Good Morning! You can enjoy today's The Macro Show HERE and access the associated slides (once they become available) HERE.
Hedgeye's Top 3 Things
Below are the top three things from Hedgeye CEO Keith McCullough’s Macro Notebook this morning:
1) SHORT-TERM VIX - The short-term S&P 500 volatility index (VXST) jumped 25% yesterday from 8.43 to 10.50 at the close with the intraday move in equity markets. The VXST is of course more volatile than VIX, but that’s the biggest move since June 28th. The VIX popped 10.4% from 9.93 to 10.96 and is now up above 12 for the first time in a month. You know the drill. As we wrote in yesterday’s early look, “when that happens [Longs are Overbought, Shorts oversold], the playbook of the process says you simply book some gains and raise cash so that you can re-invest on pullbacks to the low-end of the range in whatever it is that you might like at lower prices.”
2) ASIA - We don’t know how to quantify the U.S.-North Korea shouting match, but Asian markets followed the intraday reversal in U.S. markets and corrected overnight with the Nikkei and KOSPI leading the downside divergences at -1.3% and -1.1% respectively. Both indices remain definitively BULLISH trend. S&P futures, meanwhile, are currently discounting impending nuclear war to the tune of -40bps!
3) EARNINGS SEASON - With earnings season winding down, 444 companies in the S&P 500 have reported. Every sector except utilities has seen YY earnings growth. Sales and earnings growth for the index as a whole has come in at +5.5% and +9.9% respectively. The information technology sector in particular has blown out estimates, beating bottom line estimates by a wider than average gap. The stocks have clearly liked it.
Institutional Excerpt
Chipotle Customers Have Been Getting Sick For A Lot Longer Than You Think
Even before the late 2015 E. coli and norovirus outbreaks crippled Chipotle shares, the restaurant chain was getting its customers sick at a much higher rate than its peers.
On August 1st, 2017, Hedgeye Restaurants analyst Howard Penney hosted a Thought Leader call with Patrick Quade, the founder of iwaspoisoned.com. Key takeaway? The Sterling, Virginia incident is far from an isolated instance. In fact, iwaspoisoned.com data shows that the number of Chipotle customers reporting incidents of sickness after eating at a local Chipotle chain has been a problem for the brand as far back as 2012. In fact, the incidence of consumer-reported illness is “multiples higher than other brands dating back to 2012,” Quade says.
In the video above, from Quade’s discussion with Penney, the iwaspoisoned.com founder explains his shock when looking at this Chipotle data back in 2012. “Back then, we were still relatively small … so we hadn’t even really promoted it because Chipotle was such a darling at that time and had such a reputation for quality,” Quade says. “The notion that they were unsafe, I think no one would have believed us.”
The Chipotle data that came rolling in, however, was exactly why Quade started the company back in 2009, a direct response to the lack of any coordinated, consumer-led, national food reporting system. “What we were [seeing at Chipotle] was a clear red flag to us that someone ought to take a look at it because it was such a huge outlier,” Quade says.
Watch THIS VIDEO to find out precisely why Chipotle’s issues are far from over.
