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Capital One: Beware The Siren Song

Takeaway: "You’d have to go back to July '07 for the last time delinquency rates had risen by 30bps y-o-y. And we know where the world stood then."

Capital One: Beware The Siren Song - denial cartoon 09.28.2015 normal

 

In this excerpt from The Macro Show earlier today, Hedgeye Financials analyst Josh Steiner dissects the credit cycle and specifically the detereorating data points embedded in credit card lender Capital One's business.

 

"Capital One is the largest U.S. subprime lender out there. Subprime lending, defined by the credit card lending industry as FICO sub-660, makes up roughly a third of their book. This chart [see below] shows the year-over-year rate of change in delinquencies in their U.S. credit card business.

 

Click image to enlarge

Capital One: Beware The Siren Song - capital one

 

As you can see, as of the latest data, delinquencies are up 35 bps year-over-year and its actually been accelerating now, really for the better part of the last year. In fact, as you go back a bit further, it bottomed out in early 2015 and, for the better part of the last 18 months, was getting less good but is now decidedly deteriorating.

 

Just to give you a bit of a time reference point, you’d have to go back to July of 2007 for the last time that delinquency rates had risen by 30bps year-over-year. And we know where the world stood in July of 2007.

 

So its not just that the market is at a toppy valuation, which it is. You’ve also got de facto indications that credit quality is deteriorating from Capital One, the largest US subprime lender in the country. Again, beware the siren song. I would not be chasing the market up here."


PREMIUM INSIGHT

About Everything | Augmented Reality: Better Than Virtual?

About Everything | Augmented Reality: Better Than Virtual? - pokemon go

In this complimentary edition of About Everything, Hedgeye Demography Sector Head Neil Howe discusses the media hype surrounding virtual reality versus "the next big thing [that] may already be sitting in your pocket: augmented reality." Howe breaks down the key takeaways and explains the broader implications for investors.


Daily Market Data Dump: Monday

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: Monday - equity markets 8 15

 

Daily Market Data Dump: Monday - sector performance 8 15

 

Daily Market Data Dump: Monday - volume 8 15

 

Daily Market Data Dump: Monday - rates and spreads 8 15

 

Daily Market Data Dump: Monday - currencies 8 15

 

Daily Market Data Dump: Monday - commodities 8 15


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.

Got #GrowthSlowing? These Poor Central Planners Just Don't Get It

Takeaway: The 10s/2s yield spread was down -6bps on the week & down -41bps year-to-date. Got #GrowthSlowing?

Another “scare” of “rising 10yr yields” met with another ramp in long-term bonds last week; we’re up to $13.4T in negative yielding bonds globally now (vs. 13.1T last wk) as global growth continues to look like Yield Spreads (slowing); UST 10yr down another beep to 1.50% this morning and the USA Yield Spread testing YTD lows at 80bps (short Banks #reiterated).

 

Got #GrowthSlowing? These Poor Central Planners Just Don't Get It - 10yr2yr 8 15

 

Editor's Note: The snippet above is from a note written by the Hedgeye Macro team and sent to subscribers this morning. Click here to learn more.


CHART OF THE DAY: Reflation Under Siege

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.

 

"... With the “reflation” trade under siege since peaking in early June, a -0.2% year-over-year Producer Price report for JUL (vs. +0.3% y/y in JUN) gave the market what it loves most when it can’t beat 1% GDP growth – Down Dollar, Down Rates:

 

  1. US Dollar Index ended the week down -0.5%
  2. US 10yr Yield fell 8 basis points on the week to 1.51%
  3. CRB Index and Oil reflated +0.5% and +6.4% on the week, respectively" 

 

CHART OF THE DAY: Reflation Under Siege - 08.15.16 chart


REPLAY! This Week On HedgeyeTV

Our deep bench of analysts take to HedgeyeTV every weekday to update subscribers on Hedgeye's high conviction stock ideas and evolving macro trends. Whether it's on The Macro ShowReal-Time Alerts Live or other exclusive live events, HedgeyeTV is always chock full of insight.

 

Below is a taste of the most recent week in HedgeyeTV. (Like what you see? Click here to subscribe for free to our YouTube channel.)

 

Enjoy!   

 

1. Tobin: Shorting Healthcare Is A ‘Layup’ (8/12/2016)

 

 

In this brief excerpt from our “Healthcare Earnings Recap” call earlier this week, Hedgeye’s Tom Tobin explains why Healthcare earnings trends don’t bode well for the industry’s stocks.  

 

2. Van Sciver: I’m Pretty Excited About The CAT Short Call (8/11/2016)

 

 

In this excerpt from our Short Caterpillar Black Book presentation held on August 4, 2016, Hedgeye Industrials analyst Jay Van Sciver discusses where CAT ranks on his list of short calls.

 

3. McMonigle: An OPEC Meeting Spoiler Alert (8/11/16) 

 

 

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.

 

4. About Everything | Q&A with Neil Howe: The Gig Economy is Alive and Growing (8/9/2016)

 

 

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.

 

Click here to access the associated About Everything slides.

Click here to read Howe’s associated About Everything piece.

 

5. What Wall Street Missed About Friday’s Jobs Report (8/8/2016)

 

 

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.

 

Click here to subscribe for free to our YouTube channel.


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.65%
  • SHORT SIGNALS 78.64%
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