Gen-X Weighs on Housing Market


In this brief excerpt from The Macro Show earlier today, Hedgeye Housing analyst Christian Drake discusses the demographic and structural headwinds facing U.S. housing. 

Cartoon of the Day: The Cycle

Cartoon of the Day: The Cycle - GDP cartoon 04.11.2016


The U.S. growth outlook is getting pretty grim. The Atlanta Fed's GDPNow tracker for U.S. economic growth in Q1 2016 just hit 0.1% after a spate of new negative data.


We've been making this bearish call for a while now and highlighted in our Q2 Macro themes that "the U.S. economy faces its toughest GDP comp of the cycle in 2Q16."

Central Planning Delusions: From Helicopter Money To NIRP

Central Planning Delusions: From Helicopter Money To NIRP - central bank cartoon 02.17.2016

Falling behind on the latest central planning nonsense?


We think it's pretty clear that the central planning #Belief system is breaking down (see chart below... since the BOJ announced negative interest rates (1/29), the Yen is up +10.8% and the Nikkei is down -10.1%)


Central Planning Delusions: From Helicopter Money To NIRP - boj nirp nikkei jpy 


However, the links below are must-reads to stay up on the latest central planning shenanigans around the world. Whether you agree or disagree with the authors, insights abound, from Ben Bernanke's defense of "helicopter money" to German Finance Minister Wolfgang Schäuble comparing easy-money policies to drug addiction.




  1. Ben Bernanke's Brookings blog: What tools does the Fed have left? Part 3: Helicopter money --  Helicopter money gets the Bernanke stamp of approval and how it would work... "Money-financed fiscal programs (MFFPs), known colloquially as helicopter drops, are very unlikely to be needed in the United States in the foreseeable future... However, under certain extreme circumstances—sharply deficient aggregate demand, exhausted monetary policy, and unwillingness of the legislature to use debt-financed fiscal policies—such programs may be the best available alternative. It would be premature to rule them out."
  2. IMF: The Broader View: The Positive Effects of Negative Nominal Interest Rates -- Insight on the IMF's latest thinking about negative interest rates... "Although the experience with negative nominal interest rates is limited, we tentatively conclude that overall, they help deliver additional monetary stimulus and easier financial conditions, which support demand and price stability. Still, there are limits on how far and for how long negative policy rates can go."
  3. WSJ: Germany’s Schäuble: Time Is Near to End Central Banks’ Easy-Money Policies -- Refreshing sanity from ECB critic German Finance Minister Wolfgang Schäuble... "There is a growing understanding that excessive liquidity has become more a cause than a solution to the problem,” Mr. Schäuble said, comparing the move away from easy-money policies to ending a drug addiction."

  4. Bloomberg: Former Yellen Adviser Proposes Sweeping Reform of Fed System -- Good ideas... "Dartmouth College professor Andrew Levin targeted four areas of change for the Federal Reserve system: make the Fed a fully public institution; ensure the process of picking regional Fed presidents is transparent; set seven-year term limits for regional presidents and Board governors; and make the entire Fed subject to external review."

investing ideas

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Retail: The Next Chapter ... 11

Takeaway: Three months into 2016 and we're already rivaling Great Recession bankruptcy rates. What say you, Sears?

Editor's Note: Below is an institutional research note written by Hedgeye Retail analysts Brian McGough and Alec Richards. To read more of our Retail team's research ping


Retail: The Next Chapter ... 11 - retail island 1 14 15


It's so easy to succumb to the 'water torture' of Chapter 11 press releases in retail coming from the likes of Sports Authority, Vestis Retail Group (Eastern Mountain Sports, Bob's, and Sports Chalet), and Pacific Sunwear. But it's important to take a step back. Then another. And another. Then, and only then, does the big picture come into focus about the broader economic cycle.


Consider this...over the average economic cycle, we see 15 to 25 retail chains go under. Those represent roughly 1% of Retail Sales. Naturally, the filings are not even by year. Sometimes (like when the economy is ripping) there are none. Plenty of profits to go around for even the worst retailers. But some years there's upwards of 15 (Great Recession).


In just a little more than three months, we've already seen 4 parent bankruptcies (6 chains) in US Retail. Annualized, that's about 16, or 0.5% of retail. 


After an extremely tough winter selling season for shoes and apparel, it's only natural that we'd see this year push the 2016 tallies to a level close to what we saw in the Great Recession.


Sears, anyone?


Retail: The Next Chapter ... 11 - retail chapter 11

INSTANT INSIGHT: The Key Implications Of Oversold U.S. Dollar

INSTANT INSIGHT: The Key Implications Of Oversold U.S. Dollar - dollar crumbled


Below are a number of important callouts this morning to help investors risk manage these manic macro markets.


Top of the list? The U.S. Dollar.


Here's analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning:


"After falling another -0.4% last week to YTD lows of -4.5%, the US Dollar Index is signaling immediate-term oversold in my model for the first time in April (the 30-day correlation b/t USD and SP500 is -0.90)."


U.S. Dollar oversold implications?


As McCullough points out in this morning's Early Look, Commodities (CRB Index) have an inverse correlation (30-day duration) of -0.88 vs. the US Dollar, which explains Oil's pop last week:


"WTI +8% last week (after falling -7% in the week prior) will be as important to watch as anything US Equity Market Beta this week; risk range is signaling a lower-high of $39.99/barrel as Oil Volatility (OVX) signals a higher-low of 43.14."


With the S&P 500 and Commodities inversely correlated to the US Dollar (-0.9), oil and equity investors are clearly begging for a “dovish” Fed.


That raises an important question...


What actually gets investors paid when the Fed goes dovish and tacitly agrees with our Macro team's U.S. #GrowthSlowing call?


Long Bonds (TLT)

(up +9.5% ytd versus +0.2% for S&P 500)



INSTANT INSIGHT: The Key Implications Of Oversold U.S. Dollar - tlt say cheese


Takeaway: We hosted a call updating our Housing outlook for 2Q16 on Friday. The deck and call replay can be accessed via the links below.

Slide Deck: CLICK HERE

Audio Link: CLICK HERE

Video Link: CLICK HERE





  • Fundamental Deceleration: Volume growth is slowing in the new and existing market. Home prices, meanwhile, are in a bitter tug-of-war between lagged demand trends and supply constraints.
  • Supply Side Economics: Supply has emerged as the big conundrum this cycle. Why is it so depressed and what is the outlook for it to change?
  • Seasonality Headwinds: Housing stocks follow a distinct seasonal trading pattern that offers a lot of alpha opportunity; 2Q/3Q are the weakest six month stretch of the year. 
  • San Francisco: A bubble or not? That is the question. We’ll take a deep look at the SF market. 
  • Big City Affordability: One of the more interesting phenomenon is where major metros stand in terms of affordability and what the outlook is for further price appreciation. 
  • Commercial Real Estate: The CRE market has run into some big speedbumps. Will this bleed into the Residential market? 




Joshua Steiner, CFA


Christian B. Drake


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