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, rates and bond spreads, key currency crosses, and commodities. 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: Wednesday - equity markets 7 27


Daily Market Data Dump: Wednesday - sector performance 7 27


Daily Market Data Dump: Wednesday - volume 7 27


Daily Market Data Dump: Wednesday - currencies 7 27


Daily Market Data Dump: Wednesday - rates and spreads 7 27


Daily Market Data Dump: Wednesday - commodities 7 27

TWTR | Worse than the Guide (2Q16)

Takeaway: We thought it was crazy to think that Legacy O&O could decline in 2Q; now it may not be that crazy to think Total Ad Rev declines in the NTM


  1. 2Q16 ≠ SANDBAG: We were expecting upside to 2Q Ad revenue since mgmt’s guidance implied either a y/y decline in its Legacy Owned-&-Operated (O&O) Ad business, or no sequential growth in either Non-O&O or Auto-Play.  We had a hard time believing either scenario was possible, but we actually got a combination of both.  The Non-O&O business sequentially declined into a seasonally stronger 2Q, and we estimate that Legacy O&O declined y/y in the mid-single digit range.  Auto-Play was the sole bright spot, producing an estimated 80% of its total Ad revenue growth in 2Q.  The 3Q guide was pretty dreadful; TWTR’s total revenue guidance was actually below what consensus was assuming for just the Advertising segment.  The 3Q guide is effectively calling for Ad revenue growth somewhere in the single-digit range depending on mgmt's assumptions for its Data segment.  The knee-jerk reaction is to assume 3Q was sandbagged, but the 2Q guide presented the same way.
  2. AUTO-PLAY = LEGACY SIPHON: It’s becoming clearer that Auto-Play is not a stand-alone growth driver, but is rather pulling engagements/budget away from its Legacy O&O ads.  This mix-shift dynamic will likely continue given the lower Auto-Play engagement threshold; especially since the more Auto-Play ads that TWTR introduces into a user’s feed, the less likely they are to directly engage with its Legacy CPC ads, which require user interaction to produce revenue.  So even if advertisers are still allocating and/or increasing budget to Legacy O&O, it doesn’t mean those budgets will actually be fulfilled; especially if TWTR continues to struggle to produce user growth.  Further, as we move through the NTM when TWTR has Auto-Play fully baked into its comps, it's possible that Total Ad revenues decline in the NTM since Auto-Play engagement growth will now be driven almost exclusively by ad load, which could exacerbate the legacy-siphon dynamic further.
  3. WHERE'S THE BOTTOM? It may sound crazy to think that Total Ad revenues may starting declining in the NTM, but the thought of its Legacy O&O business declining sounded crazy before its 2Q results.  For context, the 2Q pressure in Legacy O&O Ad revenue happened before TWTR fully comped past its Auto-Play launch.  We estimate that Auto-Play represents less than 20% of its total O&O Ad revenues, so there is a lot of Legacy O&O budget at risk just from user ad fatigue alone (Point 2).  Further, the sequential decline in Non-O&O points to another potential source of declining revenue against peak comps over the next 2 quarters.  We’re lucky TWTR isn’t down near LNKD-4Q15 levels off this print, especially considering TWTR's +30% rally since the LNKD-MSFT deal.  So we may get another shot at the short, which we had covered prematurely thinking TWTR may have bottomed out.  But considering that there isn't any clear way to fix TWTR's model, it may just mean there isn't a bottom in sight outside potential take-out value, which we doubt would be anywhere near its $10B EV when both its revenues and users are trending toward decline.  


Let us know if you have any questions, or would like to discuss further.


Hesham Shaaban, CFA
Managing Director



TWTR | Worse than the Guide (2Q16) - TWTR   Non O O 2Q16

TWTR | Worse than the Guide (2Q16) - TWTR   Incremental Ad Revenue by Source 2Q16 

Our bearish bias on the EUR/USD remains..

Client Talking Points


Our bearish bias on the EUR/USD remains and look to Friday’s announcement on the latest stress tests from 51 banks to put marginally more downside in the cross regardless of the headline “news” from the results. #EuropeImploding.


The BoJ heads into its July 28-29 meeting with peak expectations of incremental monetary easing (22 of 28 analysts according to the latest Nikkei survey expect easing). If the policy board sticks with traditional QQE expansion, we would expect a short-lived JPY sell-off and Nikkei pop, but if the #beliefsystem in Japan was still intact then 10Y JGB Yields wouldn’t have come in by -9bps with 5Y5Y Forward Breakeven Rates declining -24bps MoM.

Durable Goods

While aggregate household spending remains relatively healthy, the trend in domestic durable goods orders continues to prove neither durable nor good.  Headline Durable Goods fell -4.6% sequentially in June and declined to -6.4% YoY.  While the -60% decline in private sector aircraft orders weighed on the headline, Durables ex-Defense and Aircraft – which aligns most closely with what actual households buy – remained negative year-over-year (-1.8%) for a 4th consecutive month.  Meanwhile, Core Capital Goods Orders fell -3.7% YoY, extending its epic run of negative capital spending growth to 17 of the last 18 months = the most dismal non-recession/peri-recession streak basically ever.

Asset Allocation

7/26/16 64% 2% 4% 12% 10% 8%
7/27/16 64% 2% 4% 12% 10% 8%

Asset Allocation as a % of Max Preferred Exposure

7/26/16 64% 6% 12% 36% 30% 24%
7/27/16 64% 6% 12% 36% 30% 24%
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other assets classes is 33%.

Top Long Ideas

Company Ticker Sector Duration

Gold (GLD) = Protection from global currency devaluation and inflation/down USD – You can travel anywhere on earth and get a quote in local currency.


Long Bonds (TLT) = #GrowthSlowing, yield curve compression.


Treasury Inflation-Protected Securities (TIP) = Combination of the above exposures.

Three for the Road


CHART OF THE DAY: Can The BOJ Save Japan From Economic Reality?… via @HedgeyeDDale #BOJ #helicoptermoney



“When your team is winning, be ready to be tough, because winning can make you soft. On the other hand, when your team is losing, stick by them. Keep believing.”

– Bo Schembechler


Brian McCann has batted over .300 two times over the course of his 12 year MLB career.

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.

July 27, 2016

Want more from Daily Trading Ranges? CLICK HERE to submit up to 4 tickers you'd like to see on the list. 


  • Bullish Trend
  • Bearish Trend
  • Neutral

10-Year U.S. Treasury Yield
1.65 1.47 1.57
S&P 500
2,131 2,178 2,169
Russell 2000
1,182 1,218 1,216
NASDAQ Composite
5,009 5,130 5,110
Nikkei 225 Index
16,105 16,997 16,383
German DAX Composite
9,925 10,372 10,247
Volatility Index
11.72 16.63 13.05
U.S. Dollar Index
96.21 97.92 97.18
1.09 1.11 1.09
Japanese Yen
104.04 107.21 104.64
Light Crude Oil Spot Price
42.07 44.98 42.92
Natural Gas Spot Price
2.59 2.80 2.68
Gold Spot Price
1,310 1,350 1,320
Copper Spot Price
2.16 2.27 2.22
Apple Inc.
96.48 104.10 96.67
729 755 735
Netflix Inc.
80.38 95.06 91.41
J.P. Morgan Chase & Co.
62.03 64.54 64.13
Twitter Inc.
16.02 18.55 18.45
Lockheed Martin Corp.
251 260 254

Hedgeye's Daily Trading Ranges are twenty immediate-term (TRADE) buy and sell levels, along with our intermediate-term (TREND) view.  Click HERE for a video from Hedgeye CEO Keith McCullough on how to use these risk ranges.

JT TAYLOR: Capital Brief

JT TAYLOR: Capital Brief - JT   Potomac banner 2

“You must pay the price if you wish to secure the blessing.”

-        Andrew Jackson


HELP FROM HILLARY’S HUSBAND: A more subdued group of speakers followed Monday’s captivating kickoff cast, featuring Mothers of the Movement - a group of women who lost children in cases that inspired the Black Lives Matter movement, along with other Clinton surrogates, but sentiment quickly shifted when President Bill Clinton took the stage in primetime to extol the virtues of his wife, the former First Lady and possible president. There’s never been quite a speech like the one he gave – speaking in the unprecedented role of husband, former president and potential first gentleman. President Clinton was the anchor of the night and the convention as a whole so far, but will his centrist values and praise for his wife rally any part of the progressive wing and kick-start momentum into the final days?


BERNIE OR BUST: Bernie Sanders is certainly feeling the love from his supporters, but will it ever translate to Hillary Clinton and at what length are Sanders holdouts willing to continue their temper tantrums when they put the party at risk of losing the election? The jeering contingent of backers has been so insistent about never supporting Clinton that Sanders himself can’t even reel them in – his revolution is running amok. Sanders formally nominated Clinton last night and his best shot to win them over is to build upon his role as Clinton’s chief surrogate now and for the remainder of the campaign. Democratic power brokers fear that these last-ditch holdouts are marring the convention, hampering unity and their general election chances; but should they be playing to the audience inside the Wells Fargo Center - or the much more critical audience of millions tuning in?


OMNI-BUST?: Congress longs for the day it can pass all 12 appropriations bills separately – but that will not happen this year…or anytime in the near future. The Appropriations Committees in both the House and the Senate have moved all 12 spending bills out of Committee, allowing for negotiations to proceed over recess. If successful, we could look be looking at long-term funding for the government or more likely, an omnibus package – but don’t get your hopes up. Congress could instead adopt a continuing resolution (CR) as an interim measure, providing funding for areas of the government for which specific appropriations are not adopted before the new fiscal year begins, but that would keep funding at the same level as the previous fiscal year. An omnibus package is better for economy and markets given the certainty that the government will be funded for a longer period of time, we can only hope something gets done before September 30.


TRUMP’S TRUSTY THUMBS: By day, Donald Trump is a campaigning machine – raising cash and swooping into swing states like NC and PA – but by night, he’s a twitter maniac. His blood pressure must be boiling watching primetime tv this week, because on the first night of the DNC, he lobbed insult after insult at every major speaker, with just one exception - Michelle Obama. She didn’t mention him by name either, but she did criticize “the Manhattan businessman” for his rampant Twitter use. We thought the frequency of Trump’s 140 character games were going to diminish, and expected at least some sort of pivot from last week’s convention, but we were wrong.


DISSECTING THE PARTY PLATFORMS: The Republican Convention concluded last week and the Democratic Convention officially kicked off this week. We put together a comparison of each party’s platform to help you better understand the differences and similarities in the policy agendas for the coming year. You can read the comparison here.

CHART OF THE DAY: Can The BOJ Save Japan From Economic Reality?

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Senior Macro analyst Darius Dale. Click here to learn more.


"... So as the BoJ heads into its July 28-29 meeting with peak expectations of incremental monetary easing (22 of 28 analysts expect such per the latest Nikkei Quick survey), we must ask ourselves one very simple question:


“Does whatever they do even matter?”


CHART OF THE DAY: Can The BOJ Save Japan From Economic Reality? - 7 27 16 Chart of the Day

real-time alerts

real edge in real-time

This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.