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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.


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.


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.

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.


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.


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 80.64%
  • SHORT SIGNALS 78.61%
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