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“I believe I can fly – I believe I can touch the sky…”

-R. Kelly


“I think about it (what can make markets go up, not down) every night and day… spread my wings and fly away.”


You remember the tune, right? While the 1996 movie (Space Jam with Michael Jordan and Bugs Bunny) was forgettable, Rolling Stone named I Believe I Can Fly one of the Top 500 songs of all time!


It’s perfect for whoever wants to get plugged chasing European stocks again this morning on the effervescent hope that the belief-system-in-central-market-planning isn’t breaking down.


Eurocopter! - Draghi cartoon 11.21.2014


Back to the Global Macro Grind


Has anything that’s happened in 2016 Japanese and/or European FX vs. Equity trading changed your mind on how this grand central-market-planning experiment ends? Or does the daily color on your screens drive your belief system?


“If I can see it, then I can be it

If I just believe it, there’s nothing to it”


In the span of a night’s sleep, my inbox has gone from “nice call Keith – I can’t believe the Euro ripped on Draghi Day and that they closed European stocks on the lows”… to “omg, omg – Keith, what about the LTR-triple-whiz-bang-Coco buying – can’t it work?”…


Do you really think Mr. Market cares what I think? The Question remains – what do you believe?


  1. Do you believe that the Japanese Economic and Profit Cycles are accelerating or slowing?
  2. Do you believe that the European Economic and Profit Cycles are accelerating or slowing?
  3. Do you believe that the US Economic and Profit Cycles are accelerating or slowing?


Moreover, what did you believe when it mattered 7%-25% higher across Global Equity markets?


  1. Do you believe that the market impact of #GrowthSlowing can be “smoothed” by central-market-planners?
  2. Do you believe that even though you don’t think that’s a “free market”, that it can happen anyway?
  3. Do you believe that since many believe markets can never really go down that they won’t?


I can tell you what I believe:


  1. Rates of change in growth and inflation can be measured, mapped, and capitalized on in macro markets
  2. When the rates of change go obviously negative, central-planners enter your decision making matrix
  3. When they corroborate reality (growth slowing) with policy panic, the belief system breaks down


Huh? Don’t you remember what happened in the USA in early to mid-2008? Don’t you remember when Larry Kudlow would get on a “markets in crisis” segment of CNBC begging the Fed for “shock and awe rate cuts to zero”?


It’s one thing to “cut rates 600 times, globally” during a 5-7 year Global Economic expansion. It’s entirely another to keep pushing on that string of a very tenuous belief-system AFTER economic cycles have already peaked and you’re about to enter a #recession!


Oh, right. No worries. Everyone who didn’t call the slow-down to begin with is very sure that the “probability of a US recession is now 20% vs. 21%” in the recent WSJ poll of linear-economists.




Quick question on that: if the probability is so “low”, what’s up with US investors begging Draghi to fly with “helicopter money” (and the Fed “being on hold” when they’re allegedly “raising rates”)?


I know. I know. Too many questions for a Friday. Futures are “ripping”, Bro!


Back to lecturing humans on flying, please note that when asked yesterday in the press conference, Draghi said “we haven’t discussed helicopter money… but it is interesting… although it does have some legal and accounting complexity.”


I believe I can stop there.


Our immediate-term Global Macro Risk Ranges are now (with intermediate-term TREND Research Views in brackets):


UST 10yr Yield 1.69-1.95% (bearish)

SPX 1 (bearish)
RUT 1007-1103 (bearish)

NASDAQ 4 (bearish)

Nikkei 152 (bearish)

DAX 9 (bearish)

VIX 15.88-22.66 (bullish)
USD 96.52-98.70 (bullish)
EUR/USD 1.08-1.11 (bearish)
YEN 111.69-114.63 (bullish)
Oil (WTI) 30.89-38.99 (bearish)

Nat Gas 1.61-1.86 (bearish)

Gold 1 (bullish)
Copper 2.10-2.30 (bearish)


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Eurocopter! - EUR CoD

HIBB | The Anti-ULTA

Takeaway: Two polarizing earnings reports today…ULTA and HIBB. One should double, the other cut in half.

Two earnings reports caught our eye this morning – ULTA, one of the most defendable growth stories in retail today, and its polar opposite on the quality spectrum – Hibbett Sports.  ULTA is one of those names we’ll buy on the down days, and this certainly won’t be one of them. Hibbett, however, is uninvestable to us at any price starting with a $2 – which is 50% below current levels. We thought it was a short at $49, and perhaps even a better one at $36.


As for the quarter…

The company beat expectations by 3 pennies, but that hardly matters. The growth algorithm was simply horrendous. A -0.6% comp, +2.7% growth in revenue, and a 14% EBIT erosion.

HIBB threw Wall Street a bone by talking about investing in ‘omnichannel’ business platform. Mind you, HIBB is the ONLY retailer out there that does not have a dot.com platform. I’m pretty sure that the reason that HIBB does not have a dot.com platform is because Nike does not want them to. We might call that a conspiracy theory if it didn’t have so much truth to it.  As for the ‘omnichannel’ platform, isn’t that a retail buzzword that real companies stopped using about three years ago?  No matter…HIBB is severely low-balling the cost of a dot.com business. Having the ability to ship from store to home does not make up for a 10-year deficit in spending on a general growth driver.


The funny thing is that the omnichannel comments weren’t even the most notable part of the print… it was the fact that inventories were up 18% on a -0.6% comp and 2.7% revenue increase. This couldn’t be spelled out better than in our HIBB SIGMA below. The company took its worst turn to the lower left quadrant this entire economic cycle. So inventories are too high, sales are too weak, margins have already eroded, and capital spending is picking up (too little too late) to try to tap into e-comm.


HIBB just reported $2.87 a share. We think it’s more likely that it earns below $2.00 next year than over $3.00 (i.e. 32%+ downside is more likely than 3% upside).


All in, margins should get cut in half by 2018 at HIBB, and the stock along with it.


HIBB | The Anti-ULTA - 3 11 2016 chart1

[UNLOCKED] Keith's Daily Trading Ranges

We've made some new enhancements to Daily Trading Ranges - our proprietary buy and sell levels on major markets, commodities and currencies sent to subscribers weekday mornings by CEO Keith McCullough. Click here to view a brief video of McCullough explaining how to use it most effectively.


Subscribers now receive risk ranges for 20 tickers each day -  the last five of which are determined by what's flashing on Keith's screen and by what names subscribers are asking about. Click here to subscribe.


  • Bullish Trend
  • Bearish Trend
  • Neutral

10-Year U.S. Treasury Yield
1.99 1.70 1.93
S&P 500
1,934 2,021 1,990
Russell 2000
1,030 1,099 1,064
NASDAQ Composite
4,561 4,787 4,662
Nikkei 225 Index
15,909 17,357 16,852
German DAX Composite
9,407 9,880 9,498
Volatility Index
16.11 22.17 18.05
U.S. Dollar Index
95.75 97.92 96.12
1.08 1.12 1.10
Japanese Yen
111.49 114.63 113.14
Light Crude Oil Spot Price
31.45 39.45 38.02
Natural Gas Spot Price
1.60 1.86 1.81
Gold Spot Price
1,220 1,285 1,273
Copper Spot Price
2.10 2.30 2.22
Apple Inc.
96 104 101
Amazon.com Inc.
540 589 559
McDonald's Inc.
116 121 120
Utilities Select Sector SPDR
45.90 48.69 48.10
Financials Select Sector SPDR
20.89 22.76 21.92
J.P. Morgan Chase & Co.
56.77 61.09 58.61

Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

Euro, Italy and Oil

Client Talking Points


The belief system needs the transmission mechanism (Burning Euros) in play to “reflate” European stocks. So, “off the highs” in yesterday’s epic big bang EUR/USD ramp, Euro -0.7% gives birth to a new hope that doing whatever it takes is going to arrest an almost 3 year European economic expansion from slowing.


If you’re still trying to day-trade the break-down in the belief system, the Italian Stock Market is where it’s at! After crashing -33% from last year’s economic cycle high to “up” then down hard into the close yesterday, bank stocks straight up (again) to lower-highs this morning – massive TREND resistance overhead for MIB index at 19,347.


Oh, right, that’s going on too. Oil up +2.1% this morning is another big-bite reason to keep reflation bulls in the game here – immediate-term risk range (dynamic) $31.66-39.45/barrel for WTI as Oil Volatility’s risk range remains surreal at 48-60. We are much more bearish on the Financials than Energy, but would love another shot (short side) closer to $40 Oil.


*Tune into The Macro Show with Hedgeye CEO Keith McCullough and Demography Sector Head Neil Howe live in the studio at 9:00AM ET - CLICK HERE

Asset Allocation


Top Long Ideas

Company Ticker Sector Duration

If you were long energy over utilities last week, nice trade! We'd remind you that Utilities (XLU) are outperforming the S&P 500 by +10% year-to-date. And that’s with the bounce. By contrast, Energy (XLE) was up 6.5% on the week but is up only 1% year-to-date.


General Mills (GIS) faces some headwinds across their portfolio, and although the 1H of FY16 was a challenge, the company has robust merchandising and consumer plans in the 2H that should improve results.


GIS has embarked on a mission to drive their top 450 SKUs, which represent 75-85% of their volume. Calling it their ‘Power 450’, surprisingly these 450 SKUs aren’t even in all retail locations and formats, broadening the distribution footprint of these top SKUs is priority number one for GIS’s sales team. The organization is also looking at the bottom 450, representing 1-2% of volume and making critical decisions on what products can be discontinued.


We continue to believe GIS is one of the best positioned consumer packaged foods companies due to its strong brands and best-in-class people and organization.


We can’t emphasize enough the bigger picture from both a data and top-down market signaling perspective. To contextualize the relief rallies and short squeezes in asset classes and instruments that are counter to our more longer-term view. Here’s what how we think the macro environment plays out from here:

  1. The market is positioned for more rate hikes into 2016
  2. The data continues to deteriorate, and market volatility ensues
  3. The expectation that “all is good” comes off the table and the market increasingly pivots to the view that, throughout 2016, the Fed is going to hike rates in methodical fashion straight into an economic slowdown
  4. The market takes in the growth slowing pivot in real-time (Treasury rates and the dollar both move lower, and inflation-leveraged assets like gold catch a bid)


Once the policy catalysts are out of the way in the next few weeks, our expectation is a return to outperformance in growth slowing asset classes (TLT and XLU). If you’re in for the TAIL and the TREND call, focus on the data, not the desperate attempts of central planners to arrest economic gravity. 

Three for the Road


$HIBB inventories +18% on sales growth of 2.7% and comp of (-0.6%). That's after 25%YTD gain and 13% draw-down in short interest.




You know, Willie Wonka said it best: we are the makers of dreams, the dreamers of dreams.

Herb Brooks


You know, Willie Wonka said it best: we are the makers of dreams, the dreamers of dreams.

Herb Brooks

The Macro Show Replay | March 11, 2016

CLICK HERE to access the associated slides.


An audio-only replay is available here. 


Cartoon of the Day: Off To See The Wizard

Cartoon of the Day: Off To See The Wizard - ECB cartoon 03.10.2016


ECB head Mario Draghi pulled out all the stops today but macro markets weren't buying it. "The Central Planning Belief System is breaking down," Hedgeye CEO Keith McCullough wrote. "This is the beginning of the end."

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.51%
  • SHORT SIGNALS 78.32%