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The Week Ahead

The Economic Data calendar for the week of the 25th of April through the 29th of April is full of critical releases and events. Here is a snapshot of some of the headline numbers that we will be focused on.

 

CLICK IMAGE TO ENLARGE.

The Week Ahead - 04.22.16 Week Ahead


About Everything | The Golden Age of Home Improvement

 

In this complimentary edition of About Everything, renowned demographer and Hedgeye Sector Head Neil Howe explores why consumer spending on home improvement is outstripping GDP growth and the key demographic trends behind this shift.

 

For more, click here to read the associated About Everything writeup.


Cartoon of the Day: Just Believe

Cartoon of the Day: Just Believe - central bank cartoon 04.22.2016

 

Central banker credibility is slowly waning.


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Under 60 Seconds: Starbucks Earnings Report | $SBUX

Hedgeye Restaurants analyst Howard Penney highlights three key points from Starbucks’ lackluster earnings report. Earlier this month, Penney advised our subscribers to short the stock.


Here's Why You Stay Short Junk Bonds

Here's Why You Stay Short Junk Bonds - junk pile

 

It's the #CreditCycle.

 

Despite the recent rally, we're holding the line on our short Junk Bonds (JNK) call. Here's analysis and a chart via our Macro team from a note sent to subscribers earlier this morning:

 

"Junk bonds have rallied +3% in the YTD, inclusive of a +6% squeeze over the past 3M alone. Option adjusted spreads continue to narrow dramatically, compressing -30bps in the past week alone to 586bps wide. This is down from a peak of 839bps on February 11th.

 

Is the trough of the domestic credit cycle in the rear-view mirror, leaving us holding the bag on a stale thesis? Not at all. Our work has shown that once the horse leaves the barn on the domestic credit cycle, there is no recovery until HY spreads are north of 1,000bps and corporations have sufficiently delivered their balance sheets – neither of which has occurred."

 

Click on the chart below to enlarge. Note: We think we're headed for a nice, big red dot (a.k.a. a blowout in high-yield credit spreads).

 

Here's Why You Stay Short Junk Bonds -  CreditCycle Bubble Chart DD

 

More on the credit cycle...

 

According to Standard & Poor's, there were 5 more corporate defaults this week, bringing the grand total to 51 year-to-date. FYI, that's the most since 2009.

 

Here's Why You Stay Short Junk Bonds - defaults

 

There you have it...

 

We're sticking with our short Junk (JNK) call.


Dale: ‘Brexit Is The #1 Risk In The U.K.’

 

With the U.K. divided over whether to stay or leave the European Union, Hedgeye Senior Macro analyst Darius Dale discussed the potential impact on the pound, equities and consumer/business confidence on The Macro Show this morning.


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