S. GDP. From a rate-of-change perspective, consumption growth decelerated in October, and consumer confidence is waning along-side it. That's why we would like to reiterate our Growth Slowing=Long TLT call.

 

To be clear, the consumption side of the economy had been a point of strength over the last several months. We’re not calling for a crash in household consumption, but the comps (comparison vs. prior reporting period) are important in rate-of-change analysis. The next four quarters of comps for Real PCE growth are the most difficult since Q3 2008 while the next four quarters of comps for CPI are the easiest since the four quarters ended in 4Q11. Simply put, both are headwinds for the consumer and we expect that the consumption component of the economic equation will continue to decelerate.

Three for the Road

TWEET OF THE DAY

Join Now: Healthcare Analyst Tom Tobin Live Q+A

$ATHN $AHS $ILMN $MD 

Free access: https://app.hedgeye.com/insights/47812-healthcare-analyst-tom-tobin-live-in-the-studio-today-1-00pm-et-il… … cc @HedgeyeHC @HedgeyeHIT

@Hedgeye

QUOTE OF THE DAY

Thinking is the hardest work there is, which is the probably reason why so few people engage in it.

Henry Ford

STAT OF THE DAY

The U.S. ISM Headline figure dropped sub-50 for 1st time since November 2012 to 48.6. New Orders also slide below the expansion line to 48.9.  


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Cartoon of the Day: Reality Strikes Back

Cartoon of the Day: Reality Strikes Back - Yellen Yoda cartoon 12.01.2015

 

As the steady stream of poor (recessionary?) economic data continues to come in, the Fed remains hell-bent on battling reality and raising rates into an economic slowdown.

 


BREAKING: Atlanta Fed Drops GDP Forecast, Now In-Line With Hedgeye

Following today's latest round of #GrowthSlowing data, the Federal Reserve Bank of Atlanta (once again) ratcheted back it's fourth quarter U.S. GDP estimate to 1.4%. This is down from 1.8% just last Wednesday and its 2.2% forecast from less than two weeks ago.

 

Here's the Atlanta Fed's current estimate (and Wall Street consensus) versus Hedgeye:

 

BREAKING: Atlanta Fed Drops GDP Forecast, Now In-Line With Hedgeye - atlanta fed

 

.... And the Atlanta Fed's accompanying analysis...

 

"The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 1.4 percent on December 1, down from 1.8 percent on November 25. The decline occurred this morning after the Manufacturing ISM Report On Business from the Institute of Supply Management and the construction spending release from the U.S. Census Bureau."

 

Sound familiar? 

 

We've been a bit more explicit.

 

BREAKING: Atlanta Fed Drops GDP Forecast, Now In-Line With Hedgeye - darius tweet GDP

 

(See Hedgeye CEO Keith McCullough's latest commentary in "Raise Rates Into Recessionary Data? Bad Idea. [But The Fed Probably Will Anyway]")

 


Deflation: Who Warned You First?

Behold the beauty of the timestamp below.

 

During the September 18, 2014 broadcast of The Macro ShowHedgeye CEO Keith McCullough warned about ... (drumroll please) slowing global growth, deflation and the effects of a strengthening U.S. Dollar.

 

Check out this 2-minute clip.

 

 


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.

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