While Wall Street trumpeted Friday's headline 255,000 jobs number as "good," the year-over-year rate of change continues to slow from 2.3% in February of 2015 to last week's reading of 1.72%.
In this complimentary edition of About Everything, Hedgeye Demography Sector Head Neil Howe discusses the so-called "gig economy." A broad measure of the gig economy shows that it accounted for as much as 40% of the workforce in 2010, up from 30.6% in 2005. Howe dissects what this means for the U.S. economy and the broader implications for investors.
Takeaway: Tallgrass Energy CEO David Dehaemers accused Hedgeye Energy analyst Kevin Kaiser of libel saying that he fabricated information in a note.
"Tallgrass Energy Partners LP Chief Executive Officer David Dehaemers had more on his mind than earnings during the company’s quarterly call with analysts on Wednesday.
Dehaemers took a break from talking strategy to accuse Hedgeye Risk Management analyst Kevin Kaiser of libel. Ripping into what he described as “people who act like analysts,” Dehaemers said Kaiser falsely reported on Aug. 1 that Tallgrass faces a potential contract restructuring with Bonanza Creek Energy Inc. Dehaemers said Bonanza is not a shipper on the company’s Pony Express oil pipeline. Kaiser lashed back on Twitter, citing Bonanza filings that appeared to back up his report.
On Thursday, James Edwards, Bonanza’s investor relations director, said by phone the oil explorer uses the pipeline through a third party."
Below are the key excerpts from Bonanza (BCEI) filings cited by Kaiser:
... And here's Tallgrass CEO David Dehaemers' comments about Kaiser's research from the conference call transcript:
"And you probably wonder now what am I talking about; well I'm going to tell you specifically what I'm talking about. On Monday, July or August 01, at 8.40 p.m. an analyst from Hedgeye Energy [ph] sent an unsolicited email to, I don't know how many people, but it clearly made its way to us. It went to many of our investors. It went to many of the regulated analysts or the people that act like analysts that cover our company...
You all know what is funny about this? Frankly, it is not funny. What it is, is libel. And the reason it is libel is because Bonanza Creek is not a shipper on Pony, they have never shipped one barrel on Pony Express. They certainly aren't a committed shipper.
I would suggest to people that write things about our company, be that in social media or as purported analysts, get their facts straight before they go libeling our company because they are liable for that.
I will end with my message being this. We work really hard around here for a lot of people that have a lot of money invested in our future. People are obviously welcome to believe our story, not believe it, buy our stock, sell it short, whatever. What you aren't able and have the right to do is make up your own set of facts and then slander us. If this continues we will have other means for which we will address this in the future."
The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.
Takeaway: The housing bubble in Australia is bad news for the country's big banks.
Editor’s Note: Below is a brief excerpt from an institutional research note written by Hedgeye Financials analyst Josh Steiner discussing ME Bank’s semi-annual report called the Household Financial Comfort Report which details the results of a survey that gathers responses from a significant sample size of 1,500 households.
This is an update to a previous piece, “Banks on the Barbie: Four Short Ideas In Australia’s Housing Bubble.” To access our institutional research email firstname.lastname@example.org.
The red line in the chart below represents the portion of the 65% of indedbted households that expect they will be unable to make their minimum payments. After being virtually flat for the entirety of the survey’s life, that line has risen twofold in the last six months from 5% as of December 2015 to 10% as of June 2016. To be clear, that means that 10% of the 65% of Australian households with debt—6.5% of all households—expect to default in the next 6-12 months.
**To access our institutional research email email@example.com.
In this brief excerpt from The Macro Show earlier today, Hedgeye CEO Keith McCullough and Senior Macro analyst Darius Dale discuss Friday’s Jobs Report. Spoiler alert: #EmploymentSlowing.
Takeaway: Fed policies boosted asset prices to the benefit of the super rich while devaluing the American people's purchasing power.
In a late 2010 Washington Post op-ed entitled "Aiding the Economy: What the Fed Did and Why," then Fed chairman Ben Bernanke defended the FOMC's zero interest rate policy and quantitative easing saying:
"[Fed policies] had eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate this additional action. Easier financial conditions will promote economic growth... And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion." (Emphasis added)
Nearly six years have passed since Bernanke wrote those fateful words. The supposed "wealth effect," brought on by super easy Fed policy, has failed to "boost consumer wealth" for a significant number of Americans.
According to a recently released Federal Reserve Bank of New York study, 15.1% of households in the U.S. population have either zero or negative net wealth. The authors find that Americans plagued by negative wealth are more likely to be female; from single parent households; or from a minority group (either African American or Hispanic). These households are riddled with credit card debt, student debt and mortgage debt (with "some 7 percent of home-owning households in our survey report being underwater on their mortgage," the survey finds).
With the Fed's balance sheet comfortably above $4 trillion and so much promise from omnipotent central bankers, why are so many Americans still struggling? The S&P 500 is up 170%+ since the market bottomed in 2009. In short, what gives?
Here's the key chart showing the breakdown of total wealth in the U.S. and the ownership of U.S. financial assets by wealth distribtuion from our 99-page Q3 2016 Macro themes presentation. As you can see the top 10% of Americans own 84.5% of U.S. financial assets. In other words, debt-ridden families weren't able to participate in the Fed-stoked asset price boom. (To access our institutional research email firstname.lastname@example.org.)
So much for the wealth effect...
Meanwhile, during Bernanke's reign, the Fed devalued the U.S. Dollar to a 40-year low, in 2011-2012, thereby devaluing the purchasing power of the American people. Then again currency devaluation, asset price inflation in central planning 101. Note: This policy doesn't help the bottom 50% of Americans who own 1% of U.S. financial assets and are paid in U.S. dollars.
Unfortunately, the Fed's policies have helped lined the pockets of the rich and inflated "one of the top-three stock market bubbles in history" all at the expense of average Americans.
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