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CHART OF THE DAY | Emerging Markets: 'A Sucker's Bet'

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Senior Macro analyst Darius Dale. Click here to learn more.

 

"... But what is clear, however, is that investors have had ample opportunity to sell into every “face-ripping” short squeeze to lower-highs across the spectrum of emerging market assets over the past ~5Y – of which there have been many – as highlighted by the Chart of the Day below."

 

CHART OF THE DAY | Emerging Markets: 'A Sucker's Bet' - Chart of the Day 4 19


Cartoon of the Day: No Oil Freeze

Cartoon of the Day: No Oil Freeze - OPEC cartoon 04.18.2016

 

On Friday, Hedgeye colleague and Potomac Research Group Senior Energy analyst Joe McMonigle wrote, "We believe there is no chance Saudi Arabia reverses its position and agrees to freeze production on Sunday," after Iran announced it would skip the much-hyped oil "freeze" meeting in Doha. That proved prescient. Over the weekend, OPEC members, including Saudi Arabia, and non-OPEC countries, like Russia, failed to reach an agreement to freeze oil production.


Setting the Record Straight On Our Market Calls

Setting the Record Straight On Our Market Calls - bear winking

 

The trolls are back! 

 

Since equity markets bottomed in February, a growing chorus of market prognosticators -- from outright haters to permabulls and everyone in between -- have been chirping our calls from the cheap seats.

 

Let's set the record straight.

 

We still believe U.S. equities are headed for a crash. Myriad macro market risks loom ever larger over the U.S. economy (see corporate profits and flagging economic growth). These risks are as relevant today as they were earlier this year when the market sold off. They have not gone away.

 

Set aside for a moment that the permabulls most dismissive of our bearish market calls got run over by the selloffs we warned subscribers about in July and again in December. Let's take a look at some cold hard facts. In particular, how our top Long and Short ideas we recommended heading into 2016 have performed.

 

Long The Long Bond (TLT):

 

Setting the Record Straight On Our Market Calls - tlt v s p 4 18

 

LONG UTILITIES (XLU), SHORT FINANCIALS (XLF)

 

Setting the Record Straight On Our Market Calls - xlu v xlf 4 18

we'll stick with what's working.


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 80.65%
  • SHORT SIGNALS 78.64%

Why We Think Agrium Has Substantial Downside | $AGU

Takeaway: We believe Agrium has substantial downside from here.

Our analysts Jay Van Sciver and Ben Ryan presented the bear case on Agrium (AGU) last Wednesday with a detailed 90-slide black book during an institutional conference call. To summarize, we believe the retail business is misunderstood and subject to short-termism from an analysis perspective.

 

In our view, operating margins in the retail business—which have been stable post-recession—will contract meaningfully as the sector continues its long cyclical downturn. We expect margin and top line pressure at Agrium's retail unit to expose the overvaluation of this business segment by the market.

 

Below are some relevant slides highlighting why we think Agrium has significant downside. 

 

**Email sales@hedgeye.com for the deck and/or related inquiry.

 

Click chart to enlarge

Why We Think Agrium Has Substantial Downside | $AGU - z jay 2

 

Why We Think Agrium Has Substantial Downside | $AGU - z jay 3

 

Why We Think Agrium Has Substantial Downside | $AGU - z jay 4

 

Why We Think Agrium Has Substantial Downside | $AGU - z jay5


The Latest Victim Of Europe's Nasty Economic Malaise

The Latest Victim Of Europe's Nasty Economic Malaise - Economic growth cartoon 10.20.215

 

Gone are the days of proclaiming a single ailing economy the "sick man of Europe." Across the Eurozone, countries are plagued by the same inexhaustible disease, #GrowthSlowing.

 

Don't expect that to change anytime soon. The latest news out of Spain simply confirms our thinking about lackluster European growth. Here's the update from our Macro team in a note sent to subscribers earlier today:

 

"Spain's Economy Minister Luis de Guindos lowered the country's 2016 GDP forecast to 2.7% versus 3.0% and the 2017 forecast to 2.4% versus 2.7%. This follows last week's reduced growth forecast by the IMF for Spain for the first time since 2013, to 2.6% from 2.7% for 2016. Yet the forecasts pale to our own, which according to our GIP (growth, inflation, policy) model, show the Spanish economy tracking into Quad 3 (equating to growth slowing as inflation accelerates) in the back half of the year with a mere 1.0% GDP forecast for 2016."

 

We expect things in Europe to get a lot nastier as this evolving reality continues to play out.

 

 


$25 or $50 Oil? Here’s What McMonigle Says

 

In this brief excerpt from The Macro Show this morning, Hedgeye Energy Policy Analyst Joe McMonigle explains why he believes oil prices are going lower in the short term, and where he sees it heading in the months to come. 


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