prev

Beware Of Wall Street's Conflicted Wolves

Takeaway: We're committed to unearthing the truth here at Hedgeye.

In case this is your first rodeo, we’d like to inform you that the fossilized edifice otherwise known as Wall Street remains as conflicted as it’s ever been. The idea of accountability, truth and transparency is unfortunately a foreign concept to most on the Old Wall.

 

Beware Of Wall Street's Conflicted Wolves - z wolf

 

Our outspoken CEO Keith McCullough had some things to say about this subject this morning.

 

“One of the toughest parts of seeing the Hedgeye vision through has been putting SELLs on companies where I have relationships,” according to McCullough. “If I didn't allow my all-star analysts the intellectual freedom to say SELL on companies, I'd be as conflicted as Old Wall.”

 

 

watched this one yet?

 

 

For the record... Nu Skin (NUS) finished down down 6.6% today (on a day the S&P 500 gained 2%).

 

 

it's coming... click below to watch


Cartoon of the Day: Bounce?

Cartoon of the Day: Bounce? - bounce cartoon 02.12.2016

 

U.S. stock markets bounced Friday, but one day is not a trend. The S&P 500 is still down -9% this year. 


Demographics 101 With Neil Howe: Millennials, Markets And Negative Rates

 

In this special excerpt of The Macro Show this morning, Hedgeye CEO Keith McCullough introduces world-renowned demographer Neil Howe who recently joined Hedgeye as a Managing Director. 

 

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

 

Subscribe to Hedgeye on YouTube for all of our free video content.


GET THE HEDGEYE MARKET BRIEF FREE

Enter your email address to receive our newsletter of 5 trending market topics. VIEW SAMPLE

By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails.

JT Taylor: Same Old Sanders Refrain... Bush Promises To Put On A Show

Takeaway: A brief recap of last night's Democratic debate and a look ahead, to Saturday, when Republicans square off.

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. 

DEMocratic DEBATE DEBRIEF:

JT Taylor: Same Old Sanders Refrain... Bush Promises To Put On A Show   - bernie hill

 

For the second debate in a row, Sanders was relentlessly on-message -- taking only minor detours to acknowledge a question before pivoting back to his Wall Street refrain. The party's divide on purity vs pragmatism was on display the whole night, if only indirectly acknowledged until the closing argument -- Clinton waited until the very end to break out her "I'm not a single-issue candidate, and I don't believe we're a single-issue country" shiv. To that point though, she spent most of the night on Bernie's turf, and wasn't able to pin him down for long at all on other topics, especially on foreign policy where his lack of depth remains a liability. 

 

Much of Clinton's messaging was tailored to shore up her support in Nevada and South Carolina, where African Americans haven't gravitated towards Sanders. Clinton's Barack bear-hug and accusations of Sanders' disloyalty are sticky. Her hits on immigration, along with the not-subtle Ted Kennedy mentions, reinforced the "hey, this guy isn't really one of us" subtext -- squarely aimed at core Democrats and the ever-expanding ranks of Latino voters. 

BUSH'S BACKBONE:

JT Taylor: Same Old Sanders Refrain... Bush Promises To Put On A Show   - jeb

 

Jeb Bush has promised a show at tomorrow night's debate, accusing his rivals this week of being in the "witness protection program" when it came to taking on Trump. With Marco Rubio reeling, Bush has an opportunity, however small, to get a foothold and assert himself as the anti-Trump standard-bearer.  His shot at the nomination is still bleak, but since Iowa he's looked increasingly confident on the trail -- or at least no longer afraid of losing. Bush still has plenty of money on hand and access to the big-ticket establishment donors, but he's got to give them a reason to believe he'll do something effective with it. 

 

Looking ahead to tomorrow night, Rubio desperately needs an exceptional performance to beat Bush/Kasich and regain control of the third-place spot AND erase doubts about his viability; the bullseye on his back hasn't moved and he'll be targeted by Bush, Ted Cruz and of course -- Donald Trump.  Bush will gamble on going for Trump's throat, which will likely provoke a fight given Trump's dismissal of Jeb's attacks last time around.  Will Kasich, with his upbeat message, get lost in the noise -- or will he find a way to engage without getting bloodied?


HEDGEYE Exchange Tracker | Next Stop A 40 VIX

Takeaway: Market anxiety continues to be an opportunity for the exchanges. 1Q16 ADV rose for all 3 trading categories with the VIX +29% W/W.

With the VIX in solid uptrend and having broken to new highs (on higher lows as well), the panic line of 40 is in sight. We focus on equity trading volume this week and the simple linear association of the 50 day moving average of NYSE total stock volume and the volatility index. Higher vol means more investors lining up at the exchange to move exposure around. Separately, the CME Group announced new all time highs in WTI crude oil trading which continues to build up earnings for the first quarter. With energy trading averaging a rate per contract of over $1.20, incremental volume from crude adds solid earnings power considering the blended average CME rate per contract is $0.79 for all products.

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - VIX 40

 

Weekly Activity Wrap Up

1Q16TD average daily volumes (ADVs) rose in all three categories this week as volatility picked up. Cash equity volume for the week came in at 10.1 billion shares traded per day, bringing the 1Q16TD ADV to 9.4 billion, up +36% Y/Y. Futures activity at CME and ICE came in at 28.9 million contracts traded per day this week, bringing the 1Q16TD ADV to 25.0 million, up +25% Y/Y. Additionally, CME is currently at an all-time high in open interest of 116.0 million contracts, which should push volume higher going forward. Options came in with 18.7 million contracts traded per day, bringing the 1Q16TD ADV to 18.7 million, up +20% Y/Y growth. 

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon1

  

U.S. Cash Equity Detail

U.S. cash equities trading came in at 10.1 billion shares per day this week, bringing the 1Q16TD average to 9.4 billion shares per day. That marks +36% Y/Y and +34% Q/Q growth. The market share battle for volume is mixed. The New York Stock Exchange/ICE is taking a 24% share of first-quarter volume, which is consistent with the prior quarter and year-ago quarter, while NASDAQ is taking a 19% share, +65 bps higher Q/Q but -83 bps lower than one year ago.

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon2

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon3

 

U.S. Options Detail

U.S. options activity came in at an 18.7 million ADV this week, bringing the 1Q16TD average to 18.7 million, a +20% Y/Y and +17% Q/Q expansion. In the market share battle amongst venues, NYSE/ICE has been trending downward at a moderate pace, but at an 18% share it is +80 bps higher than the year-ago quarter. Meanwhile, NASDAQ's recent declines bring it -394 bps lower than 1Q15. CBOE's market share is down -149 bps Y/Y but has improved recently; its 27% share of 1Q16TD volume is up +129 bps from 4Q15. BATS and ISE/Deutsche have been taking share from the competing exchanges, with BATS up to a 10% share from 9% a year ago and ISE/Deutsche taking 16%, up from 13% a year ago.

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon4

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon5

 

U.S. Futures Detail

22.3 million futures contracts traded through CME Group this week, bringing the 1Q16TD average to 18.8 million, a +26% Y/Y and +43% Q/Q expansion. Additionally, CME open interest, the most important beacon of forward activity, currently sits at an all-time high of 116.0 million CME contracts pending, good for +27% growth over the 91.3 million pending at the end of 4Q15, an improvement from last week's +22%.

 

Contracts traded through ICE came in at 6.6 million per day this week, bringing the 1Q16TD ADV to 6.2 million, +23% Y/Y and +29% Q/Q growth. ICE open interest this week tallied 69.7 million contracts, a +10% expansion versus the 63.7 million contracts open at the end of 4Q15, an improvement from +7% last week.

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon6

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon8

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon7

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon9 

 

Monthly Historical View

Monthly activity levels give a broader perspective of exchange based trends. As volatility levels, measured by the VIX, MOVE, and FX Vol should rise to normal levels after the drastic compression this cycle, we expect all marketplaces to experience higher activity levels.

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon10

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon11

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon12

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon13

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon14

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon15

 

Sector Revenue Exposure

The exchange sector has broadly diversified its revenue exposure over 10 years as public entities with varying top line sensitivity to the enclosed trading volume data. The table below highlights how trading volumes will flow through the various operating models at NASDAQ, CME Group, ICE, and Virtu:

 

HEDGEYE Exchange Tracker | Next Stop A 40 VIX - XMon19 3

 

 

Please let us know of any questions,

 

Jonathan Casteleyn, CFA, CMT 

  

  

 

 Joshua Steiner, CFA

 

 

 

 


OPEC Cuts = MIRAGE | CALL TODAY 1:30PM EST

Takeaway: Please join us for a flash call at 1:30PM ET today to discuss yesterday's developments and understand the thinking in Saudi Arabia and OPEC.

Please join us for a flash call at 1:30PM ET today with former US Secretary of Energy Spencer Abraham and former Vice Chairman of the Paris-based International Energy Agency Joe McMonigle to discuss yesterday's developments and understand the thinking in Saudi Arabia and OPEC.

 

OPEC Cuts = MIRAGE | CALL TODAY 1:30PM EST - HE M opec fc

 

KEY DISCUSSION POINTS:

  • A Tweet from the Wall Street Journal's OPEC reporter that "OPEC is ready to cooperate on a cut" sent oil futures higher and moved the entire market for two hours going into the close.
  • The WSJ tweet quoted a television interview given by the UAE energy minister but turned out to be false alarm as his comments resembled previous statements about cooperation if everyone cuts.
  • With oil heading lower, you should expect similar comments and headlines but it's nothing more than a mirage.
  • Investors should ignore the noise because it's too early for a cut. The Saudi's think their market share policy is winning.
  • A cut now would be counter-productive - like sending a lifeline to US producers.

 

Participating Dialing Instructions

  • Toll Free:
  • Toll:
  • UK: 0-
  • Confirmation Number: 13630766
  • Materials: CLICK HERE

 

BIOS:

 

Spencer Abraham

Secretary Spencer Abraham serves as Senior Energy Analyst and is Chairman and CEO of The Abraham Group, an international strategic consulting firm focused on the energy sector and based in Washington, DC.

Secretary Abraham is a member of the Board of Directors of Occidental Petroleum, NRG Energy and PBF Energy. Secretary Abraham served as the tenth Secretary of Energy in United States history from 2001-2005 under President Bush. 

 

Prior to being named a Cabinet Member, Spencer served as an effective and highly productive U.S. Senator from Michigan for six years.

 

In addition, he is a frequent commentator on FOX News, CNN and Bloomberg TV as well as a periodic contributor of op-ed articles to the Financial Times, The Wall Street Journal, The Washington Post, The Weekly Standard and other publications.

Secretary Abraham holds a law degree from Harvard University, where he co-founded the Federalist Society, and is a native of East Lansing, Michigan.

 

 

Joseph McMonigle

Joseph McMonigle serves as a Senior Energy Analyst and is president and co-founder of The Abraham Group LLC.


Mr. McMonigle is the former Vice Chairman of the Paris-based International Energy Agency. He also served concurrently as U.S. Representative to the IEA (2003-2005).

 

In addition, Mr. McMonigle served as Chief of Staff at the U.S. Department of Energy and also as the American co-chair of the U.S.-China Energy Cooperation Working Group. He is also an attorney and member of the Energy Bar Association as well as the Pennsylvania and District of Columbia bars.

 


investing ideas

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.

next