prev

Ignore the Pop: Oil Is Headed Lower

Takeaway: That 5% pop in WTI yesterday? It doesn't change our view that crude prices are headed lower.

Ignore the Pop: Oil Is Headed Lower - oil cartoon 03.29.2016

 

Wondering what to do after yesterday's big oil bounce? Below is some brief analysis and our updated risk ranges via Hedgeye CEO Keith McCullough in a note sent to subscribers today:

 

"No follow through to the +5.1% WTI day as the pop in this inverse correlation trade runs into resistance; immediate-term risk range for WTI is now $35.04-40.25 (top end of the range used to be closer to $42-43); we’ll be hosting our Q2 Macro Themes Call at 11AM EST"

 

 

On The Macro Show, McCullough added:

 

"As you can see in the chart [above], oil is starting to signal a series of lower highs. Oil would have to break out above $46 to get through our Tail risk level. The immediate term risk range is back down [$35.04-40.25]. So nevermind going to $46. It doesn't look like oil can get to $42 or $43, which used to be the top end of the immediate-term risk range.

 

That's important because US equity markets are hooked what? Other than the biotech charts yesterday, yes, markets are hooked on reflation and dollar down. Everything that Europe and Japan tried and is now failing."

 

Yes, that's how we think the movie ends.


CHART OF THE DAY: A Prime Example of Central Planning Failure

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

 

"... We’ll get into much more detail on how the #BeliefSystem is breaking down in both Japan and Europe on our Q2 Global Macro Themes Call at 11AM EST, but at a basic level here were some basic rules that levered macro strategies used to get paid by:

 

  1. BOJ (Bank of Japan) prints, devalues, and prints => Yen falls => Japanese Stocks rise
  2. ECB (European Central Bank) says “whatever it takes” => Euro falls => European Stocks rip"

 

CHART OF THE DAY: A Prime Example of Central Planning Failure - 04.07.16 chart


Replay: Healthcare Q&A with Tom Tobin | $ZBH $AHS $MD $HCA $HOLX

CLICK HERE to access the associated slides.

 

Healthcare analysts Tom Tobin an Andrew Freedman hosted a live Q&A today to review their latest research and answer your questions.

 


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.

Cartoon of the Day: Listen Up!

Cartoon of the Day: Listen Up! - Yellen cartoon 04.06.2016

 

All eyes on the Fed today, ahead of the release of the FOMC minutes.


A Brief Warning On Q1 Earnings

Takeaway: Be very careful out there.

A Brief Warning On Q1 Earnings - earnings cartoon 01.27.2015

 

Think first quarter earnings are growing gangbusters? Think again.

 

Here's the latest from our Macro team in a note sent to subscribers this morning:

 

"Q1 earnings season kicks-off next week with the bulge bracket banks leading the way (JPM next Wednesday). If you think we’ll follow-up an awful Q4 2015 reporting season (S&P revs -4.0% Earnings -6.9%) with a rebound, think again. We won’t be lapping bad comps until at least Q3 of this year (reported in Q4). In Q1 of 2015, 8/10 sectors saw Y/Y earnings growth, and the one sector with awful earnings was energy, where WTI averaged $48.57 vs. $33.63 in Q1 0f this year. Don’t get excited about Q1 earnings season. It will be more of the same. #thecycle."

 

Here's the chart highlighting why all of this is so significant.

 

A Brief Warning On Q1 Earnings - z 77

 

 


ISM Services: The Cycle Peaked In July 2015

ISM Services: The Cycle Peaked In July 2015 - sine of the times cartoon 03.03.2016

 

It's all about the Rate of Change...

 

While many on Wall Street cheered an expectations-beating sequential uptick in the ISM Services index, one data point does not make a trend. More importantly, the Services index and its individual components continue to trend lower year-over-year.

 

Here's some brief analysis from our Macro team in a note sent to subscribers earlier this morning:

 

"While industrial activity has stabilized against 13 months of negative comps, domestic service sector activity continues to slow off its mid-2015 highs. Headline ISM Services along with the Employment and New Orders components improved sequentially in March but the 9-month trend remains one of lower highs and lower lows.  On the Labor Front, the trend has been similar as yesterday’s JOLTS data for February showed Job Openings decline by -159K, continuing the 8-month retreat off the mid-2015 peak."

 

Here's the key chart on ISM Services

(Notice the peak in July 2015 and the year-over-year slowing in the data)

 

Stick with the process. Don't get sucked into Wall Street's storytelling. 

 

ISM Services: The Cycle Peaked In July 2015 - Math   Myth cartoon 03.30.2016


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