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Cartoon of the Day: A Growth Fairy Tale

Cartoon of the Day: A Growth Fairy Tale - 4  growth cartoon 03.02.2016

 

The truth can be a tough pill to swallow.


JT Taylor: An Analysis of Super Tuesday & The Republican Hopefuls

Takeaway: What to watch on the election 2016 campaign trail.

Below is a brief excerpt from Potomac Research Group Chief Political Strategist JT Taylor's Morning Bullets sent to institutional clients each morning.

TRUMP TAKING OVER THE REPUBLICAN PARTY:

 

JT Taylor: An Analysis of Super Tuesday & The Republican Hopefuls - trump deal with it

 

He's now won in the South, in the West, and the Northeast -- even notching a major 30-point win in MA.  While the Republican establishment weeps, gnashes its teeth, and plots to deny him the nomination, the Clinton campaign is licking its chops at the chance to turn the general election into a referendum on blustering billionaire. There are only two viable scenarios now where Trump is denied the nomination:

 

  1. The first starts with John Kasich and Marco Rubio joining Ted Cruz in winning their respective home states, and locking up enough delegates to force a contested convention in July.
  2. The other is if the anti-Trump forces unite around a single candidate (again, quickly) and the nomination comes down to a true two-man race.

 

Neither is likely to happen anytime soon. 

RUH ROH RUBIO:

 

JT Taylor: An Analysis of Super Tuesday & The Republican Hopefuls - marco rubio 22

 

 

Rubio barely dodged an ugly "winless" label with a sole victory in MN, but suffered a severe blow last night after finishing below the 20 percent threshold in AL, TX and VT, missing out on any delegates in those states.

 

Kasich was the spoiler in VA, where Rubio came within 30,000 votes of beating Trump while Kasich snapped up nearly 100,000 voters in the state, crushing his chances of pulling off an upset.

 

As if the stakes for FL weren't high enough already -- Rubio's last, best hope is that he gets an endorsement from Jeb Bush before the FL primary, and it helps him to close the gap with Trump in his home state. That is, unless rumors that sitting FL Governor Rick Scott will endorse Trump become reality. Rubio will trudge onward for the same reason the party establishment hasn't totally given in yet -- if surrender means death, then there's no incentive to surrender.  

 

Amusing that he said Cruz had a bad night after winning three states... 

TED TAKES TEXAS:

 

JT Taylor: An Analysis of Super Tuesday & The Republican Hopefuls - ted cruz 22

 

The biggest delegate prize of the race so far went for the home state Senator, along with OK and AK. Cruz's path forward from here looks bleak however -- he doesn't have much to stand on after Trump dominated evangelical voters across the Southern states, handily defeating him in AR, AL, GA, and TN -- which were touted as Cruz's southern firewall.

 

The math for Cruz (read: we're mostly shifting to northern primaries shortly) simply doesn't add up unless Kasich, Carson, and Rubio drop out and he becomes the party's sole anti-Trump standard bearer.

 

Again, not likely.


The Bull Case For Kate Spade | $KATE

Takeaway: A rare ‘bulletproof’ quarter for KATE – numbers and communication. Our thesis is playing out, and we’re sticking with it as a Best Idea.

Editor's Note: Below is a brief excerpt from an institutional research note on Kate Spade (KATE) along with some related tweets by our Retail analysts Brian McGough and Alec Richards. To access our analyst research ping sales@hedgeye.com.

 

The Bull Case For Kate Spade | $KATE - kate spade

KATE | Best Comp in Retail (Again)

 

INVESTMENT SUMMARY AND CONCLUSION:

 

In January of last year, we issued a note stating that ‘KATE Put Up the Best Comp in Retail’. Roughly a year later, we’re saying the same exact thing.

 

Sure, a 14% number this year might not seem eye-popping, but...

 

  1. It went up against an incredibly difficult 28% in 4Q14, and;
  2. Virtually every company in the space has sharply decelerated since last year.

 

KATE is leading, again. This is a rarity for us to say, but the quarter, and the conference call were both bulletproof, at least based on the standards KATE has set in the past.

 

 

We’re not making any meaningful changes to our model, as our thesis is unchanged, and the story is progressing as expected. We like the fact that the company is starting to talk about (gasp!) E-P-S as a financial metric. That’s been our contention for the past six months, that an actual earnings base after seven years of losses would give investors a more tangible valuation metric, as opposed to the ‘adjusted EBITDA’ numbers that no one really trusts anyway.

 

 

The current 25x p/e on this year's numbers might seem like a stretch. But the earnings growth rate for the next three years is 40-50%. Using a multiple with a 50% discount to growth in 2017, we get to a $40 stock.

 

 

We don’t want to get greedy with a high-beta, high-multiple stock in this tape where its style factors are so clearly out of favor. But when all is said and done, we think the company will continue to execute, and valuation will prove supportive for this stock to work.


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.

Two Excellent Investing Ideas (On the House)

Two Excellent Investing Ideas (On the House) - bubble cartoon 11.02.2015

Looking for some investing ideas?

 

Below is one SHORT and one LONG idea with brief analysis from Hedgeye CEO Keith McCullough from a note sent to subscribers this morning. (If you like what you see, you'll love our suite of investing products.)

 

"... Post the short squeeze “off the lows” the Russell’s draw-down is still -18.6% since July – if you haven’t been short small/mid cap, junk, illiquidity, high beta, high short interest, etc., here’s another bite at a big apple of alpha. There is immediate-term downside in the Russell to 991 (short/sell lower-highs, cover lower)."

 

Two Excellent Investing Ideas (On the House) - russell 2000 3 2

 

"...To end on a bullish note, Donald Trump would characterize today’s excellent buying opportunity in the Long Bond as very very super huge with the UST 10YR at 1.84% (on a whiff of a rate of change slow-down jobs report on Friday, our risk range implies 20 basis points of immediate-term downside to 1.64%); buy TLT, ZROZ, EDV, XLU, etc."

 

Two Excellent Investing Ideas (On the House) - spx v tlt

 

BOTTOM LINE: We are bullish on Long Bonds (via TLT) and bearish on the Russell 2000 (via IWM).


Call Today | Get Ready for the Demographic "New Normal" in Housing

Takeaway: We'll be hosting a call with Neil Howe Today at 11am ET to discuss the demographic outlook for US Housing.

Call Today | Get Ready for the Demographic "New Normal" in Housing - housing cartoon 03.02.2016

 

Neil Howe recently joined Hedgeye as Sector Head, Demographics. He is an accomplished author on the topics of demographics, generational trends and economics. Neil is an often requested speaker and consultant to Corporate America. Most famously, Neil coined the term “Millennial Generation”. He is also a recognized authority on global aging, long-term fiscal policy, and migration.

 

We'll be hosting a call with Neil to discuss the Demographic outlook for Housing in America TODAY at 11am ET.

 

The call will delve into the following: 

 

KEY TOPICS

  • Why, long-term, housing will never return to its pre-2007 glory days
  • What's pushing the renaissance in extended family living--and what it means for home demand
  • Why Boomers are aging in place--and Millennial college grads are moving to urban centers
  • How long the home remodeling boom will last (hint: for a long time)
  • Why Millennials and many Xers are moving from buying to renting
  • Where I think Millennials home buyers will gravitate next

 

CALL INFORMATION

Toll Free Number:

Toll Number:

UK: 0

Confirmation Number: 13630931

Materials Link: CLICK HERE (presentation will be made available approximately 1-hour before the call)

Video Access: CLICK HERE (to watch this presentation live)

 

 

ABOUT NEIL HOWE

Hedgeye Managing Director & Demography Sector Head

Neil is a renowned authority on generations and social change in America. An acclaimed author and speaker, he is the nation’s leading thinker on today’s generations—who they are, what motivates them, and how they will shape America’s future.

 

Howe is founder and president of the consulting firm LifeCourse Associates, where he develops and implements cutting-edge research, analysis, and consulting services to help clients understand how generations impact marketing, workforce issues, and strategic planning. LifeCourse has served hundreds of corporate, nonprofit, and government clients.

 

A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.

 

Howe is a bestselling author who has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss’ first book, Generations (1991) is a history of America told as a sequence of generational biographies. Generations, said Newsweek, is “a provocative, erudite, and engaging analysis of the rhythms of American life.” Vice President Al Gore called it “the most stimulating book on American history that I have ever read” and sent a copy to every member of Congress. Newt Gingrich called it “an intellectual tour de force.” Of their book, The Fourth Turning (1997), Dan Yankelovich said, “Immensely stimulating…We will never be able to think about history in the same way.” The Boston Globe wrote, “If Howe and Strauss are right, they will take their place among the great American prophets.”

 

Howe and Strauss originally coined the term “Millennial Generation” in 1991, and wrote the pioneering book on this generation, Millennials Rising, in 2000. Neil has since released several application books on Millennials—including a Recruiting Millennials Handbook for the United States Army (2001), Millennials Go To College (2003, 2007), Millennials and the Pop Culture (2005), Millennials and K-12 Schools (2008), and Millennials in the Workplace (2010). Howe’s work on the Millennial Generation has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS’ 60 Minutes.

 

Previously, with Peter G. Peterson, Howe coauthored On Borrowed Time (1989; reissued 2004), a pioneering call for budgetary reform. He coauthors numerous studies for CSIS (including the Global Aging Initiative’s Aging Vulnerability Index and The Graying of the Middle Kingdom: The Economics and Demographics of Retirement Policy in China). In 2008, he co-authored The Graying of the Great Powers with Richard Jackson.

 

Howe grew up in California and currently resides in Great Falls, Virginia, close to Washington, DC.  He received his B.A. at U.C. Berkeley, studied abroad in France and Germany, and later earned graduate degrees in economics (M.A., 1978) and history (M.Phil., 1979) from Yale University.

 

 

Joshua Steiner, CFA

 

Christian B. Drake


CHART OF THE DAY | McCullough: 'How To Be Positioned On The Open Today'

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.

 

"... I have some very specific ways to execute winning the next speed round of Monopoly. On the open today, I want you to position your hard earned net worth and liquidity as follows:

  1. BUY Long-term US Treasury Bonds (TLT) ahead of Friday’s #LateCycle jobs report
  2. SHORT the SP500 (SPY) anywhere from here to 1978 for immediate-term downside to 1889
  3. SHORT the Russell 2000 (IWM) anywhere from here to 1070 for immediate-term downside to 991..."

CHART OF THE DAY | McCullough: 'How To Be Positioned On The Open Today' - 03.02.16 chart


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