Bad Sushi From the Bank of Japan

Takeaway: Big bang theories on what the BOJ “could do” didn’t pay out overnight.

“The definition of insanity... doing the same thing over and over again,

but expecting different results.”

-Albert Einstein


On that note, the Bank of Japan (BOJ) went ahead and implemented the “QQE with Yield Curve Control” plan (i.e. a -0.1% policy rate and a centrally planned 0.00% 10yr Yield rate). 


Bad Sushi From the Bank of Japan - z bad sushi





Here's a quick breakdown of the BOJ's policy announcementt:


  • BoJ to change maximum scale of each ETF buying operation
  • continue buying JGBs at ¥80T annually
  • conduct policy to influence interest rates
  • extend fixed-rate fund-providing operations to 10-yrs from 1-yr
  • begin fixed-rate JGB buying operation
  • increase monetary base until inflation goes above 2%
  • ...adopts inflation-overshooting commitment
  • ...scraps 7-12 year JGB buying duration period
  • use QQE with yield curve control 


#Riveting, eh? Yep. A whole lot of nothingness emerged from the latest central-market-plan to literally not let the Japanese 10yr Yield move from 0.00%. With a policy rate of -0.1%, you’re going to need a microscope to see that Bad Sushi Yield Spread.


For more insight on Japan, take a look at our Senior Macro analyst Darius Dale's "The BOJ's Stench of Desperation."



Macro markets doing a big yawn post the BOJ event and I have to admit that some of the “rates are gonna rip” theories are quite clever at this point; not as P&L practical as simply getting #GrowthSlowing right in 2016, but definitely clever! US Treasury 10yr Yield immediate-term risk range = 1.55-1.75%. I’m a buyer of long-term bonds on any move > 1.70%


Bad Sushi From the Bank of Japan - TLT safewaters 10.15.14 large


Editor's Note: The note above is from this morning's Early Look written by Hedgeye CEO Keith McCullough. Click here to subscribe.

Target (TGT): Best Idea Short Call Today

Takeaway: TGT will probably survive, but we don't like companies that simply survive.

Target (TGT): Best Idea Short Call Today - tgt black book



The Hedgeye Retail Team, led by Sector Head Brian McGough, will host a Black Book conference call today (at 11 a.m. ET) to review their SHORT thesis on Target Corporation.


Target has historically been largely a macro call, as has Wal-Mart. But it's increasingly clear that this is no longer the case. We think what is missing in the minds of investors is the duration over which this sub-par performance will take its toll on the stock. Our estimates are 15% below consensus next year, and 30% by 2019. 


Ultimately, TGT will probably survive, as long as management avoids egregious mistakes. But we don't like companies that simply survive - especially without recognizing the precarious position we believe they're in today. The company will likely ultimately do the right thing, but we think the road to survival will be a costly one.



Attendance on this call is limited. Please note if you are not a current subscriber to our Retail research there will be a fee associated with this call. Ping for more information.


Hedgeye Risk Management is a leading independent provider of real-time investment research. Focused exclusively on generating and delivering investment ideas, the firm combines quantitative, bottom-up and macro analysis with an emphasis on timing.


The Hedgeye team features some of the world's most regarded research analysts - united around a vision of independent, uncompromised real-time investment research as a service.


[UNLOCKED] Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record

[UNLOCKED] Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - dollar pic

This is a complimentary research note originally published September 15, 2016 by our Financials team. If you would like more info on how you can access our institutional research please email

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Daily Market Data Dump: Wednesday

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




Daily Market Data Dump: Wednesday - equity markets


Daily Market Data Dump: Wednesday - sector performance


Daily Market Data Dump: Wednesday - volume


Daily Market Data Dump: Wednesday - rates and spreads


Daily Market Data Dump: Wednesday - currencies


Daily Market Data Dump: Wednesday - commodities

CHART OF THE DAY: Another Ugly Economic Indicator... Should The Fed Raise Rates?

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.


"... Got the latest “transports” data?

  1. Class 8 new truck orders at the lowest level since August 2010 in both absolute and rate of change terms (-56% y/y)   
  2. NA total commodity carloads originated continues tracking down over -5% Y/Y since March 2015 – no bounce whatsoever
  3. Commodity carloads down -11% y/y. Largest commodity carload declines in Petroleum products (-22%) and Coal (-27%) which are obvious. Other areas of weakness are forest products (-7.5%), Metals (-6.1%), minerals (-3.6%), Farm/Food products (-3.4%)"

So maybe the Fed should “raise rates” today. That’s neither an empty nor a clever theory. That would just be dumb.


CHART OF THE DAY: Another Ugly Economic Indicator... Should The Fed Raise Rates? - 09.21.16 EL Chart

Pandora: 2 Reasons Why We’re Now Bullish (But Still Dislike The Company)

Hedgeye Internet & Media analyst Hesham Shabaan recommended shorting Pandora Media (P) from December 2014 until earlier this year. Recently, he’s flipped to the long side. For now. Shabaan explains why in this excerpt from The Macro Show yesterday.


Subscribe to The Macro Show today for access to this and all other episodes. 


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