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The Zeitgeist According to Steve Bannon’s Favorite Demographer Neil Howe

The Zeitgeist According to Steve Bannon’s Favorite Demographer Neil Howe - TMS NH 2 1 Bannon NO TEXT

In the exclusive video above, Neil Howe and Hedgeye CEO Keith McCullough discuss the current political climate stoked by Bannon and Trump, how that could affect markets and more.

Cartoon of the Day: Trumpocalypse Now?

Cartoon of the Day: Trumpocalypse Now? - Trumpocalypse cartoon 02.03.2017


The Never Trump crowd and stock market bears are still waiting for the Trump implosion. Will it ever come?



Click here to receive our daily cartoon for free.


Got Fake Jobs Report News? Old Wall Media Does!

Got Fake Jobs Report News? Old Wall Media Does! - fake news

The mainstream media coverage of today's Jobs Report was a joke.

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.

Had You Listened to McGough's Big Short Call On This Stock...

Takeaway: McGough thinks this is a single digit stock by year end.

Throttled. That's what's happening to shares of Hanesbrands (HBI) today. Investors are pummeling the stock. It's down 14% after the U.S. apparel maker reported Q4 earnings and sales below Wall Street expectations.


HBI is down over 28% since Hedgeye Retail analyst Brian McGough made the short call in May. Here's a link to the video of the call ("10 Reasons Why I Don’t Like Hanesbrands").


Below is a complimentary institutional research note from our Retail team written last night.


Had You Listened to McGough's Big Short Call On This Stock... - zhanes


Let me lead in with what McLean IM’d me in the middle of this HBI conf call…


“…the deception I hear in management’s prepared remarks is downright sickening.’


And to be clear, as animated as I am, McLean is the opposite. That’s a big statement for him.


How I see it, HBI management’s credibility is as shot as Kevin Plank’s and Ralph Lauren’s – maybe more than those dudes. I’ve hardly hid my opinion that Rich Noll was a ‘bad guy that did unethical things to get both himself and investors paid.’ (In fairness, people got paid = good). And while I love giving my opinion, facts are better. Here goes...


  • Cash flow (CFFO) guidance started the year at $750mm-$850mm.
  • Over three quarters, expectations crept down to $750mm-$800mm.
  • Then Rich Noll announced he was leaving as CEO. Simultaneously sold stock -- left in Oct after doing four acquisitions in three months.
  • Leading up to Noll’s exit, he threw a $1bn in Cash Flow target out there to the Street. The consensus ended up over $900mm.
  • On the 3Q16 call 90 days ago, management said the following re 2016 Cash Flow… "So, very confident, though, that we're going to get to the numbers that we've been talking about."
  • Then in mid-Nov HBI was at the Morgan consumer conference hitting the one-on-one circuit. MS analyst is the big bull. Good guy and good analyst, but not on this one.
  • Then (I think) HBI was at the KeyBank conference the week of Dec 6th and talked up the same level of optimism.
  • To be clear, at that point the year was 94.7% over and cash flow guidance was STILL suggesting $750mm-$800mm.
  • Then last week it boosted the dividend by 36% -- by our math that locked in 60% of next year’s cash flow in the form of a dividend (and a less risky 20% on the now-false Street numbers/guidance).


While I’m being factual, here’s another one for you. I have not made my career by basing my ideas on what management teams tell me. I listen – there’s always something to learn. It’d be arrogant for any of us to not appreciate that most people in the C-suite are very smart people (but smart ≠ good judgement or good intentions).


But I like my opinions better than their IR pitches. Get this… while we conducted our initial research after HBI was looking like a big out-of-consensus short, we called HBI IR to vet through some issues and see where we could be wrong.


The VP of IR got back to us six weeks later and said something like [I don't think that Hedgeye can differentiate and add value vs. other analysts covering our stock]. Yep, I guess we didn’t add any value to them. I can sleep well knowing that.  


I digress. Back to the grind...


So let me get this straight…Everything was fine three weeks before the quarter closed. And now the company puts up a 22% cash flow miss? This tells me that either…


  1. The company’s forecast accuracy is horrible, or
  2. HBI’s financial management/reporting systems are inaccurate, or outdated, or...
  3. Management lied.


The truth is that as much as I can use every bit of analytical mojo I have to piece together the financial facts and the behavior I think that led to poor decision making, I can never rightfully say that anyone lied. So I won’t start now. But what I know is that I’m not the only one in the investment community that can put these pieces together. Even the uber-bulls – at least those with intellectual integrity – will be asking (and probably answering) these questions.


As long as this dynamic is in place – along with my view that HBI will be lucky to generate $400mm in CFFO this year (with a greater decline in FCF) is the case – then I think we’re looking at a meaningful revaluation on a much lower steady-state cash flow number (ie another 30-40% cash flow cut).


I still think this is a single digit stock be year-end 2017.


*  *  *  *  *


Editor's Note: If you would like access to our HBI Black Book, our note heading into the print, and any/all HBI commentary from my RetailDirect morning product, email sales@hedgeye.com.

Retirement Guru: Social Security Is Broken, But Fixable


Is America’s Social Security system bankrupt? Well, not exactly.


It is, however, significantly underfunded. No shocker there. What’s perhaps more interesting is that we have the tools to fix the problem right now, says retirement guru Bradley Belt. He knows a thing or two. Belt used to run the Pension Benefit Guaranty Corporation (PBGC) where he was responsible for leading the federal pension insurance program and overseeing a $60 billion investment portfolio.


The bigger challenge? Getting flimsy politicians on board. (No shocker there either.) As Belt says in the HedgeyeTV Real Conversations interview above:


“Social Security is actually pretty easy to solve from a math standpoint. There are a few levers that you can adjust that actually most reasonable, rational people when you sit them down in a room would say, ‘Yes that’s a reasonable rational trade off.’ And you can actually solve for the fiscal deficit over the long term, but it’s more about the political willingness to change things.”

Social Security: Here are the numbers


The Social Security Board of Trustees estimates that the Social Security trust fund will be depleted by 2034. After that, under current law, just three quarters of scheduled benefits are projected to be payable to each retiring recipient from 2035 onward. Projecting that out 75 years, if Congress does nothing the expected benefits deficit would reach a staggering $11.4 trillion.


These are obviously massive numbers, which explains why the issue is such a political hot potato. But Belt suggests some fixes in the video above. While Belt is now vice chairman of alternative asset manager Orchard Global Asset Management, he has spent much of his career working on retirement issues in the public sector.


Belt served as executive director of the PBGC under President George W. Bush, which was set up by the U.S. government to fill the gap of employer pension plans that cannot afford to fulfill promised benefits. It’s an even bigger problems these days, Belt says. Private pension shortfalls will be exacerbated over the coming years by global trends, related to low productivity and population growth, he says. This suggests “lower returns over the medium to longer term.”


On the public pension side, Belt is equally qualified to suggest fixes to Social Security. After serving on a Congressional commission called the National Commission on Retirement Policy during the Clinton Presidency, Belt and others put forth proposals like raising the retirement age – and indexing for gains in longevity.


Belt’s discussion with Hedgeye CEO Keith McCullough above is thought-provoking. And should help you get up to speed on an issue affects all Americans.

Inside Trump's Housing Proposal: A Rich Guy in Populist Clothing?

Inside Trump's Housing Proposal: A Rich Guy in Populist Clothing? - trump house2


It appears President Trump's new housing proposal amounts to a tax break for millionaires and billionaires. If Democrats want to score political points, they would roll with this populist rally cry.


"Most of the headlines and soundbites from [Trump Treasury Secretary nominee Steve] Mnuchen et al center on the vague but superficially appealing notion of 'capping' mortgage interest deductibility," writes Hedgeye U.S. Macro analyst Christian Drake in this morning's Early Look. "As we understand it, the actual proposal is almost exactly opposite of what it sounds like."


Under the current system ... homeowners can deduct mortgage interest on debt up to $1 million. That equates to around $45,000 in deductible interest assuming a 30-year mortgage at current rates of 4.5%.


Under the new system ... total itemized deductions would be capped at $200,000. As the Chart of the Day below illustrates, hitting that $200,000 cap would support a mortgage balance of $4.4 million under the same assumptions.


"To make it a little more realistic (it’s unlikely mortgage interest would be the lone itemization item), let’s consider the situation for the top 1% of income earners.


The cutoff for the 1% income threshold in the US is $390,000.  Applying liberal assumptions for medical expenses, state & local taxes and charitable contributions (see HERE), non-interest itemized deductions would total $100,000, leaving $100,000 for mortgage interest – which would support a mortgage of greater than $2 million or two times the cutoff under current law."



More to be revealed.


Inside Trump's Housing Proposal: A Rich Guy in Populist Clothing? - MID CoD

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 80.37%
  • SHORT SIGNALS 78.32%