McCullough's Take On Star Wars And Disney | $DIS

On Fox Business' Morning's with Maria, Hedgeye CEO Keith McCullough discusses why he's generally positive on shares of Disney (DIS) with FBN's Dagen McDowell and Barron's Jack Otter. As McDowell says, "this proves that Keith is no Grinch, he's no Scrooge."

RTA Live: December 18, 2015

replay  below



Retail Callouts (12/18): FL | This Is Bad, Free Shipping Friday, KSS, TGT

Takeaway: FL - This Is Bad. TGT launching mobile wallet after data breach, seriously. Free Shipping Friday



Takeaway: e-commerce trends appear to be bifurcating further between Nike and FL as we head into year-end. FL remains Best Idea Short.


For the full note see link: CLICK HERE


Retail Callouts (12/18): FL | This Is Bad, Free Shipping Friday, KSS, TGT - 12 18 2015 FL NKE



Free Shipping Friday -- Seriously... ANOTHER Themed Shopping Day?


Today is Free Shipping Friday. For starters, did anyone know that this day even existed? It sounds more like an Instagram hash tag than a shopping promotion, but it’s simply another invented day along with the usual suspects (Black Friday, Cyber Monday, Small Business Saturday, Green Monday) intended to create a little extra buzz as we approach the end of the Holiday shopping season.  In fairness, the retailers need everything they can get. But on the flip side, if everybody is doing it, is it really a competitive advantage for anyone?


The day not only offers free shipping, but guaranteed delivery by Christmas eve. Of over 1064 participating merchants, one notable missing name from the list is KSS, which on its own lowered its free shipping threshold from $75 to $50 a few weeks back and introduced a whole host of Door Buster sales that will hit this Saturday.


One day of free shipping isn't damning for margins by any means, but we think it’s indicative of the inevitable reality that US Retail is moving to 100% free shipping, 100% of the time.


It will be interesting to see how the carriers handle the capacity. We've seen the reports noting the higher volume, and the spread in on-time order rates has widened by 2 points vs. last year (see exhibit 2 below). With all the promises being made on delivery time, we could see a lot of disappointed parents on Christmas Day.


Retail Callouts (12/18): FL | This Is Bad, Free Shipping Friday, KSS, TGT - 12 18 2015 Shipping


Retail Callouts (12/18): FL | This Is Bad, Free Shipping Friday, KSS, TGT - 12 18 2015 Bizrate chart



TGT, WMT, AAPL - TGT mobile wallet in the works...great


We don't understand the need for retailers to launch their own mobile payment systems -- aren't credit cards enough? As if the companies need to assume the liability, why not let Apple, Google, and Samsung duke it out. On Target specifically, who in their right mind would give the company that type of access to credit card information after its system and security failures led to one of the biggest data breaches in retail history?


BBY - Best Buy hopes faster free shipping will rein in holiday procrastinators


AMZN - Amazon leasing airplanes, tired of UPS and FedEx


The force is strong in retail thanks to Star Wars

Marketing campaign launch date challenged Cyber Monday in online sales


BABA - Bad BABA warned of selling counterfeit items by US


APP - Two Parties Aligned With Charney Said to Have Bids Out for American Apparel


AMZN - Study: Most holiday shoppers check out this retailer

"87% of respondents will comparison shop at before buying a gift….73% of respondents said they will buy from Amazon and 71% will spend more than a quarter of their holiday budgets on Amazon"

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Pervasive (Not 'Transitory') Deflation Is Ripping Markets

Takeaway: Hedgeye CEO Keith McCullough explains how #Deflation and a stronger US Dollar is rattling financial markets.

Pervasive (Not 'Transitory') Deflation Is Ripping Markets - Deflation cartoon 12.17.2015


The U.S. Dollar ramps and rates fall. That’s a clean cut #Deflation reaction to the Fed tightening into a slow-down.


Here's analysis from Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning:


"The USD is re-testing the go-zone of $99-100 on the USD Index with the EUR/USD risk range suggesting $1.05 is next. In 2016 “forecast” terms, this remains grossly misunderstood from a foreign currency, commodity, EM, credit, etc. risk perspective."


On that point, the direction of commodities, currencies, Emerging Markets and credit are all tethered to the future of the U.S. Dollar. As a result of the USD strengthening and deflationary concerns, here's a sampling of what happened yesterday:


Pervasive (Not 'Transitory') Deflation Is Ripping Markets - commod

Pervasive (Not 'Transitory') Deflation Is Ripping Markets - treasury 10yr info 

Pervasive (Not 'Transitory') Deflation Is Ripping Markets - EM info


On a related note, Treasuries yields are tumbling after the Yellen Fed's rate hike, confounding Old Wall predictions. Below is another note from McCullough earlier today:


"The U.S. 10 year yield is now 2.21% = lows of the week AFTER the almighty “rate hike”- don’t forget that Industrial Production for NOV was -1.2% y/y (recession) and consumer spending put in its 6yr cycle peak (alongside employment gains) in Q1 of this yr too."


Pervasive (Not 'Transitory') Deflation Is Ripping Markets - industrial production 2


We know what this means, and so do you, because we've warned you about it for a while now...


Pervasive (Not 'Transitory') Deflation Is Ripping Markets - hike bad


If Recent market downturns aren't a repudiation of the Fed's rate hike justification, we don't know what is.

The Macro Show Replay | December 18, 2015


CHART OF THE DAY: (Red Flag) Earnings Missing The Mark

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye U.S. Macro analyst Christian Drake. Click here to subscribe. 


"... In the Chart of the Day below we show the spread between the # of companies beating by <3% and the # of companies missing by < -3% (black line) vs. S&P500 Operating Margin (pink line).


The simple takeaway is that with corporate profitability now past peak and margins contracting, the capacity for manufactured beats is lower and declining. With repo activity down some 75% in 3Q, that management lever is now apparently past peak as well."


CHART OF THE DAY: (Red Flag) Earnings Missing The Mark - CoD2 EPS Mgmt



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