prev

7 Reasons Market Risk 'Significantly Exceeds' Reward

Takeaway: We think the "risk-reward" of the U.S. stock market is tilted decidedly to the downside.

7 Reasons Market Risk 'Significantly Exceeds' Reward - S P 500 cartoon 06.08.2016

 

Hedgeye Financials analyst Josh Steiner listed the many reasons why we think the "risk-reward" of the U.S. stock market is tilted decidedly to the downside.

 

Here's a brief recap from a recent edition of The Macro Show

 

  1. You’ve got small business loans and credit quality deteriorating, an enormous part of the economy.
  2. You’ve got the rest of the lending complex beginning to tighten.
  3. You’ve got the Fed in a position in which it's not able to do much about it.
  4. You’ve got a broad swath of economic indicators getting worse.
  5. You’ve got market valuation up on a rope.
  6. You’ve got the duration of the labor cycle very extended.
  7. And then there's this curious case of significant decline in maternity rates taking hold across America.

 

As Steiner summarized:

 

"To me, it all paints a very fascinating picture of risk versus reward in the marketplace right now, where I think it's pretty plain that risk significantly exceeds what’s being priced into stocks and it's not that uncommon an occurence. In October 2007, it should have been pretty plain to many people that things were going to go from bad to worse when the market was at an all-time high. And so the fact that the market hit a very high level is not a defensible argument for why we shouldn’t be concerned about all of this deterioration. It's actually exactly the opposite."


6 of 13 Key Indicators Flashing Warning Signals

Editor’s Note: Below is a brief excerpt from an institutional research note written by Hedgeye Financials analyst Josh Steiner. To access our Financials team’s research ping sales@hedgeye.com.

 

6 of 13 Key Indicators Flashing Warning Signals - red light

 

The trend of tepid risk readings broke last week with 6 of 13 indicators flashing short-term warning signals.

 

Most notably, the TED spread, a measure of counterparty risk in the financial system, spiked by 6 bps to 57. That is the highest reading since January 2012. Separately, the Shifon Index (China's TED Spread equivalent) has been quietly, but steadily creeping higher for the past month. Meanwhile, CDS widened globally, the high yield YTM shot up by +13 bps to 6.43%, and the price of Chinese steel dropped -1.5%.

 

6 of 13 Key Indicators Flashing Warning Signals - ted spread 9 19


PREMIUM INSIGHT

Emerging Markets: 4 Countries To Buy & 3 To Sell

Emerging Markets: 4 Countries To Buy & 3 To Sell  - HETV macroshow thumb 9.19.2016

In this brief excerpt from The Macro Show earlier today, Hedgeye CEO Keith McCullough and Senior Macro analyst Darius Dale discuss the emerging market countries they like and don’t like.


investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

ELECTION UPDATE: CALL INVITE WITH CHARLIE COOK OF THE COOK POLITICAL REPORT

Hedgeye Potomac is hosting a call with Charlie Cook - one of the nation’s leading authorities on American politics and U.S. elections, and founder of the Cook Political Report.

 

Cook will share his outlook on the presidential race, discuss the state of play for House and Senate elections, and give a preview of the upcoming presidential debates later this month.

 

The call will take place tomorrow, September 20th at 2:00 PM EST with prepared remarks from Cook followed by Q&A.

 

ABOUT CHARLIE COOK

 

Charlie Cook is the Editor and Publisher of the Cook Political Report and a political analyst for National Journal magazine, where he writes a twice weekly column. Charlie is considered one of the nation’s leading authorities on American politics and U.S. elections. In 2010, Charlie was a co-recipient of the American Political Science Association's prestigious Carey McWilliams award to honor "a major journalistic contribution to our understanding of politics." In the spring semester of 2013, Charlie served as a Resident Fellow at the Institute of Politics at the Kennedy School of Government at Harvard University.

 

Charlie founded the Cook Political Report in 1984 and became a columnist for Roll Call, the newspaper of Capitol Hill, in 1986. In 1998 he moved his column to National Journal. Charlie has served as a political analyst or election night analyst for CBS, CNN and NBC News and has been a frequent political analyst for all three major broadcast news networks and has appeared on Meet the Press and This Week.

 

The New York Times has called Charlie “one of the best political handicappers in the nation" and has said the Cook Political Report is "a newsletter which both parties regard as authoritative." The late David Broder wrote in the Washington Post that Charlie was "perhaps the best nonpartisan tracker of Congressional races," while CBS News' Bob Schieffer called the Cook Political Report, "the bible of the political community."

 

CALL DETAILS

 

Toll Free:

Toll:

UK: 0

Confirmation Number: 13645449


TGT | Why We’d Short It Today Black Book

Takeaway: Please join us Wednesday, 9/21 at 11:00am for our TGT Best Idea Short Call.

Please join us Wednesday, September 21st at 11:00 AM ET for a call reviewing our Black Book on Best Idea Short, Target (TGT).

 

There are a lot of reasons why we don’t like Target. It’s not because of any one factor, as most of those – at least in isolation – are known. But what is underappreciated (in a very big way) is the cumulative effect of a decade of mediocre/reckless decision making that has left the company in a difficult position – a position without the leverage to drive the business, the P&L, and cash flow going forward without eroding returns. We think this is probably in numbers for the back half of this year. But this company will have to back off of guidance and expectations, and ultimately take necessary steps (higher investment) to maintain competitive position, or else see continued top line pressure and earnings misses. We’ll walk through how we think it all plays out from here on Wednesday.

 

Simply put, Target has historically been largely a macro call, as has Wal-Mart. But we increasingly think it’s clear that this is no longer the case. We think what is missing in investors’ minds on this one is the duration that this sub-par performance will rear its true form. Our estimates are 15% below consensus next year, and 30% by 2019. 

 

One thing we balance with all of this is that the biggest thing this name has in its favor is that after all, it is Target. Will it be here in 10 years? Yes, it will. Will Kohl’s? Probably not. Bed Bath & Beyond? Not sure. Best Buy? Probably not. Ultimately this company will probably survive without egregious mismanagement. But we don’t like companies that simply survive – especially without respecting the precarious position they’re in today – and Target is definitely in one from where we sit. The company will likely ultimately do the right thing, we just think it will be costly before it ensures survival.

 

Call Details

Toll Free:

Toll:

UK: 0

Confirmation Number: 13645612

Materials/Video: CLICK HERE for event details (includes video link, materials link and dial-in details)


JT TAYLOR: ELECTION UPDATE: Call Invite with Charlie Cook of the Cook Political Report

Hedgeye Potomac is hosting a call with Charlie Cook - one of the nation’s leading authorities on American politics and U.S. elections, and founder of the Cook Political Report.

 

Cook will share his outlook on the presidential race, discuss the state of play for House and Senate elections, and give a preview of the upcoming presidential debates later this month.

 

The call will take place tomorrow, September 20th at 2:00 PM EST with prepared remarks from Cook followed by Q&A.

 

ABOUT CHARLIE COOK

 

Charlie Cook is the Editor and Publisher of the Cook Political Report and a political analyst for National Journal magazine, where he writes a twice weekly column. Charlie is considered one of the nation’s leading authorities on American politics and U.S. elections. In 2010, Charlie was a co-recipient of the American Political Science Association's prestigious Carey McWilliams award to honor "a major journalistic contribution to our understanding of politics." In the spring semester of 2013, Charlie served as a Resident Fellow at the Institute of Politics at the Kennedy School of Government at Harvard University.

 

Charlie founded the Cook Political Report in 1984 and became a columnist for Roll Call, the newspaper of Capitol Hill, in 1986. In 1998 he moved his column to National Journal. Charlie has served as a political analyst or election night analyst for CBS, CNN and NBC News and has been a frequent political analyst for all three major broadcast news networks and has appeared on Meet the Press and This Week.

 

The New York Times has called Charlie “one of the best political handicappers in the nation" and has said the Cook Political Report is "a newsletter which both parties regard as authoritative." The late David Broder wrote in the Washington Post that Charlie was "perhaps the best nonpartisan tracker of Congressional races," while CBS News' Bob Schieffer called the Cook Political Report, "the bible of the political community."

 

CALL DETAILS

 

Toll Free:

Toll:

UK: 0

Confirmation Number: 13645449


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.

next