Incessant Fed flip-flopping from hawkish to dovish (6x in 8 months!?) is simply insane. What will they do at Wednesday's FOMC meeting? Tell us what you think by casting your vote in our Poll of the Day here.
In this excerpt from The Macro Show, Hedgeye Internet & Media analyst Hesham Shaaban lays out our Best Idea Long call on Expedia and why the company’s HomeAway acquisition is a “considerable opportunity” relative to Wall Street’s expectations.
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 TODAY, 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."
Confirmation Number: 13645449
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.
Takeaway: After hitting a post-recession high, S&P 500 company share buybacks fell -6.8% y-o-y in the second quarter.
is the tide turning?
Consider this. After hitting a post-recession high in 2Q16, FactSet reports today that S&P 500 buyback activity tumbled -6.8% year-over-year in 2Q16.
Here's the key excerpt and chart from the FactSet data:
"Companies in the S&P 500 spent $125.1 billion on share buybacks during the second quarter, which marked the smallest quarterly total since Q3 2013. This comes after a first quarter that saw buybacks for the index hit a new post-recession high. Aggregate buybacks in Q2 represented a 6.8% decline from the year-ago quarter, which was the largest year-over-year decrease since Q1 2015. This Q2 decline came during a quarter that saw the S&P 500 index hit record-high price levels. On a trailing twelve-month basis, shareholder buybacks amounted to $592.9 billion at the end of the second quarter. This was a 6.8% increase from the same time period a year ago. The TTM buyback total at the end of Q2 marked the fourth largest amount going back to the start of 2005, despite this quarter’s decline."
This dour question mark is a far cry from the headlines we saw just two months ago when the buyback boom was cited as justification for why the S&P 500 was hitting all-time highs. Indeed, as the Wall Street Journal wrote, "There's No Need To Fear the Buyback-Boosted Stock Market."
We advised otherwise, here. (Note: The S&P 500 is down -0.9% since then.)
***To understand why we think buybacks, corporate profits, consumer confidence, the labor market etc, etc, etc, are all past peak and U.S. growth continues to slow, watch this 6-second animated clip Hedgeye CEO Keith McCullough in "An Animated History of U.S. #GrowthSlowing" below.
Takeaway: Average Co + Average Acquisition = Subpar Financial Performance. ASNA now. HBI is next in line in 2017. Mark your calendar.
We don’t care much for ASNA – and never really ‘got’ the whole value-play. We actually have grown to not like Retail value-stocks. They’re ‘value’ for a reason, which is not where you want to be in this environment unless the Street is overly penalizing the company for investing in its future (RH, NKE, DKS). ASNA is a good example of the former. We think HBI is next in line.
Here’s what we can all learn from ASNA:
a. Great example of ‘the calendar rule’ – why you should mark your calendar for 12 months after we see a questionable acquisition.
b. It’s been just 5 quarters since ASNA bought and integrated Ann Taylor. We can finally see the real earnings power, and it’s not good. 12 months of first-year integration obfuscated the real earnings power of this company (ie it made it look too large).
c. The company missed the quarter by 50%, cut expectations by 24%, the super-bullish ‘buy rating’ ratio fell by 30%, and the stock is currently trading down 27%.
d. All this brings to question 1) ASNA’s ability to consummate deals, but more so, 2) Why it chose to do this deal in the first place. Great example of why defensive deals don’t win.
Hanesbrands is the king of defensive deals. It has made some of the most egregiously priced deals or questionable assets that we have seen in this economic cycle. Will it implode this quarter? Probably not. But Rich Noll has 12 days left on the job. Mark your calendar for 3Q17 – or sooner.
LINK: HBI | Press the Short
Takeaway: The BOJ is monetizing over half of annual JGB issuance but has still failed to energize economic growth.
Editor's Note: Below is an excerpt from a research note written by Hedgeye Senior Macro analyst Darius Dale. To access our institutional research email email@example.com.
That Japan's failure to launch
...is occurring at a time when the Bank of Japan (BoJ) is expanding its balance sheet at a near +25% annual clip speaks volumes about the inefficacy of the BoJ’s existing monetary easing platform.
And while market participants have yet to defend critical ratios with respect to the size of the BoJ’s balance sheet or the pace of its accumulation of JGBs, the seemingly egregious nature of both is worth flagging.
- The BoJ’s balance sheet is nearly three times the size of the next closest G4 counterpart when adjusted for the size of the respective economies.
- When assessed as a ratio to total nonfinancial sector credit (a good proxy to evaluate where LSAP programs may face frictional resistance), the BoJ’s balance sheet is twice the size of the next closest G4 counterpart.
- Prior to the start of Abenomics, the BoJ was a fairly distant third with respect to JGB ownership at 12% of the float. It’s now far and away the #1 holder at 33.9% of the total. Monetizing over half of annual JGB issuance has a tendency to do that for you.
All told, the purpose of this note isn’t to speculate on what the BoJ will or won’t do tomorrow. For all I care, Kuroda could tightrope across the towers of the Tokyo Metropolitan Government Building wearing nothing but whitey tightys and I would be largely unfazed.
While there’s no doubt the BoJ has the potential to shock global bond markets for a TRADE, there’s also no doubt that nothing they do tomorrow or in the not-too-distant future will outweigh economic gravity in the pricing of interest rates over the long term. How they plan to achieve the aggressive growth and inflation targets as mandated by Abenomics remains well beyond our purview – and likely theirs too (hence the stench of desperation and policy fatigue).
See the forest, not the trees. The central planning #BeliefSystem continues to break down right before your very eyes.
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