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Daily Market Data Dump: Wednesday

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

 

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Daily Market Data Dump: Wednesday - equity markets 5 11

 

Daily Market Data Dump: Wednesday - sector performance 5 11

 

Daily Market Data Dump: Wednesday - volume 5 11

 

Daily Market Data Dump: Wednesday - rates and spreads 5 11


A #LateCycle Reality Check Hits Disney, Macy's, China, Italy, etc...

Takeaway: Recent stumbles in Disney shares, Italy's bank-heavy FTSE MIB index, and China's Hang Seng index are prime examples of #GrowthSlowing.

A #LateCycle Reality Check Hits Disney, Macy's, China, Italy, etc... - late cycle cartoon 10.08.2015

 

It's getting tougher each day for deniers of #LateCycle reality.

 

"I wonder if Disney missing for the 1st time in 5yrs has anything to do with #TheCycle (it continues to slow)," Hedgeye CEO Keith McCullough wrote in a note to subscribers this morning.

 

Even chart chasers can digest the massive rally in Disney (DIS) shares followed by the abrupt flatlining. Note: DIS is down more than -10% from it's August 2015 peak.

 

 

By the way...

 

It's going to be a rough #LateCycle reality check for Macy's (M) investors this morning. The retailer printed lackluster earnings eerily reminiscent of the last cycle's rollover. (It has also already nosedived from its July 2015 peak – it's down almost -50% since then.)

 

 

It's happening around the world...

 

Check out European economic data:

 

 

And Italy's banking-heavy FTSE MIB leads the losers today. 

 

Thanks NIRP!

 

 

(For more, read the FT's piece about the German regulator who called NIRP a "seeping poison." Or Spain's 50-year Long Bond issuance as growth continues to slow.)

 

 

Rouding out the morning's #GrowthSlowing flops is China's Hang Seng:

 

 

Meanwhile, there's always a bull market somewhere...

 


CHART OF THE DAY: A Look At The Peak In S&P 500 P/E

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.

 

"... Unless we’re going to go all-in #bubble multiple speak (Bernstein slapped a $1000 price target on AMZN yesterday), as you can see here in our Chart of The Day, forward SP500 P/E multiples already peaked (right on time) last year too."

 

CHART OF THE DAY: A Look At The Peak In S&P 500 P/E - 05.11.16 EL Chart


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Cartoon of the Day: Dead On Arrival

Cartoon of the Day: Dead On Arrival - earnings season cartoon 05.10.2016

 

A brief update on earnings season:

  1. 441 of 500 S&P 500 companies have reported their Q1 2016 numbers
  2. Aggregate SALES growth is DOWN -2.4% year-over-year
  3. Aggregate EARNINGS growth is DOWN -8.9% year-over-year
  4. Ex-Energy (EPS -109% y/y), Financials have EARNINGS DOWN -14.3% year-over-year
  5. Ex-Energy, Technology has EARNINGS DOWN -8.4% year-over-year 

Trump & Bernie's War On Math

Below is a brief excerpt from Hedgeye Potomac 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.

TRUMP'S TROUBLING NUMBERS   

Trump & Bernie's War On Math - trump 55

 

Donald Trump is under fire for waffling on the pillars of his economic plans. We think he has a bigger numbers problem - and his difficult task of winning over key demographics (particularly Hispanics) may have just gotten harder. Yes, his unfavorables are at a historic high for a major party nominee; and yes, his misguided attempts to win over those groups (think: TacoGate 2016) have not done him any favors.

 

But that may be nothing compared to the impending "Hispanic backlash."  Trump is backed up against a big border wall for a number of reasons: he has a net favorability among Latinos of negative 78% (while Hillary Clinton is at +29%). Since 1980, no Republican has won the White House without locking down at least 30% of the Hispanic vote, and Hispanic registration is up in a number of key states - CA, CO, NV and FL - to name a few. 

BERNIE SANDERS' WAR ON MATH 

Trump & Bernie's War On Math - bernie sanders another

 

The Democratic underdog is fighting over big numbers again, and this time they're coming at him from the left. The left-leaning Urban Institute did the math on Sanders' "Medicare for all" program estimating it would increase federal spending by $32 trillion over 10 years - yes, that's trillion with a T

 

Sanders had previously estimated the cost to be closer to a measly $13.8 trillion. But West Virginians don't seem too concerned. Despite Sanders' long list of policy proposals with no clear way to pay for them, he is likely to pick off another win in WVA today and the Democratic contest will just keep dragging on. 

CARRIED INTEREST, THE NEW INVERSIONS?  

Tax Notes recently suggested the Obama Administration could use the regulatory process to close the so-called "carried interest loophole." Treasury officials responded in an eerily similar tone it used during the run-up to recently-released inversion guidance, saying closing the loophole was a top priority and that Treasury is "continuing to explore its existing authority...but the department cannot eliminate the carried interest tax benefit by itself." 

 

Given the heat they are taking on their unilateral action on inversions, we would be surprised to see Treasury take on another battle.  But given Clinton, Sanders and Trump have all criticized the carried interest provision, the rhetoric on this issue will likely heat up just in time for the summer.


A Nasty Day For Debt Collector PRA Group (Another Solid Short Call By Josh Steiner) $PRAA

Takeaway: PRA's weak quarter is only the beginning of it's downturn, says Financials analyst Josh Steiner. We still see "significant downside."

A Nasty Day For Debt Collector PRA Group (Another Solid Short Call By Josh Steiner) $PRAA - praa

 

Today hasn’t exactly been a happy day for investors long debt collector PRA Group (PRAA). After the company missed first quarter earnings estimates by a wide margin, shares plummeted over -18%. Ugly? Of course. But this barely scratches the surface of PRAA’s underlying issues.

 

To be clear, our Financials analyst Josh Steiner has been advising our customers to short PRAA. Since adding it to his team's Best Ideas Short list in November, shares are down almost 30%.

 

Here’s an excerpt from an update on PRAA via an institutional research note written by Steiner:

 

“PRA Group (PRAA) reported 1Q 2016 earnings after the close last night. The company missed revenue expectations by -6%, reporting $225 million versus expectations for $240 million, and adjusted EPS of $0.85 fell -11% short of expectations for $0.96. GAAP EPS, meanwhile, was $0.69, 28% below expectations.”

 

It’s also important to note, as Steiner continues, “Operating margin has fallen by a massive -770 bps from 39.2% in 1Q15 to 31.5% in 1Q16.”

 

Another highlight that caught our Financials team’s attention, since the broader issue is on the SEC’s radar, was the widening disparity between PRAA’s GAAP and non-GAAP earnings:

 

The last 9 months have seen GAAP earnings of $1.91, while non-GAAP earnings have been $2.87 (50% higher!). We think the buyside and sell-side may be slowly waking up to the fact that GAAP numbers are the better gauge of how PRA is performing. It's also remarkable how in the last 9 quarters, not once have Non-GAAP earnings been lower than GAAP earnings.”

 

Other important issues to watch include further deterioration in major company metrics, regulatory scrutiny, allowance charges and IRS-related tax troubles. In other words…

 

Not good.

 

Bottom Line: “Given the numerous aforementioned headwinds, we believe this quarter’s broad deterioration in PRAA’s metrics is only the beginning of the company’s downturn. We continue to see significant downside to PRAA’s stock price.”

 

*  *  *  *

 

Editor’s Note: To access our institutional research email sales@hedgeye.com.


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