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Rickards: Why Gold Is Going To $10,000

Bestselling author Jim Rickards sits down with Hedgeye CEO Keith McCullough to discuss his new book, “The New Case for Gold,” and why a cocktail of factors makes it more critical than ever for investors to protect their portfolios with gold.

 

Follow Jim on Twitter @JamesGRickards

Purchase his book: “The New Case for Gold

Learn more at the JamesRickardsProject


We Think Valeant Still Has Over 40% Downside | $VRX

Takeaway: Our analysts have been bearish on Valeant for almost two years. Meanwhile, Wall Street's VRX price target implies 257% upside. Okay.

We Think Valeant Still Has Over 40% Downside | $VRX - Ackman cartoon 10.26.2015

 

Ka-boom ... Shares of Valeant Pharmaceuticals (VRX) were cut in half today after the company cut its 2016 revenue forecast by 12% and said a delay in filing its annual report could pose a debt default risk. Our Healthcare analysts Tom Tobin and Andrew Freedman have been warning about the company's "unsustainable business model" for a while now.

 

 

Here's the "VRX | Bear Case $20" note in its entirety:

 

We Think Valeant Still Has Over 40% Downside | $VRX - valeant

 

Never fear Valeant shareholders! Wall Street consensus still sees 257% upside from here.

 

Click to enlarge

We Think Valeant Still Has Over 40% Downside | $VRX - valeant price target

 

Now, that's obviously ridiculous. But so is the sell side's track record for predicting a VRX price target. Check out the chart below. Keep in mind that Valeant shares currently trade around $35. 

 

We Think Valeant Still Has Over 40% Downside | $VRX - graph valeant

 

 


Cartoon of the Day: Crude Or Crud?

Cartoon of the Day: Crude Or Crud? - oil cartoon 03.15.2016

 

Oil prices continue to fall despite Wall Street's continued predictions otherwise.


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 80.28%
  • SHORT SIGNALS 78.51%

A Paradigm Shift In Retail Is Happening

Takeaway: We hit the point where e-commerce dollar growth surpassed Brick & Mortar. 2016 is officially ‘Game On’ for financial impact of e-comm.

Editor's Note: This is a brief excerpt from an institutional research note written by Hedgeye Retail analysts Brian McGough and Alec Richards. To access our institutional research please email sales@hedgeye.com.

 

A Paradigm Shift In Retail Is Happening - z retail

 

Today’s 60bp negative revision for January Retail Sales (from +0.2 to -0.4%) was obviously disappointing, albeit not terribly surprising to anyone listening to retail conference calls over the past four weeks...

 

Let’s step away from the obvious for a minute and look at a powerful trend that’s actually investable...

 

Today, e-commerce accounts for 7.3% of total Retail Sales. A decade ago that number was 2.5%, and five years ago it was 4.4%. At face value we’re talking really small numbers…right? Not really. Consider this…in the fourth quarter, e-commerce accounted for 65% of all incremental Retail Sales

 

A Paradigm Shift In Retail Is Happening - retail sales 22 

That’s S-I-X-T-Y F-I-V-E percent! This ramped from 23% a year ago, and 45% in the prior quarter.

 

 


A Preview of Super Tuesday... & Sizing Up Democratic Defections

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.

DEM-OLITION DERBY:

 

A Preview of Super Tuesday... & Sizing Up Democratic Defections - hillary another

 

Tonight's results will likely determine whether the Republican race goes on, or if Donald Trump becomes the prohibitive frontrunner heading into Cleveland -- today's significance to Democrats, however, may have been overlooked by comparison. Having flexed his muscle in MI, Bernie Sanders will look to replicate his win in the analogous states of IL, MO, and OH. Conventional wisdom holds that Hillary Clinton is on track for easy victories in both NC and FL, due in part to overwhelming support among African American voters. If Sanders carries all or a combination of IL, MO, and OH, or scores an upset in FL, the Dem race would face an upheaval and call Clinton's frontrunner status into serious question.

CRUZ SOLDIERS ON: 

 

A Preview of Super Tuesday... & Sizing Up Democratic Defections - cruz cruz

 

Trump could run the table in all five states tonight, but Ted Cruz is banking on picking off a state or a sizeable number of delegates tonight, and will continue his campaign no matter the results.  With the potential elimination of Marco Rubio and/or John Kasich, Cruz's long-awaited dream of a one-on-one with Trump appears almost at hand. He can afford to look past tonight's votes and is the only one who has made ad buys in post-March 15th states, having already purchased $200,000 worth of airtime in AZ -- but will bump up against Trump, who is sure to benefit from Gov. Jan Brewer and Sheriff Joe Arpaio's endorsements in the state. Cruz's team has their sights on sweeping all of the delegates in the closed-caucus state of Utah (March 22nd), and putting WI in play on April 5th.  As we've said, the primary calendar gets tough for Cruz from here on out. He's now primarily competing to be the plausible alternative to Trump at a contested convention in Cleveland.

DEM DEFECTIONS:

 

The industrial heartland of Ohio is seeing large numbers of Democrats changing their registration to Republican, with the apparent motivation being Trump's anti-free trade campaign rhetoric. In Mahoning County alone there were over 7,000 early votes cast as of March 3rd, with the Youngstown Vindicator reporting that 14% were Democratic crossovers. This much-discussed shift of blue-collar Dems to Trump would provide him with a major boost across the Rust Belt should it actually materialize.


Failure? A Look At The BOJ's Negative Interest Rate Experiment

Takeaway: Since the Bank of Japan announced negative interest rates, the Yen is up and Nikkei is down. The exact opposite of its intentions.

It was inevitable. But it's finally happening. The belief system that central bankers can bend and smooth economic gravity ... it's breaking down. 

 

In case you missed it, back in February, Hedgeye CEO Keith McCullough wrote an Early Look entitled, "The Big Bang Theory" (we unlocked it). He posited that the entire central-market-planning belief system/edifice could implode. What would happen if macro markets no longer believed in the potency of central planners at the Fed, BOJ and ECB? What if currencies actually went up ... and stocks went down in response to central bank easing?

 

Well, that's what's happening in Japan right now. Look at the chart of the USD/Yen since the BOJ pursued negative interest rates in January. 

 

Failure? A Look At The BOJ's Negative Interest Rate Experiment - usd jpy

 

This morning, the BOJ downgraded its view of the economy, but held interest rates at minus 0.1% and kept asset purchases at a pace of Y80tn a year. Here's analysis from McCullough in a note sent to subscribers:

 

"If you’ve been bearish on the #BeliefSystem (central-market-planning) breaking down in Japan alongside us, congrats – Japanese stocks failed @Hedgeye TREND resistance overnight as the Yen popped (again) on a BOJ statement day. The Nikkei is down -0.7% to -10% for the year-to-date. It is not clear how the bulls could be trumpeting losing money year-to-date."

 

The Nikkei is down -2.3% since the BOJ announced NIRP.

Failure? A Look At The BOJ's Negative Interest Rate Experiment - japan nikkei

 

So where do we go from here?

 

We'll say it again. The biggest market risk is believing central banks' economic forecasts.


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