prev

CHART OF THE DAY: Poking the Productivity Bear

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Director of Research Daryl Jones. Click here to learn more.

 

"... As we've highlighted in the Chart of the Day, productivity, which is a proxy for the goods and services produced each hour by Americans, has now declined for three straight quarters. As the chart shows, productivity declined both sequentially and year-over-year. This was also the first time since 1979 that productivity has declined for three quarters in a row."

 

CHART OF THE DAY: Poking the Productivity Bear - 08.11.16 chart


McMonigle: An OPEC Meeting Spoiler Alert

In this brief HedgeyeTV video, Hedgeye Potomac Senior Energy Policy analyst Joe McMonigle explains why Saudi Arabia and Iran will once again dash OPEC oil production “freeze” discussions.


Cartoon of the Day: Sign of the Times

Cartoon of the Day: Sign of the Times - 10 yr yield cartoon 08.10.2016

 

Ten-year yields, globally, were down across the board this morning. Got #GrowthSlowing?


the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

No Holding Back... Saudis Ramping Production Despite Oil Production "Freeze" Rumors

Takeaway: Saudis ramp oil production. That's right. No production freeze. Just as we've been saying.

No Holding Back... Saudis Ramping Production Despite Oil Production "Freeze" Rumors - Oil cartoon 04.07.2016

 

"Saudi Arabia told OPEC that it pumped a record 10.67 million barrels of oil a day in July to meet a summer surge in domestic demand, an increase that will do nothing to endear the group’s leading exporter to other members seeking output limits to shore up prices," Bloomberg writes.

 

That's right. No production freeze. Just as we've been saying. Check out Hedgeye Potomac Senior Energy analyst Joe McMonigle's piece "OPEC Oil Production "Freeze" Talk Will Have Similar Ending ... No Agreement." McMonigle has been making the case that Saudi Arabia and Iran have no incentive to agree to an oil production freeze anytime soon.

 

Here's a key chart from Bloomberg (with our commentary in red). As you can see, so far this year, Joe has been right. Saudia Arabia has, in fact, ramped production.

 

No Holding Back... Saudis Ramping Production Despite Oil Production "Freeze" Rumors - freeze


The NIRP Effect: A Look At Pancaking Yields & Trillions In Negative Yielding Debt

Takeaway: The $9.4 trillion in negative-yielding sovereign bonds now make up 37% of the Bloomberg Global Developed Sovereign Bond index.

The NIRP Effect: A Look At Pancaking Yields & Trillions In Negative Yielding Debt - Yield cartoon 06.14.2016

 

As yields on bonds from the U.K., Spain, and Ireland make news lows this week, sovereign bond yields are digging ever deeper into the red. According to the Bloomberg Global Developed Sovereign Bond index, which tracks nearly $25 trillion worth of sovereign bonds globally, there are $9.4 trillion in negative-yielding sovereign bonds, making up 37% of the index. That's up from just 13% at the start of 2016. 

 

Meanwhile, the value of global negative-yielding investment grade corporate debt is up 1,254% this year at $368 billion. That's according to data in the Bloomberg Global Investment Grade Corporate Bond index, which tracks 10,050 investment grade bonds globally. (These figures have backed up a bit in the past month with rising yields in Japan and the U.S. Click here for our previous update.)

 

The index now includes 445 negative yielding bonds, versus just 59 at the start of the year, issued by companies such as General Electric, Siemens, Total, Unilever, Daimler, and Roche. 

Back to Sovereign Bonds...

 

A few notable developments... new lows for 10-year yields in Spain, Ireland and the U.K. Below are their respective yield curves versus this time last year. Note how they've fallen (yellow line last year versus green line today).

Spain

The NIRP Effect: A Look At Pancaking Yields & Trillions In Negative Yielding Debt - spain 8 10

U.K.

The NIRP Effect: A Look At Pancaking Yields & Trillions In Negative Yielding Debt - uk 8 10

Ireland

The NIRP Effect: A Look At Pancaking Yields & Trillions In Negative Yielding Debt - Ireland 8 10

Got #GrowthSlowing.


2 Reasons Why Wayfair Is Still A Short

Takeaway: W continues to invest in an addressable market much larger than we believe it will ever recognize. Starting to see cracks in the foundation.

Editor’s Note: Below is an institutional research note on Wayfair written yesterday by Hedgeye Retail analysts Brian McGough and Alexander Richards. To access our institutional research email sales@hedgeye.com.

 

2 Reasons Why Wayfair Is Still A Short - wayfair 8 10

 

The -20% move today is a nice near-term win, but let’s be perfectly clear about one thing…this short call is far from over. We saw a few cracks in the foundation within the numbers printed this morning and we think there’s considerably more downside risk embedded in this story as the company continues to invest in an addressable market that is much larger than our research has us convinced it will ever recognize. And ever is a long time.

  1. This is no longer a US story as the company has clearly pushed international expansion up higher in the queue. To date, Wayfair is present in four countries and the management team has now talked to roughly a $180bn market opportunity between the US and Western Europe. What that tells us is the company isn’t done funneling dollars across borders in order to diversify its revenue base. Meaning a bigger drag on earnings for longer.
  2. Over the past 12 months, Wayfair has rung the register on $2.7bn in the US. The current market share on Wayfair’s math is 13%, or looked at another way, 4% of its long term TAM. That still leaves a considerable amount of share to be captured in the US if you believe Wayfair’s math. We don’t think the outlook is as opportunistic for W, which based on our work suggests that the company has a $27bn TAM with upside to $45bn vs. the company at $90bn. That tells us that Wayfair is spending up now to supplement an unrecognizable US end market.

Attention Students...

Get The Macro Show and the Early Look now for only $29.95/month – a savings of 57% – with the Hedgeye Student Discount! In addition to those daily macro insights, you'll receive exclusive content tailor-made to augment what you learn in the classroom. Must be a current college or university student to qualify.

next