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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.


FLASHBACK: Howard Penney Says Buy McDonald's

Takeaway: More good news for McDonald's investors.

Editor's Note: Lovin' it... Veteran Hedgeye Restaurants analyst Howard Penney's bullish, non-consensus call on McDonald's continues to pay off for those who listened. See WSJ story today, McDonald’s Profit Climbs, Showing Turnaround Is Sustainable. Shares of MCD are up over 21% since his article was published on Fortune. The stock is up 27% since it was added to Investing Ideas on August 11, 2015 versus 0.36% for the S&P 500. 

 

FLASHBACK: Howard Penney Says Buy McDonald's - z how 

 

The fast-food chain’s stock will likely pop next year, thanks to its real estate holdings and its ‘All-Day Breakfast’ menu.

 

Last week, McDonald’s shares jumped 1.5%, amid speculation that the fast-food giant might spin-off its massive real-estate holdings. That looks increasingly likely under the activist-like new CEO, Steve Easterbrook. It’s another welcome development and a broader sign that McDonald’s is finally turning the corner. Our prediction: This year will be the last time McDonald’s stock sees a price below $100.

 

Let’s be clear. A lot has changed at McDonald’s in the past year. Within the first two months of becoming CEO earlier this year, Easterbrook announced $300 million in cost cutting measures, a move that includes refranchising 3,500 stores of its 36,290 stores globally and shutting down an additional 700. McDonald’s  MCD -0.35%  will soon use technology, such as self-ordering kiosks, to change the customer experience while rejiggering its menu, dropping some, adding others and improving its existing products. In October, for instance, McDonald’s announced that it would take “All-Day Breakfast” nationwide. Meanwhile...

 

Click here to continue reading on Fortune.


Slow Global Growth Snails

Takeaway: The latest read through on U.S. and Euro-area economies isn't good and confirms both economies remain mired in this slow growth environment.

Slow Global Growth Snails - Slow growth snails cartoon 07.14.2015

 

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

 

"Eurozone April preliminary PMIs were released this morning... drum roll... both the Manufacturing and Composite (Manufacturing + Services) fell month-over-month, in-line with our theme of #EuropeSlowing. Eurozone Manufacturing recorded 51.3 vs. 51.6 prior and the Composite fell to 53.0 vs. 53.1. Services rose 10bps to 53.2. Meanwhile, coming late to the party, the ECB released the results of the Q2 2016 survey of professional forecasters, which sees the inflation forecast revised down by 0.4% to 0.3% for 2016 and growth at 1.5% in 2016 vs. a prior estimate of 1.7%."

 

Slow Global Growth Snails - eurozone

 

Meanwhile, in the U.S., more souring economic data. According to Markit, its survey of U.S. Manufacturing PMI fell to its lowest level in six-and-a-half years:

 

Slow Global Growth Snails - us pmi

 

Here's analysis from Markit: 

 

"US factories reported their worst month for just over six-and-a-half years in April, dashing hopes that first quarter weakness will prove temporary... With prior months’ survey data pointing to annualized GDP growth of just 0.7% in the first quarter, the deteriorating performance of manufacturing suggests that growth could weaken closer towards stagnation in the second quarter."

 

Then there's China. Earlier this week, we noted that the PBoC would enact more "prudent" monetary policy even as China's economy continues to slow.

 

Add all of this to the laundry list of dour economic news we've seen of late.


the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

CHART OF THE DAY | U.S. 2016 Growth Estimates: Us Versus Consensus

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Director of Research Daryl Jones. Click here to learn more.

 

"... So to summarize, our view is that key economic statistics will begin to miss consensus estimates as the year progresses. We’ve highlighted our view on GDP growth for 2016 in the Chart of the Day below. Specifically, while we were in line with consensus for Q1 2016 GDP growth, we are close to 100 basis points below consensus for the remainder of 2016E. In our views it’s hard to see how disappointing data will buoy the stock market, especially when the growth rates being reported are barely above recessionary levels in the best case scenario."

 

CHART OF THE DAY | U.S. 2016 Growth Estimates: Us Versus Consensus - 4 22 16 EL


Cartoon of the Day: A Closer Look At NIRP

Cartoon of the Day: A Closer Look At NIRP - negative interest rate cartoon 04.21.2016

 

BOJ governor Haruhiko Kuroda has been defending the central bank's negative interest rate policy recently, even stressing his readiness to expand monetary policy still further. "Good luck with that," Hedgeye CEO Keith McCullough wrote recently. "These guys just don't get it. The #BeliefSystem is breaking down."


Will Bernie Bow Out? ... Trump's Got "The Best Toys"

Below is a brief excerpt from our Potomac Research Group colleague and Chief Political Strategist JT Taylor's Morning Bullets sent to institutional clients each morning. For more information on how you can access our institutional research please email sales@hedgeye.com.

BERNIE'S END GAME?

 

Will Bernie Bow Out? ... Trump's Got "The Best Toys" - bernie sanders

 

Bernie Sanders' NY loss was crushing - not just for losing in the state where he was born, raised, and claimed he would pull an upset, but because it dashed any reasonable chance for him to eclipse Hillary Clinton in pledged delegates. Now he must choose whether to up the ante with attacks on Clinton, or pull a 180 and return to his core, issues-based movement. His campaign is sending mixed signals on whether he will remain in the race after the conclusion of next week's Northeast primaries - where Clinton has healthy leads. This could be a make or break week for his continued candidacy, and going negative again might be his only shot - yet can he justify doing so just as there are signs that 83% of Sanders-leaning Democrats would coalesce around Clinton? Party unity is on the line.

DELEGATE DRAFT DAY

 

Will Bernie Bow Out? ... Trump's Got "The Best Toys" - ted cruz up

 

As it stands now, Donald Trump is 392 delegates shy of the 1237 needed to secure the nomination the old fashioned way, but he is poised for another huge set of wins in CT, MD, DE, PA, and RI next week. Whether or not Trump goes to Cleveland with a delegate majority, some pols and pundits are suggesting that he could still clinch the nomination on the first ballot even if he is 100-150 delegates short.

 

This is due to the unbound "free agent" delegates that will be available, and are sure to be wined-and-dined by Trump and Ted Cruz for their support - though Trump's lead and his claim of having "the best toys" means he may have more to offer.   

HOOSIER DADDY?

There may be five more Northeastern states voting before May 3rd's IN contest, but the focus of the Trump and Cruz campaigns has shifted back to the Midwest. IN is being compared to WI - where Cruz pulled off a strong victory - and if he has any hope of blocking Trump from winning 1237 delegates, he needs to sweep the Hoosier State. But this is far from certain - IN's demographics are more favorable to Trump than WI's were, and the anti-Trump forces have yet to organize there. As important as winning IN is to Cruz's new strategy, it may be more vital to Trump and his ability to win a delegate majority without it.


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