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5 Key Takeaways: What You Need To Know About Fed & BoJ Statements

Takeaway: The BoJ underwhelmed but suggests incremental easing on the horizon. Meanwhile, Fed stands pat but raises specter of December rate hike.

Editor's Note: Below is a brief excerpt from an institutional research note written by Hedgeye Senior Macro analyst Darius Dale. To access our institutional research email sales@hedgeye.com. For more on the subject of central planning check out analysis via Hedgeye CEO Keith McCullough here and Dale here.

 

5 Key Takeaways: What You Need To Know About Fed & BoJ Statements - central bank kool aid 06.09.2016

 

  1. While the BoJ underwhelmed near-term easing expectations in the most confounding of manners, a detailed review of their policy statement in the context of preexisting cyclical and structural growth and inflation dynamics suggests incremental easing is likely to come in the not-too-distant future.
  2. Looking beyond the immediate-term TRADE duration, it’s safe to conclude that the potential for a protracted JGB “tantrum” has been dramatically reduced and the key implication of dramatically-reduced JGB “tantrum” risk is reduced upward pressure on U.S. interest rates.
  3. With respect to the Fed, if it looks like a dove, walks like a dove and coos like a dove – it’s probably a dove. Looking beyond the [likely] December rate hike guidance inserted into today’s FOMC statement, both the Summary Economic Projections and Yellen press conference offered a slew of dovish takeaways.
  4. Moreover, the confluence of their ongoing “data dependence” and our dour outlook for the U.S. economy and the labor market imply the 10Y Treasury yield’s intraday high of 1.73% may represent the peak of 2016 rate hike fears.
  5. All told, we reiterate our bullish bias on Treasury bonds and defensive (i.e. non-cyclical) dividend yields in the context of our “lower-for-longer” and #LateCycle slowdown themes, having likely just survived yet another round of [largely ungrounded] consensus fear of higher rates. 

JT TAYLOR: Capital Brief

JT TAYLOR:  Capital Brief - JT   Potomac banner 2

 

“Great lives never go out; they go on.”

-        Benjamin Harrison

 

BIGGER - AND BETTER: Though Donald Trump has expanded his fundraising and political infrastructure in August, it was still no match for Hillary Clinton, as his combined monthly fundraising trailed hers by $42 million. Trump’s campaign, along with two supportive super PACs and the RNC, grossed a combined $70 million, relying largely on small donors, while Clinton, with one allied super PAC and the DNC, raised $112 million, leaning heavily on major donors, star-studded events and an influx of smaller donors. Clinton’s camp is continuing to make a push to register voters, hold phone banks, and knock on doors in a series of battleground states, and though Trump has recruited the RNC to augment his efforts, but there is still no comparison to the massive organization that Clinton and her team have assembled.

 

LOOKING TO AVOID A KNOCKOUT PUNCH: Trump has struggled to sell himself as the candidate who can fix the problems of African-American communities and even stepped out to campaign with former boxing promoter Don King, who dropped a bomb before a group of pastors while introducing Trump. Trump’s polling among African-Americans has been dismal, falling to low single digits at times, and some believe his outreach to the community is as much about convincing moderate white voters that he is not racist. On the other hand, Clinton isn’t a complete lock for African-Americans either - she’s pinning her hopes on Barack Obama and deploying him in an effort to excite the community while looking to repeat his last two commanding performances.

 

AND WE’RE OFF: Don’t worry, it’s still way too early to predict anything significant, but early voting figures may be a trend leading up to November 8th. So far, figures show promise for Clinton in NC, while Trump has the advantage in IA. NC is a must-win state for Trump, and out of the 53,000 voters who have requested ballots, 40% are Democrats, while 33% are Republican - we know there are six weeks to go, but you want to start ahead and stay ahead. IA doesn't officially begin early voting until later this month, but of the 68,000, 60% are Democrats, while 19 % are Republicans. But IA Democrats are requesting fewer ballots than they did when Obama ran in 2012 - he won the state both times and relied heavily on the support of early voters.

 

SEPTEMBER SHOWDOWN: The Senate will stay in session next week for two reasons - the looming funding issue and a showdown with Obama over legislation making it easier for the families of victims of 9/11 to sue Saudi Arabia. Obama is expected to veto the legislation later this week, even after it passed with bipartisan support. The rising issue is that a two-thirds majority in both chambers is needed to override the president’s veto, and some senior lawmakers are now having second thoughts insisting they'll need to listen to the Administration's objections. If Congress were to leave for the campaign trail this week, the Administration might have had a better shot at convincing Democrats to uphold the veto in a lame-duck session, but Senate Majority Leader Mitch McConnell is determined to stay in the Capitol to deal with the issue…along with many others.

 

IMPEACHMENT PLEA: IRS Commissioner John Koskinen spent yesterday morning persuading members of the House Judiciary Committee to stave off an impeachment drive by the Freedom Caucus. Remember, congressional leaders promised the hearing after Freedom Caucus members backed off their demands for an immediate impeachment floor vote - something House Republicans certainly don’t need right now. Koskinen expressed regrets for his failings related to allegations that the agency destroyed emails, and that Koskinen misled Congress about those records - but Committee Chair Jason Chaffetz, who filed an impeachment resolution against Koskinen last year, has yet to decide whether or not he will do so again this year.

 

CALL INVITE: TOP THREE CHALLENGES FOR U.S. DEFENSE INDUSTRY IN NEXT ADMINISTRATION: Our Senior Defense Policy Advisor LtGen Emo Gardner is hosting a call on September 30th at 11:00 AM EDT with Aerospace Industrial Association CEO, Dave Melcher, to hear what industry is telling and hearing from the candidates. You can find call details here.

 

FREEZE PUT ON ICE FOR SEPTEMBER: Our Senior Energy Analyst Joe McMonigle shared his insight on when Iran will be in a position to unfreeze again. You can read his piece here.

 

REPLAY | ELECTION UPDATE: CHARLIE COOK OF THE COOK POLITICAL REPORT: In case you missed it, we hosted a call with Charlie Cook, founder of the Cook Political Report and one of the nation’s leading authorities on American politics and U.S. elections. He shared his outlook on the presidential race, discussed the state of play for House and Senate elections, and gave us a preview of the upcoming presidential debates later this month. You can listen to the replay here.

 


Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration

Key Takeaways:

 

  1. While the BoJ underwhelmed near-term easing expectations in the most confounding of manners, a detailed review of their policy statement in the context of preexisting cyclical and structural growth and inflation dynamics suggests incremental easing is likely to come in the not-too-distant future.
  2. Looking beyond the immediate-term TRADE duration, it’s safe to conclude that the potential for a protracted JGB “tantrum” has been dramatically reduced and the key implication of dramatically-reduced JGB “tantrum” risk is reduced upward pressure on U.S. interest rates.
  3. With respect to the Fed, if it looks like a dove, walks like a dove and coos like a dove – it’s probably a dove. Looking beyond the [likely] December rate hike guidance inserted into today’s FOMC statement, both the Summary Economic Projections and Yellen press conference offered a slew of dovish takeaways.
  4. Moreover, the confluence of their ongoing “data dependence” and our dour outlook for the U.S. economy and the labor market imply the 10Y Treasury yield’s intraday high of 1.73% may represent the peak of 2016 rate hike fears.
  5. All told, we reiterate our bullish bias on Treasury bonds and defensive (i.e. non-cyclical) dividend yields in the context of our “lower-for-longer” and #LateCycle slowdown themes, having likely just survived yet another round of [largely ungrounded] consensus fear of higher rates.

 

“Quantitative and Qualitative Monetary Easing with Yield Curve Control” = Hawkish Doves

Overnight the BoJ overhauled its monetary policy framework as part of its “comprehensive monetary policy assessment”. The most important features of the new program are as follows:

 

  • The bank will target a wider yield curve via controlling the level of both short-term and long-term interest rates (specifically a 10Y JGB yield of 0.00%). It seeks to accomplish the latter by implementing fixed rate JGB purchases across the curve and extending the duration of its existing fixed-rate funds-supplying operations from 1 year to up to 10 years.
  • The bank will adopt an “inflation-overshooting” commitment, in which it pledges to keep expanding the monetary base until core inflation has stabilized above their +2% price stability target.
  • While the new yield curve target gives the bank more flexibility in the timing and duration of JGB securities purchases, there were no changes to the existing pace of monetary base expansion (i.e. ¥80T/year).

 

In the context of the aforementioned overhaul, the bank was clear to point out that it now has an expanded list of options for additional easing, including: cutting the short-term policy interest rate (now at -0.1%), lowering the long-term interest rate target, adjusting the composition of LSAP and accelerating the pace of monetary base expansion outright.

 

Moreover, in the context of Japan’s preexisting cyclical and structural growth and inflation dynamics, we think betting on incremental easing in the next 2-3 quarters is as safe a macro bet you can make. For more details regarding said dynamics, please see our 9/20 BoJ meeting preview titled, “#BeliefSystem Breakdown: Will Kuroda Tightrope In Whitey Tighties?”.

 

If all you did was eyeball the TOPIX or the TOPIX Banks Index – which were up +2.7% and +7.0% on the day, respectively – you’d say the BoJ’s policy overhaul was well-received by Japanese investors. But a more-than-cursory glance shows that the market closed with the USD/JPY cross at its highs. The yen has since rallied and is now up over a percent on the day – heading into the Fed statement (it’s whipped around, but remains largely unchanged since). Holding preexisting trading relationship constant implies an open on the order of down -3% for the broader Japanese equity market – i.e. a reversal of today’s gains.

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 1

Source: Bloomberg

 

Looking beyond the immediate-term TRADE duration, it’s safe to conclude that the potential for a protracted JGB “tantrum” has been dramatically reduced, given that the 0.00% 10Y JGB yield target represents a ceiling, rather than a floor in the context of the aforementioned economic gravity weighing on Japan’s sovereign yield curve. That 10Y and 30Y JGB yields backed up only +4bps and +1bps on the day to -0.03% and 0.52%, respectively, is supportive of this view.

 

In fact, we can envision a scenario whereby the BoJ is forced to dump bonds into the secondary market to prevent yields from forcefully breaching its target to the downside. In this scenario, it’s highly likely that the bank opts for a wholesale downshifting of its targeted term-structure of interest rates given that it is unlikely that they would want to be perceived by market participants as tightening monetary policy.

 

From a global macro perspective, the key implication of dramatically-reduced JGB “tantrum” risk is reduced upward pressure on U.S. interest rates – which themselves have backed up from their early-July all-time-lows as Japanese demand for U.S. Treasuries has waned amid rising funding costs in the FX market. And though the yield pickup on 10Y and 30Y paper is now at negligible levels from the perspective of Japanese investors, we view the BoJ’s long-term interest rate target as an effective cap on the long end of the JGB curve – which implies little spread erosion from here.

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - Japan Currency Adjusted Yield Pickup 10Y

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - Japan Currency Adjusted Yield Pickup 30Y

 

In short, the aforementioned dynamic implies Japanese demand for U.S. Treasuries should stabilize after crashing in recent weeks. On the margin, that’s positive for long end of the Treasury curve. As such, we are keen to reiterate our bullish bias on Treasury bonds and defensive (i.e. non-cyclical) dividend yields in the context of our “lower-for-longer” and #LateCycle slowdown themes, having likely just survived yet another round of [largely ungrounded] consensus fear of higher rates.

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - Japan Net Foreign Securities Investment   Bonds

 

“The Case For a Rate Hike Has Strengthened, But We’re Content To Remain On Hold For Now” = Dovish Hawks

Earlier this afternoon the Fed pandered to consensus expectations of their September meeting being used as a springboard to set the stage for a December rate hike by inserting the following language (all incremental) into their policy statement:

 

“The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”

 

In her presser, Yellen reiterated that every FOMC meeting is indeed “live” from the perspective of “policy normalization”, but we side with the market in eschewing their 11/1-11/2 meeting as a real candidate given that it lacks December’s offering of additional “communication tools”, which are identical to today’s press conference and Summary Economic Projections.  

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 5

 

Dissenting from today’s policy statement were Esther George, Loretta Mester and Eric Rosengren – all of whom were calling for a rate hike at today’s meeting; three total dissenters represented a directionally-hawkish increase of +2 over the July statement.

 

That and [inappropriately] labeling domestic economic growth as having “picked up from the modest pace seen in the first half of the year” is about where the hawkish takeaways end. Downward revisions to the “Dot Plot” and Summary Economic Projections, as well as Yellen’s dovish tone throughout her press conference all coalesced to render today a huge win for long bond bulls:

 

The “Dot Plot” Heads South (Again):

 

  • Consistent with the trailing two-year trend, the FOMC’s infamous “Dot Plot” saw wholesale downward revisions across the maturity curve.
  • The median forecast for the Fed Funds Rate at year-end 2016 among FOMC members was revised down to 0.625% from 0.875% prior – effectively implying only one rate hike for the year.
  • The median forecast for the Fed Funds Rate at year-end 2017 among FOMC members was revised down to 1.125% from 1.625% prior – effectively implying a more gradual pace of “policy normalization” in the form of only two rate hikes for the year vs. a median projection of three prior.
  • The median forecast for the Fed Funds Rate at year-end 2018 among FOMC members was revised down to 1.875% from 2.375% prior.
  • Consistent with recent downward revisions to the neutral rate, the median forecast for the Fed Funds Rate in the “long run” was revised down to 2.875% from 3% prior.

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 6

Source: Bloomberg

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 7

Source: Bloomberg

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 8

Source: Bloomberg

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 9

Source: Bloomberg

 

Downward Dog Summary Economic Projections:

 

  • The Fed took revised down its 2016 real GDP growth forecast to +1.7-1.9% from +1.9-2.0% prior.
  • The Fed revised down its 2016 PCE price index forecast to +1.2-1.4% from +1.3-1.7% prior. The committee revised down the high end of its 2017 inflation forecast by -10bps to +1.9% and the low end of its 2018 inflation forecast by -10bps to +1.8%.
  • The Fed revised up its 2016 unemployment rate forecast to 4.7-4.9% from 4.6-4.8% prior.

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 10

Source: Federal Reserve

 

Key Highlights From A Less-Than-Hawkish Yellen’s Press Conference:

 

  •  “I agree the projections for growth are slow and that reflects productivity growth likely to remain low for a long time. Slow productivity growth is a factor that influences the longer term normal level of interest rates.”
  • “Inflation is running below our +2% objective and it is important that inflation gets back to the goal.”
  • “The Fed wants the expansion to last as long as possible.”
  • “Investment spending has been weak for some time -- part of it is oil, but we're not quite sure why.”
  • “There is little risk to falling behind the curve in the near future so the FOMC can be gradual in its rate hikes.”

 

Don't Forget That "Data Dependence" = Lower Rates If We Continue To Be Right On the Data

In the context of everything highlighted above, it’s very clear that nothing has changed with the Fed’s propensity to err on the side of caution with respect to its policy normalization objectives. Assuming the Fed remains “data dependent”, we believe our dour forecasts for domestic economic growth will force policymakers to maintain their dovish bias (relative to expectations). To recap, those forecasts are currently:

 

  • Q3: +1.1% YoY/+1.7% QoQ SAAR vs. a Bloomberg Consensus forecast of +2.8%
  • Q4: +1.0% YoY/+0.4% QoQ SAAR vs. a Bloomberg Consensus forecast of +2.4%
  • Q1: +0.6%% YoY/-0.8% QoQ SAAR vs. a Bloomberg Consensus forecast of +2.1%

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - GIP Model Baseline

 

With domestic economic growth slowing on a sequential, trending and quarterly average basis across the preponderance of key high-frequency indicators within our predictive tracking algorithm, we anticipate negative revisions to both consensus and official GDP forecasts over the intermediate term.

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - U.S. Economic Summary Table

 

Whether or not the labor market deteriorates fast enough to pump the brakes on a rate hike in December is likely beside the point at this point. What we do know is that labor itself remains at a very asymmetric point in the context of the ongoing recession in corporate profits – a recession that we do not see ending anytime soon. That plus continued degradation in the broader growth matrix likely implies some accelerated pace of labor market deterioration likely into and certainly beyond year-end.

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 13

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 14

 

Hawkish Doves and Dovish Hawks: Back to the Narrative Machine If You’re Short Duration  - 15

 

In short, it would be wise for investors to adhere to the old mantra of “don’t fight the Fed” in that our “lower-for-longer” theme has legs with respect to the intermediate term. They (i.e. policymakers) have repeatedly told you as much.

 

As we’ve said a million times, the most exploitable risk across global macro markets was always the Fed’s own forecasts and we think investors will benefit from continuing to take advantage of said projections on the long side of duration.

 

DD

 

Darius Dale

Director


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Cartoon of the Day: Hangin' On

Cartoon of the Day: Hangin' On - Yellen   bull 09.21.2016

 

LOL. "In general, I would not say that asset valuations are out of line with historical norms," Janet Yellen said at today's FOMC press conference.


Is Japan Whistling Past the Demographic Graveyard?

Takeaway: Prime Minister Abe has his head in the sand on Japan's demographic trends.

Is Japan Whistling Past the Demographic Graveyard? - Abenomics unicorn cartoon 09.24.2015

 

Prime Minister Shinzo Abe remarked today that Japan's aging population was not a burden on its economy. It's an incentive.

 

Huh?

 

When asked about the 34.6 million people aged 65 and older, or 27.3% of the population (highest proportion among advanced nations) Abe told the crowd, "I have absolutely no worries about Japan's demography."

 

"Japan may be aging. Japan may be losing its population," he said. "But these are incentives for us. Why? Because we will continue to be motivated to grow our productivity." The prime minister cited robots, wireless sensors, and Artificial Intelligence as among the bastions of support for future Japanese growth.

 

"So, Japan's demography, paradoxically, is not an onus, but a bonus," Abe said.

Ok, enough.

 

Here are the facts from our Macro team's 99-page 3Q16 Macro Themes deck. It all boils down to the fact that an aging country that is steadily losing its core consumption cohort, people ages 35 to 54 years old, will find itself mired in slow growth. Our Macro team has labelled Japan's dire economic circumstances over the coming ten years as "plunging into the abyss."

 

As you can see in the chart below, despite Abe's handwringing, the outlook isn't good.

 

Is Japan Whistling Past the Demographic Graveyard? - japan demographics


Buh-Bye | 3 CEOs Whose Jobs Are On The Line

Takeaway: With meaningful earnings miss/blowout/miss bifurcation in 2017, we’re likely to see an increase in CEOs getting sacked. Here’s the top 3.

Editor's NoteBelow is a complimentary research note written by Hedgeye Retail analysts Brian McGough and Alexander Richards. To access our institutional research email sales@hedgeye.com

 

Buh-Bye | 3 CEOs Whose Jobs Are On The Line - pink slip

 

Our contention that 80% of US retailers are woefully underinvested to gain share in e-commerce should not only lead to a more concentrated and severe round of earnings misses in 2017 than we have seen since the Great Recession and dot.com bubble, but it is likely to cost several CEOs their jobs. 

 

We’re already seeing CEOs of certain companies head for the door, like HBI’s Rich Noll (58 yrs old), who has 12 days left on the job. He sees what’s coming down the pike. Then there’s Terry Lundgren (64), who is leaving the helm of Macy’s at the end of this year. We kind of get the whole Lundgren thing. He’s been at Macy’s for two decades, and has been CEO since 2004. He’s arguably the closest thing to a Retail Ninja that’s alive today. But, the reality is that the guy would likely be hanging in for a couple more years if he thought Macy’s was prepared to gain share and/or expand margins in 2017.  

 

Here’s Our Retail Sack List. 

Brian Cornell, Target

The Target Board might be slow, but it has a track record for admitting mistakes – like when it fired Steinhafel. We think Cornell is next, and will prove to be a short-timer. On the plus side, Cornell closed Canada and sold Rx to CVS. All good things, for sure, but also super obvious points in any new CEO's decision tree. At the same time he benefitted from the snapback from the 2013 data breach, which probably made him look better than he otherwise should have. Now he’s back to where Steinhafel was before he made the decisions that led to his demise.

 

At the same time, Wal-Mart is investing in employees, vendors, and most importantly e-commerce by buying assets (jet.com) it failed to put in place over a decade. Now we’re seeing the e-comm growth gap between WMT/TGT narrow meaningfully, and yet rather than invest at a rate to regain share, TGT is hinging its strat plan on cost cuts, an unrealistic 3% comp growth number, and is inadvertently buying back stock at the top ($79/$81 vs $69 today).

 

We think it’s as plain as day that TGT will consistently miss growth targets (pardon the pun), else wake up and invest considerably in the infrastructure to regain relevance with how the consumer increasingly shops in this country. If Cornell wants to keep his job, he’ll reset expectations, and take down margins so the company can actually grow profitably again. If he does not, we think there will be 3 CEOs in 3 years.

Kevin Mansell, Kohl’s

Let’s face it, the #GreatnessAgenda is not exactly panning out. This is a CEO who, at an analyst meeting last year, said that he really did not want to talk about financials. He is also a CEO who openly stated that the stores are about a third too big, and they have too many stores. We actually think he’s right, as 1100 stores should be 700 to sustain returns over the next 5 years – but at a much lower earnings base. Existing boxes should be 30% smaller – though it’s near impossible to execute.

 

So in fairness, the fact that even the best CEO in retail likely could not fix KSS is probably why Mansell has kept his job since 1999. But unfortunately, this company has failed to capitalize on the biggest sea change in retail since the advent of the Sears catalogue. Kohl’s likely won’t exist as either a retail banner or a public equity in a decade.  It will be a distant memory for millennials.

 

There’s no take-out play here – no real estate optionality whatsoever. KSS has a lease duration of close to 20 years. That means that management made an egregious bet that the stores will be relevant 20-years down the road in order to secure low rent expense. This is a company that needs a 1-1.5% comp to leverage occupancy. That’s so low because of aggressive leases. And yet it’s only comped that rate 1 quarter in four years at the store level. For real?  

 

This is the worst management in the industry, but we’d argue that the story is so terminal that it can’t even be fixed by a team of ‘retail ninjas’.

Laurent Potdevin, Lululemon

While Target is a good brand with poor management, and KSS is a bad company of an increasingly irrelevant concept with weak content and complacent management, Lululemon is an outstanding brand run by a management team too unsophisticated to carry itself beyond strength in a killer category. 

 

There’s no viable strategic plan. Seriously. Unit growth in North America is slowing dramatically. Incremental square footage is coming in the form of bigger stores with unproductive footage, and unit growth in places like Albany instead of Orange County, NYC or Buckhead. Growing overseas in more expensive markets at margins that are still and will be dilutive for the foreseeable future. Ivviva (lulu for tweens) is good, but the costs associated with the brand are the same (real estate, marketing and product development) and yet the prices are 20% less than lululemon. Men’s business is definitely viable, but again, carving space away from the women’s business only can go so far.

 

LULU is in desperate need of a wholesale model, as they need to sell product where people shop. Believe it or not, people do actually shop at multi-line stores. That will be expensive as LULU is not invested in making that work. It will take far more sophisticated product differentiation, including sub brands – which will require new development and design and marketing triads inside the organization. Focusing on delivering on a low-50s gross margin won’t get shareholders or this management team paid.

 

Again, this is a stellar brand, and it’s a shame that the team running it did not have a better vision and the ability to execute. There’s easily $4 in EPS power, which could make this a $100+ stock. We just don’t think we’ll ever see it without taking EPS below $2 and changing up management first. Remember that Chip bargained away his Chairman title to get Potdevin in the CEO role.

 

It’s more likely than not that the Board was not bowled over by the guy – but saw it as a way to get Chip out. The real boss right now is Stuart Haselden. We expected more out of him in his first year. Maybe he’ll get more active after Potdevin is shown the door.

BUH-BYE

 

 


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