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There May Be No Bottom In Sight For Twitter

Takeaway: There isn't any clear way to fix TWTR's model. There might not be any bottom in sight outside potential take-out value.

This is a brief excerpt from our Internet & Media analyst Hesham Shaaban's note to institutional subscribers on Twitter's (TWTR) lousy earnings report which has sent shares down over -10%. He’s been bearish on TWTR and remains so. Send an email to sales@hedgeye.com for more information on our institutional research.

 

...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.  

 

2-minute clip ahead of TWTR's print where Hesham outlines his concerns.

 

Where's the bottom for shares of Twitter? Anyone's guess.

 There May Be No Bottom In Sight For Twitter - Twitter cartoon 5.7.2014


Ouch! Durable Goods: Neither Durable Nor Good

Takeaway: Headline Durable Goods fell -4.6% sequentially in June and declined to -6.4% YoY.

Ouch! Durable Goods: Neither Durable Nor Good - The Cycle cartoon 05.12.2016

 

While aggregate household spending remains relatively healthy, the trend in domestic durable goods orders continues to prove neither durable nor good, according to Hedgeye U.S. Macro analyst Christian Drake.  Headline Durable Goods fell -4.6% sequentially in June and declined to -6.4% YoY. 

 

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.

 

Here's the detailed Durable goods breakdown (as you can see, it's a sea of red):

 

Click image to enlarge

Ouch! Durable Goods: Neither Durable Nor Good - durable goods 7 27


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

 

CLICK TO ENLARGE

 

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


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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


[From The Vault] Cartoon of the Day: In Case You Didn't Know

[From The Vault] Cartoon of the Day: In Case You Didn't Know - Fed lady cartoon 06.25.2016  1

 

Our inimitable, in-house cartoonist Bob Rich is on a much-deserved summer vacation. While he kicks back and relaxes, we're going into the Hedgeye Vault and highlighting some of his best work. On that note, ahead of tomorrow's Fed policy announcement, we bring you another audience favorite


Uncertainty? 10% Probability of Fed Rate CUT to 10% Rate HIKE (In Just One Month)

Takeaway: Yeah ... this is normal.

Uncertainty? 10% Probability of Fed Rate CUT to 10% Rate HIKE (In Just One Month) - rate hike cartoon 11.05.2015

 

U.S. equity markets are backing off today ahead of a full week of central planning. (The Fed's policy announcement is tomorrow and the BOJ meeting on Thursday.)

 

Market expectations for 2016 Fed rate hikes are now within spitting distance of pre-Brexit hike probabilities.

 

Uncertainty? 10% Probability of Fed Rate CUT to 10% Rate HIKE (In Just One Month) - rate hike expectations 7 26

 

What a difference a month can make. Contrast this against the implied rate hike probabilities directly following the Brexit vote when rate CUT expectations for the July meeting spiked to 10%.

 

Uncertainty? 10% Probability of Fed Rate CUT to 10% Rate HIKE (In Just One Month) - rate prob 6 24

 

None of this is really shocking. In fact, it highlights the unbelievable amount of uncertainty surrounding Fed policy that's supposedly undergirding the recent rally to all-time highs.

 

Remember... it ain't over until the Fed lady Sings.


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