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Cartoon of the Day: Head In The Sand

Cartoon of the Day: Head In The Sand - Fed ducks in a row

 

Our Macro team has been highlighting the increasing likelihood that the U.S. economy slips into recession this year. The Fed is completely oblivious to the slowdown. "Every time the Fed misses calling the recession, they reverse to panic policy then consensus panics," Hedgeye CEO Keith McCullough wrote today. 


JT Taylor: Another Test For Donald Trump... Don't Rule Out Rubio

Takeaway: Donald Trump leads in New Hampshire and battle for second place between Bush, Kasich, Christie, and Rubio is heating up.

Editor's Note: Below is a brief excerpt from Potomac Research Group Senior Analyst JT Taylor's Morning Bullets sent to institutional clients each morning. 

TRUMP'S TEST TAKE II:

JT Taylor: Another Test For Donald Trump... Don't Rule Out Rubio - trump 55

 

Heading into today's primary, Donald Trump leads the field by the same 15-20% polling margin he's maintained for the last six months. He's been downplaying the expectations set by his numbers -- the absence of a solid ground game could hurt him today, as it did in Iowa.

 

He's locked in his eclectic ~25% of the electorate, but he also has a ceiling; for every Trump vote there's another anti-Trump vote. With so many players still on the field though, that's likely enough for him to win. The latest post-debate tracking poll has Trump at 34%, and Bush/Kasich/Christie/Rubio at a combined 38% -- with some polls showing a late-breaking Bush surge into second place. 

DON'T RULE OUT RUBIO:

JT Taylor: Another Test For Donald Trump... Don't Rule Out Rubio - rubio christie

 

Despite last week's debate performance, Rubio is still in position for a good showing in today's vote. He risks real damage though if similar flubs, like at a rally last night, keep happening -- there's a fine line between being "on message" and "on repeat." He has to be less risk-averse and can't look like he's retreating to a script. Christie's line of attack on Rubio's "Obama Problem" is sure to come around again, and Rubio will have to show something new when it comes around again at the CBS debate this Saturday.


McCullough: ‘Watch Volatility, It’s An Expression Of Fear Or Anxiety’

In this brief excerpt of The Macro Show this morning, Hedgeye CEO Keith McCullough explains why it’s becoming increasingly likely we’ll have big down days, as opposed to rallying off the lows.

 


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VIDEO | Earnings In 60 Seconds Or Less: McDonald's, Ralph Lauren, LinkedIn, Yelp

Takeaway: These four video shorts provide instant, post-earnings insights on companies MCD, LNKD, YELP and RL.

Below are four videos via HedgeyeTV with updates on some of our analysts' top long and short ideas following quarterly earnings. Each provides the key takeaways from the quarter in sixty seconds or less. (Click here to subscribe to our YouTube channel.)

 

1. McDonald's

 

Our Restaurants analyst Howard Penney's favorite long call in the sector, McDonald's (MCD). Penney made the bold call back in August that MCD would never trade below $100 again. That's proven prescient. The stock is up +17% since versus down -12% for the S&P 500.

 

 

2. Ralph Lauren 

 

Retail analyst Brian McGough said in a recent research report that Ralph Lauren (RL) is "uninvestable at almost any price." It remains on McGough's Long bench because "it might take a while to get paid" ahead of "yet another restructuring."

 

 

3. LinkedIn 

 

LinkedIn (LNKD) was on Hedgeye Internet & Media analyst Hesham Shabaan's long side but after noting "a deteriorating selling environment and expecting light guidance for 2016" he added it to the short side. Smart move. Earlier in the month, LNKD fell off a cliff and is about 50%. Here's what you need to know now. 

 

 

4. Yelp

 

Another Shabaan short call, Yelp (YELP) "is still chasing consensus estimates while its model continues to unravel. Apparently it hasn't learned much from its mistakes in 2015." The stock is down -45% year-to-date.

 


[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16

Takeaway: In continued risk aversion, investors are piling into tax-free municipal bonds.

Editor's Note: This is a complimentary research note which was originally published February 4, 2016 by our Financials team. If you would like more info on how you can access our institutional research please email sales@hedgeye.com.

 

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Investment Company Institute Mutual Fund Data and ETF Money Flow:

In the 5-day period ending January 27th, investors returned to making contributions to equity ETFs with a +$2.0 billion net subscription and international equity funds also saw some interest with a +$1.3 billion inflow. However, the exodus from domestic equity funds continued with a -$6.2 billion outflow last week, negating total net inflows to the total equity category. Additionally, taxable bond funds continued to give up AUM, losing -$1.8 billion to withdrawals. The category has been taking it on the chin recently and has had only 23 weeks of positive inflows in the last 52 weeks. However, investor interest continues in tax-free bonds with investors making a positive contribution of +$856 million. Weekly average contributions in tax-free bonds are up over +200% in 2016, with a mean weekly contribution of +$1.1 billion thus far in the New Year versus the 2015 weekly average of +$314 million. Money funds saw a +$14 billion inflow during the week as investors also shored up cash.


[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI1 large 2 9 16

 

In the most recent 5-day period ending January 27th, total equity mutual funds put up net outflows of -$4.9 billion, trailing the year-to-date weekly average outflow of -$3.2 billion and the 2015 average outflow of -$1.5 billion. The outflow was composed of international stock fund contributions of +$1.3 billion and domestic stock fund withdrawals of -$6.2 billion. International equity funds have had positive flows in 41 of the last 52 weeks while domestic equity funds have had only 6 weeks of positive flows over the same time period.

 

Fixed income mutual funds put up net outflows of -$917 million, trailing the year-to-date weekly average outflow of -$834 million and the 2015 average outflow of -$463 million. The outflow was composed of tax-free or municipal bond funds contributions of +$856 million and taxable bond funds withdrawals of -$1.8 billion.

 

Equity ETFs had net subscriptions of +$2.0 billion, outpacing the year-to-date weekly average outflow of -$4.8 billion but trailing the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net inflows of +$5.3 billion, outpacing the year-to-date weekly average inflow of +$2.7 billion and the 2015 average inflow of +$1.0 billion.

 

Mutual fund flow data is collected weekly from the Investment Company Institute (ICI) and represents a survey of 95% of the investment management industry's mutual fund assets. Mutual fund data largely reflects the actions of retail investors. Exchange traded fund (ETF) information is extracted from Bloomberg and is matched to the same weekly reporting schedule as the ICI mutual fund data. According to industry leader Blackrock (BLK), U.S. ETF participation is 60% institutional investors and 40% retail investors.



Most Recent 12 Week Flow in Millions by Mutual Fund Product: Chart data is the most recent 12 weeks from the ICI mutual fund survey and includes the weekly average for 2015 and the weekly year-to-date average for 2016:

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI2

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI3

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI4

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI5

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI6



Cumulative Annual Flow in Millions by Mutual Fund Product: Chart data is the cumulative fund flow from the ICI mutual fund survey for each year starting with 2008.

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI12

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI13

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI14

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI15

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI16



Most Recent 12 Week Flow within Equity and Fixed Income Exchange Traded Funds: Chart data is the most recent 12 weeks from Bloomberg's ETF database (matched to the Wednesday to Wednesday reporting format of the ICI), the weekly average for 2015, and the weekly year-to-date average for 2016. In the third table are the results of the weekly flows into and out of the major market and sector SPDRs:

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI7

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, the defensive utilities XLU and long treasuries TLT ETFs experienced the largest percentage inflows last week of +3% or +$180 million to the XLU and +3% or +$226 million to the TLT.

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI9



Cumulative Annual Flow in Millions within Equity and Fixed Income Exchange Traded Funds: Chart data is the cumulative fund flow from Bloomberg's ETF database for each year starting with 2013.

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI17

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI18



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$7.3 billion spread for the week (-$2.9 billion of total equity outflow net of the +$4.4 billion inflow to fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52-week moving average is +$437 million (more positive money flow to equities) with a 52-week high of +$20.5 billion (more positive money flow to equities) and a 52-week low of -$19.0 billion (negative numbers imply more positive money flow to bonds for the week.)

  

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI10

 


Exposures:
The weekly data herein is important for the public asset managers with trends in mutual funds and ETFs impacting the companies with the following estimated revenue impact:

 

[UNLOCKED] Fund Flow Survey | Tax-Free Municipal Flows Up Over +200% to Start '16 - ICI11 


Under 60 Seconds: YELP’s Earnings Report

Hedgeye highlights three key points from YELP's rough quarter courtesy of our Internet & Media analyst Hesham Shaaban.


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Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

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