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3 Charts: The Calculated Politics Behind Trump's "Fake News" Fury

3 Charts: The Calculated Politics Behind Trump's "Fake News" Fury - trump fake news tweet2

 

President Donald Trump is a product of our tumultuous times. He's tapped into a gnawing feeling of economic and political insecurity. Shouting "fake news" in a press conference or clubbing politicians on Twitter resonates for a reason. Congressional job approval and mainstream media trust (or lack thereof) are in the proverbial basement, hovering near all-time lows.

 

From politicians to the mainstream media, confidence is withering. 


As Hedgeye CEO Keith McCullough explains in the video below from The Macro Show earlier this year:

 

“If you really look at his strategy. He’s anti-mainstream media and anti-Congress. Do you know what the approval rating is for these two things are? Very, very low. Trump wakes up every day and he effectively enrages these two constituencies. But he’s got a lot of people that don’t like these things more than they don’t like him.”

 


Consider this...

1. Congressional Job Approval

Only 23% of Americans approve... 64% disapprove.

 

3 Charts: The Calculated Politics Behind Trump's "Fake News" Fury - congressional job approval

2. Mainstream Media Trust

Only 21% of Americans have “a great deal” or “quite a lot” of confidence in TV news … versus 36% ten years ago.

 

Take a look at the Gallup polling data below. People were asked "how much confidence" do you have in each of the following institutions. Respondents answering "a great deal" or "quite a lot" has been slipping across the board for two decades.

 

3 Charts: The Calculated Politics Behind Trump's "Fake News" Fury - trust in institutions

 

3 Charts: The Calculated Politics Behind Trump's "Fake News" Fury - trump post image

3. America ‘Right Direction or Wrong Track?’

Boding well for Trump, 42% of Americans say the country is on the right track today … that’s almost double the 24% at December 2015 lows.

 

3 Charts: The Calculated Politics Behind Trump's "Fake News" Fury - rasmussen chart


In light of these numbers, don’t expect the Trump administration to stop bash Congress and the media any time soon.


Want to Buy U.S. Growth Accelerating? It's On Sale!

Want to Buy U.S. Growth Accelerating? It's On Sale! - sale

 

If you'd like to ramp up exposure to U.S. growth accelerating, guess what? You can now buy it on sale. That's right, data on Retail Sales, Consumer Confidence, ISM Manufacturing, and S&P 500 earnings are all heating up. Meanwhile, the Russell 2000 fell -2% last week. As a pure play on the U.S economy accelerating, we suggest you buy it. 

 

(Click here to read a brief primer on our U.S. economic growth call.)

How To Play U.S. Growth Accelerating? Buy the Russell 2000

$IWM #SmallCaps #GrowthAccelerating

 

The reasoning is fairly simple. The companies inside the Russell 2000 generate less than 20% of sales outside the U.S. By way of contrast, larger-cap S&P 500 companies generate nearly a third of revenues abroad. In other words, the Russell 2000 is more heavily levered to U.S. economic growth. It's also why the index is up +12% in the last six months.

 

There's another reason to like the Russell 2000: Wall Street consensus is short.

 

As you can see in the Chart of the Day below, the CFTC's latest data on institutional investor positioning in futures and options markets reveals "a spanking brand new net SHORT position in the Russell 2000 of -10,317 contracts (after getting -31,761 contracts SHORTER) last week," writes Hedgeye CEO Keith McCullough in today's Early Look. (A net negative number of contracts indicates Wall Street consensus is short.)

 

Bottom Line: It's simple... U.S. growth is accelerating. We think Wall Street's mounting short position is misguided. So buy the dip in the Russell 2000.

 

Want to Buy U.S. Growth Accelerating? It's On Sale! - 03.14.17 EL Chart


Cartoon of the Day: Trumpcare vs. Obamacare

Cartoon of the Day: Trumpcare vs. Obamacare - 03.13.2017 Obamacare cartoon

 

On Monday, the Congressional Budget Office estimated that as many as 24 million more people may be uninsured over the next decade under the Republican's healthcare bill, the American Health Care Act.

 

 

Click here to receive our daily cartoon for free.

 


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Whoa, An Epic Paradigm Shift Is Happening In Retail

We’ve been talking a lot recently about the acceleration in retail bankruptcies  – to the tune of 2 per week. We saw four retailers of size file Ch.11 in the last 7 days alone.

 

Take a close look at the chart below. It’s not what you’d expect to see.

 

Whoa, An Epic Paradigm Shift Is Happening In Retail - z bri

 

Retail bankruptcies accelerated during the 2008-2009 financial crisis, as economic growth cratered. No real surprise—it’s what you’d presume would occur.

 

Fast forward to today

 

U.S. growth is accelerating, and yet .. retail bankruptcies are spiking to the highest levels we have ever seen. Not supposed to happen right?

 

My analyst team has been doing a lot of research into what’s going on. We have an idea on what’s driving this counterintuitive development.

 

We will explore this as one of our ‘game-changing’ themes in our “Retail 5.0” deck later this month. This is an important call. If you’re an institutional investor, email sales@hedgeye.com for more info and access.

 


Short Deere: 'An Unusually Favorable Opportunity' - Conference Call

Short Deere: 'An Unusually Favorable Opportunity' - Conference Call - deere machinery

 

Our Industrials Team – led by Jay Van Sciver – is hosting an institutional call on our Deere (DE) short thesis. 

 

With FY17 guidance likely to be updated in the May earnings report amid deteriorating credit, rising input costs, and ongoing unit declines, we believe investors should position accordingly.  DE shares have risen sharply providing an unusually favorable opportunity.

 

The call will take place on Wednesday March 15th at 11am ET. Email sales@hedgeye.com for more information.

 

Short Deere: 'An Unusually Favorable Opportunity' - Conference Call - de image for call 2

KEY DISCUSSION POINTS

 

Management Comments Don’t Match Data, As We See It:  Ongoing deterioration in credit metrics and year-on-year increases in the lease portfolio portend pressure on DE Financial.  A proper historical context implies that provisions will have to move significantly higher.

 

Materials Costs To Move Higher:  While key suppliers may have limited the hit to DE from higher steel prices, we expect equipment margins to be compressed by rising input costs in FY17.  Current estimates continue to incorporate aggressive margin assumptions.

 

Valued Incorrectly:  We see investors applying a trough multiple to financial services earnings, which we believe is best valued on a multiple of book.  We also see a trough multiple as inappropriate, as prior equipment cycles have lasted as long as many investors’ careers.

 

Not Trough:  We do not believe DE results have ‘troughed’, with unit sales declines for the Ag Equipment industry ongoing.  Viewed on a longer-term basis, the risk to units becomes clear, as referenced previous ‘troughs’ were comparatively minor relative to the current downcycle.

 

Short Deere: 'An Unusually Favorable Opportunity' - Conference Call - de image for call

CALL DETAILS

Ping sales@hedgeye.com for more information. Please note if you are not a current subscriber to our Industrials research there will be a fee associated with this call.  

ABOUT HEDGEYE

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.


Corning Best Idea Call: Wall Street Is Ambivalent... Time To Get Long

Corning Best Idea Call: Wall Street Is Ambivalent... Time To Get Long - phones gorilla glass

 

Our Technology Team – led by Ami Joseph – will be hosting a deep dive institutional call on our long Corning (GLW) call.

 

The call will take place on Wednesday March 15, at 1pm ET

 

Email sales@hedgeye.com for more information.

KEY DISCUSSION POINTS

  1. The Unknowns here are around TV Units. We see the setup for a classic replacement cycle bubbling up, and in this deck we walk you through the math and the catalysts as well. If we are right about the direction of TV units, Corning revenue gets a boost from units + faster shift to larger screen TV + tight glass market yielding to better pricing. 2017 is the first year in a while not facing a down year in Display GM...how will all this translate to 2018 GM.
  2. There are several Known positives, not reflected. Gorilla Glass is getting a large content shift in the next generation iPhone. Typically, Apple leads the market and others follow, especially given the underlying technology reasons that Apple is shifting to a glass back. When we waterfall that content growth across high end smartphones, and also factor growing penetration for GG3 in the mid-tier, the effect is a ~2x on Gorilla Glass revenue by 2019. In Optical, carrier networks are investing in fiber, and in the US Corning has a strong market and technology lead. We show a # of positive vectors in this area, notwithstanding some recent lumpiness in the optical supply chain. Finally, the environmental business has a 3-4x content growth opportunity in the years ahead. All of this translates, to us, as better than wimpy 4%, 1%, and 4% growth modeled by the Street in 2017-2019.
  3. A Forgotten LONG whose time has come. The Street is more or less ambivalent about Corning's stock, featuring 8 buys, 10 holds, 1 sell, and more than 3 days to cover on the short side. Valuation is choppy due to the cyclicality of the industry, but if you believe in the dream, namely - that the company has multiple drivers that will lift revenue estimates in the coming 8-9 quarters, then you will be rewarded with enormous FCF, for a company returning 8% of the cap in a buyback and a 2%-plus div yield, AND, has bought back 24% of the share count in the last 24 months. And, let's be honest, in this time we all need cyclical longs we can live with, and this one is for living!!

 

Long awaited upside cometh!

 

Corning Best Idea Call: Wall Street Is Ambivalent... Time To Get Long - corning hedgeye image

CALL DETAILS

Ping sales@hedgeye.com for more information. Please note if you are not a current subscriber to our Technology research there will be a fee associated with this call.  

ABOUT HEDGEYE

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.


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