• run with the bulls

    get your first month

    of hedgeye free


McCullough: What If Amazon & Facebook Can’t Go Higher?


In this brief excerpt from The Macro Show, Hedgeye CEO Keith McCullough and Retail analyst Alec Richards respond to a subscriber’s question about whether companies like Amazon and Facebook can continue to prop up equity markets. 

HEDGEYE Exchange Tracker | Comping Higher to Start 2Q

Takeaway: Exchange activity remains positive year-over-year to start 2Q and any market draw down historically benefits volume.

Weekly Activity Wrap Up

Cash equity volume held steady at 7.0 billion shares traded per day this week, keeping the 2Q16TD average daily volume (ADV) in line at 7.0 billion, +10% higher than the year ago period in 2Q15. The volume of futures traded through CME and ICE contracted week-over-week to 18.6 million contracts traded per day, but still pushed 2Q16TD ADV to 18.4 million, +4% higher year-over-year. Furthermore, CME's open interest currently tallies 110.0 million contracts, +20% higher than the 91.3 million pending at the end of 2015. This compares to ICE's OI growth of just +4% since the beginning of the year.  Lastly, options volume came in at 15.5 million, lower week-over-week but consistent with the 2Q16TD ADV, which is +1% higher against 2Q15.


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon16


U.S. Cash Equity Detail

U.S. cash equities trading came in at 7.0 billion shares per day this week, keeping the 2Q16TD ADV at 7.0 billion. That marks +10% Y/Y growth. The market share battle for volume is mixed. The New York Stock Exchange/ICE is taking a 25% share of second-quarter volume, which is +81 bps higher Y/Y, while NASDAQ is taking a 17% share, -166 bps lower than one year ago.


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon2


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon3


U.S. Options Detail

U.S. options activity came in at a 15.5 million ADV this week, keeping the 2Q16TD average at 15.5 million, a +1% Y/Y expansion. In the market share battle amongst venues, NYSE/ICE is taking a 17% share of 2Q16TD volume. Although that 17% is +61 bps higher than NYSE's year-ago share, it has been trending downwards. Additionally, CBOE's 25% market share of 2Q16TD is down -242 bps Y/Y. Meanwhile, NASDAQ is doing well in 2Q16TD, taking a 23% share, +95 bps higher than one year ago.  BATS has also been taking share from the competing exchanges, up to an 11% share from 10% a year ago. Finally, although ISE/Deutsche's share expanded through 1Q16, it has been falling recently; at 14%, its share is -119 bps lower than 2Q15.


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon4


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon5


U.S. Futures Detail

13.9 million futures contracts per day traded through CME Group this week, bringing the 2Q16TD ADV to 13.8 million, +3% higher Y/Y. Additionally, CME open interest, the most important beacon of forward activity, currently sits at 110.0 million CME contracts pending, good for +20% growth over the 91.3 million pending at the end of 4Q15, although a contraction from last week's +21%.


Contracts traded through ICE came in at 4.6 million per day this week, bringing the 2Q16TD ADV to 4.6 million, a +7% Y/Y expansion. ICE open interest this week tallied 65.9 million contracts, a +4% expansion versus the 63.7 million contracts open at the end of 4Q15, consistent with last week's +4%.


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon6


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon8


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon7


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon9 


Monthly Historical View

Monthly activity levels give a broader perspective of exchange based trends. As volatility levels, measured by the VIX, MOVE, and FX Vol should rise to normal levels after the drastic compression this cycle, we expect all marketplaces to experience higher activity levels.


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon10


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon11


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon12


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon13


HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon14

HEDGEYE Exchange Tracker | Comping Higher to Start 2Q - XMon15



Please let us know of any questions,


Jonathan Casteleyn, CFA, CMT 




 Joshua Steiner, CFA





Setting The Record Straight On Our Macro Calls

Takeaway: For reality-challenged critics chirping from the cheap seats, here's an update on our top Macro calls versus the S&P 500.


Setting The Record Straight On Our Macro Calls - macro calls


We'll let the numbers speak for themselves.


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.


Takeaway: Caribbean tailwinds abate somewhat for the rest of 2016 - soft guidance stemming from Europe & China matters

Here are our takeaways from today's release and conf call:

  • Thanks to close-in North America business the Q1 yield beat was huge. However, Q2 guidance is much weaker. A simple calculation would suggest 1H yield growth average 4% (it's actually a little less than 4% since Q2 has a higher weighting in terms of revenue contribution than Q1) which is slightly ahead of our expectations and the Street's. This is why only the low end of FY yield guidance was raised by 50bps despite the huge Q1 beat.
  • But the Q2 weakness is more concerning
    • Additional promotional discounting is needed in the Mediterranean for the close-in bookings to fill the ships. RCL has had to source more guests from Europe than usual (69-70% of European business (usually 2/3)) since North America guests are more hesitant to booking into Europe, a point we emphasized in our recent cruise presentation. As a result, RCL is lowering their yield expectations for Europe. This sourcing shift is also a negative for NCLH's European business which is mostly US-sourced. In addition, European guests spend lower on board the ships than North American guests do. 
    • The company continues to blame capacity increases in China, particularly in Shanghai. Management's tone has shifted from high optimism to caution regarding China. Capacity in China is 9% this year vs 6% last year.
    • Low end of expectations in Shanghai (50-60% of total China business) i.e. Quantum of the Seas and Mariner of the Seas. Everyone knows China is a close-in market. In its release, RCL implicitly suggested that visibility on China's bookings environment is getting murky. RCL certainly feels tenuous about China currently. In our recent cruise presentation, we stressed pricing pressures in China.  
    • The Easter shift accounts for 20-30bps, shifting from Q1 to Q2 2016. 
    • Introducing 2 new ships (Harmony of the Seas/Ovation of the Seas) ramps up occupancy but at lower yields - Harmony's inaugural sailings is in a tough European environment and Ovation is in China, which has seen lower yields YoY in 2016. 
  • Fuel/FX - Midpoint FY 2016 EPS guidance was raised by 25 cents with 15 cents contributing from a FX/fuel tailwind. FX/fuel benefited Q1 by 8 cents, which implies a 7 cent tailwind for the rest of 2016. 
    • But bunker fuel prices have risen on average ~15% since Q1 which leads us to believe that mgmt's fuel expense guidance could be too low
    • Meanwhile, the US dollar has weakened ~5% for RCL's blended currency basket since Q1.
    • Hence, so far in Q2, the tremendous rise in oil prices has outpaced that of the US$ weakness which suggests the 7 cent tailwind for the rest of 2016 may come in a little bit lower if current prices persist.
  • NCC ex fuel growth guidance was raised slightly for the full year to 1%. It's not that big of a hike but any hike isn't great as China costs have increased.
  • Caribbean is less important going forward. For some perspective, Caribbean deployment in Q1 was 63%; it's averaging ~39% for the rest of 2016. For Europe, itineraries accounted for almost 0%; for 2Q and 3Q, Europe accounts for 28% and 40% of RCL's capacity, respectively. China deployment overall, as mentioned above, is also higher YoY due to Ovation's entry into Tianjian into late June 2016. 


LNKD | Good Print, No Chase (1Q16)

Takeaway: The muted chase off a largely flawless print suggests 4Q15 is still top of mind; LNKD may need to over-deliver just to stay afloat this year


  1. 1Q16 = SOLID BEAT/SOFT RAISE: No big surprise on the beat after the scary 2016 guidance offered up on its last call.  Talent Solution revenue came in ahead of expectations, albeit notably decelerating in its legacy Hiring segment from 32% to 27% y/y growth.  However, LNKD produced unexpected accelerations in both Marketing Solutions & Premium Subscriptions revenue growth.  LNKD raised 2016 guidance largely inline with the 1Q beat; 2Q guidance edged above consensus.  
  2. NO NEW RED FLAGS: We avoided this print largely becuase we didn't know how mgmt was going to address the street, which we suspect may carry more weight than its reported metrics this year after the 4Q15 fallout on largely self-inflicted wounds.  However, mgmt handled themselves much better on the call this time around.  The focus of mgmt commentary was more on LNKD's long-term prospects and less so on the current environment.  Mgmt did address the EMEA/APAC concerns raised during the last call by suggesting that both markets are performing as expected.  Interestingly, revenues actually accelerated in both markets... 
  3. BUT NOT MUCH OF A CHASE: The stock is up only 2%, which is a fairly muted chase given the -45% YTD drawdown.  The lack of buy-side enthusiasm for what was largely a flawless print suggests the 4Q15 fallout is still top of mind, which also suggests there could be a ton of downside the next time LNKD doesn't handily beat/raise estimates.  1Q16 could be one of LNKD’s better prints of the year given the inevitable step-up in sell-side estimates, which generally tend to exceed guidance by a wide margin.  That said, we suspect LNKD could be closer to its ceiling than its floor this year.  We remain on the sidelines for now.


Let us know if you have any questions or would like to discuss in more detail.


Hesham Shaaban, CFA
Managing Director


Dear President Obama: Who's 'Peddling Economic Fiction' Now?

Takeaway: US growth continues to slow from 3% to 0.5%, while President Obama claims our Macro team's #GrowthSlowing call is "peddling fiction."

Dear President Obama: Who's 'Peddling Economic Fiction' Now? - obama


“I actually compare our economic performance to how, historically, countries that have wrenching financial crises perform. By that measure, we probably managed this better than any large economy on Earth in modern history." -President Obama, New York Times Magazine, 4/28/16 




In case you missed it, yesterday's Q1 2016 GDP reading came in at 0.5%.


Yes, 0.5%. Meanwhile...



That's why President Obama's New York Times victory lap is a bit of a headscratcher considering first quarter growth was the worst it's been in two years. As we reminded subscribers yesterday, "We Called The U.S. Growth Slowdown (And Believe The Worst Is Yet To Come)." (Click here to read more about what we expect for growth in Q2 2016.)


Dear President Obama: Who's 'Peddling Economic Fiction' Now? - GDP cartoon 10.29.2015


To be clear, we've heard It all before.


Earlier this year, in his final State of the Union address, President Obama told the nation that anyone "claiming that America's economy is in decline is peddling fiction."


Meanwhile, U.S. growth has continued its downward descent, from 3% to 1.4% to 0.5%, so who's "peddling fiction" exactly? Now to be fair to President Obama, unaccountable Wall Street economists and unelected Fed bureaucrats completely missed U.S. #GrowthSlowing too.


So, no worries.


But we didn't.



We've taken President Obama to task for these kinds of statements before (see "7 Key Economic Talking Points For Serious Contenders at Tonight's #GOPDebate"). And considering yesterday's lackluster GDP report coupled with today's data on waning U.S. consumption and another declining PMI reading, we're sticking with the call that's been right for over a year now...

U.S. growth slowing

Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.