Earnings Season: U-G-L-Y (You Ain't Got No Alibi, You Ugly)

Takeaway: A total of 374 of 500 S&P 500 companies have reported Q1 results with aggregate sales and earnings growth down -2.7% and -8.8% respectively.

Earnings Season: U-G-L-Y (You Ain't Got No Alibi, You Ugly) - earnings cartoon 01.27.2015


It's been an ugly earnings season.


Some important callouts this morning:

  • A grand total of 374 of 500 S&P 500 companies have reported Q1 2016 results, with aggregate sales and earnings growth down -2.7% and -8.8% respectively;
  • So far... 7 of 10 sectors have reported negative earnings growth;
  • Earnings growth for our favorite sector short call, Financials (XLF), are down -13.8% with sales -4.0%;
  • Energy (XLE) earnings growth crushed, down -99.5%, with -30.7% sales growth;


Here's what it looks like right now.

Earnings Season: U-G-L-Y (You Ain't Got No Alibi, You Ugly) - earnings 5 5

Daily Market Data Dump: Thursday

Takeaway: A closer look at global macro market developments.

Editor's Note: Below are complimentary charts highlighting global equity market developments, S&P 500 sector performance, volume on U.S. stock exchanges, and rates and bond spreads. It's on the house. For more information on how Hedgeye can help you better understand the markets and economy (and stay ahead of consensus) check out our array of investing products




Daily Market Data Dump: Thursday - world equity markets 5 5


Daily Market Data Dump: Thursday - sector performance 5 5


Daily Market Data Dump: Thursday - market volume 5 5


Daily Market Data Dump: Thursday - rates and spreads 5 5

CHART OF THE DAY | FYI: Employment Growth Peaked In Feb 2015

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more. 


"... if NFP (non-farm payrolls) ramps to a rate-of-change acceleration ABOVE last year’s peak growth rate (+2.3% year-over-year NFP growth), my conviction on US #GrowthSlowing could fall below 66%, but would have to TREND that way."


CHART OF THE DAY | FYI: Employment Growth Peaked In Feb 2015 - 05.05.16 EL Chart

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What To Watch Ahead Of Friday's Jobs Report: U.S. Dollar & Oil

What To Watch Ahead Of Friday's Jobs Report: U.S. Dollar & Oil - Jobs report cartoon 06.04.2015


"We're seeing very short-term oversold signals in US Equity Beta yesterday (see Real-Time Alerts for details)," Hedgeye CEO Keith McCullough wrote this morning in a note sent to subscribers this morning. Here's more from McCullough:


"One of the main reasons for the oversold SPY signal was the super-short term overbought signal in USD (2 USD up days rocked reflation beta, but on a bad jobs report tomorrow, USD can easily retrace to 16 month lows); 90-day inverse correlation b/t SPY and USD is -0.62, so it’s not the layup that buying oil/energy stocks has been (higher correlation), but it’s there."



Digging deeper into oil...


"Big bounce +3.3% on Dollar Down move as WTI holds the low-end of our immediate-term $42.34-46.63 risk range and that’s all it’s signaling to me here – short-term range bound with long-term TAIL risk in that $46-47 range."



Ahead of Friday's down Dollar jobs report, that's why McCullough sent out the buy Energy (XLE) signal in Real-Time Alerts late yesterday.


Cartoon of the Day: Red, White & Blew It

Cartoon of the Day: Red, White & Blew It - Fed cartoon 05.04.2016


“A rate hike could be appropriate, if the data is as expected," San Francisco Fed Head John Williams remarked yesterday. As Hedgeye CEO Keith McCullough wrote in today's Early Look, "Given that a recently reported GDP of 0.5% isn’t in the area code of “as expected”, I don’t think Williams has a lot of credibility as a Wall Street forecaster."

A Chipotle Brand Survey Update (via CivicScience) | $CMG

Editor's Note: Below is a complimentary institutional research note written by Hedgeye Restaurants analysts Howard Penney and Shayne Laidlaw. In it, they discuss the findings of a recent CivicScience brand survey regarding Chipotle Mexican Grill (CMG) and what it tells investors about the damage to the brand following the E. coli outbreak earlier this year. To read our Restaurant team's research ping


A Chipotle Brand Survey Update (via CivicScience) | $CMG - chipotle 2


Prior to the start of the earnings season we highlighted proprietary CivicScience brand survey data on two of our favorite names, LONG Panera and SHORT Chipotle


Looking at the previous notes on PNRA and CMG, the CivicScience brand survey data pointed to improving trends at Panera, supporting our LONG position and called for continued troubles at Chipotle, supporting our SHORT case.  As both companies reported earnings, the PNRA trends remain positive and Chipotle remained negative.  At this point, we intend to publish on more company’s making further use of the CivicScience data set.  We felt, at this point it is important for everyone to understand who or what CivicScience is.


Quite simply, CivicScience is a survey company.  Their technology, which traces its roots to Carnegie Mellon University, allows them to ask anything they want, to anyone they want, in huge numbers, extremely fast.  This context is important because we can use the platform for quick-turn-around questions (to test an investment hypothesis we may have) and will typically see results in a few hours – with history and context.


Here’s how CivicScience’s process works: Through partnerships with hundreds of media companies, they embed questions inside the kinds of fun polls and quizzes you see on websites and social networks everywhere you look. CivicScience has cataloged nearly a billion responses since 2011 on thousands of topics. They’ve tracked the popularity of hundreds of brands, media consumption, technology usage, shopping behavior, and most of the key consumer trends affecting the markets. They mine all of that data, constantly, for patterns and correlations.  Importantly, due to the scale and diversity of their data sources and the fact that they are reaching real consumers, their results are scientifically-valid and appear very reliable.


At Hedgeye, we are now taking that data and correlating it with management commentary and brand performance to see where we can isolate discrepancies in market perception and stock prices.  While we don’t take advantage of it, the company even provides data feeds, via API, for some quant funds.    


To that end we are publishing the latest Chipotle brand survey, which asks consumers: How much do you like to eat at Chipotle?  The results are showing minor improvements in the trends, but not enough for us to change our short thesis. Our previous survey included the early days of 2Q16 (1,197 responses), now, as we are moving further into 2Q16 we have received 3,051 responses and are getting a better picture of the true sentiment for the brand.

  1. The “I don’t like it” crowd is up 700bps from 18% in 4Q15 to 25% in 2Q16, declining slightly sequentially from 1Q16.
  2. The “I like it” is still down roughly 100bps from 4Q15 to 17% of responses, seeing a sequentially recovery from 1Q16. Importantly this answer has significantly decreased from our initial note which showed people that said “I like it” rose aggressively to 21%.
  3. “I love it” responses were sequentially flat from 1Q16 to 2Q16, which was better than our early read which indicated a deceleration in people saying “I love it”.
  4. The “I don’t have a strong opinion” is down 700bps from 4Q15 to current levels as consumers have become more opinionated on the brand.


A Chipotle Brand Survey Update (via CivicScience) | $CMG - chipotle survey


Although the survey is showing sequential improvement in consumer opinions towards the brand, the steep rise in people saying “I don’t like it” cannot be over looked. As we continue to work through 2Q16, we will update you monthly on how the trends are evolving.

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 80.52%
  • SHORT SIGNALS 78.67%