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TRLG: Reflecting on the Subtlety

As I combed through my notes from the ICR Exchange, I came across a subtle, but relevant call-out that was overlooked in the two-day confluence of buy-siders, sell-siders, bankers, and CEO’s. (For what it’s worth, there were more bankers than Sell Side analysts – that’s sad). During  the breakout session for True Religion, there were many questions surrounding the company’s retail growth, salesforce transition, new hires, lower price point offerings (aka “cleaner looks”), and the state of the wholesale business. 


Aside from some fashion commentary regarding the validity of the term “Jegging” (think skinny jean meets legging), the most interesting comment came from the CFO.  He stated that he was surprised at the level of discounting on the company’s premium denim over the holiday period at major wholesale customers.  Without getting specific on which retailers were promotional (it has to be any combination of Saks, Neimans, and Nordstrom), he also went on to say the company doesn’t really engage in “markdown” allowances so it shouldn’t be an issue.  Fair enough.  But, the real issue lies in the fact that the retailer(s) pulled the promotional trigger to sell the $250+ denim.   If you believe discounting was a byproduct of slower product sales, then this may be something to watch as Spring rapidly approaches.


In addition, we’ve seen this film before. A brand that thinks it walks on water says ‘we don’t pay for markdowns’, but the reality is that the consumer votes with its wallet, and the CFO validated it in breakout discussions. So let me get this straight… we’ve got a high-end denim brand that is underperforming at a time when peers in other luxury categories are showing signs of life. This is at the same time the company is downshifting in price point as it expands into a lifestyle model, and it is opening up more of its own shops due to a weaker ‘pull model’ in the wholesale channel.  I know the stock already crashed and burned, but are we the only ones that are concerned that we’re still looking at a company with 25.6% EBIT margins, and only a 1.4% marketing ratio? I repeat… only 1.4% of sales goes towards marketing. That might be fine when you sell a hundred million in revs to a few customers, but is low by a factor of 2-3x if the company really wants to make the jump to a sustainable growth trajectory at respectable and consistent margins.



-Eric Levine




R3: Mobile Apps Will Matter in 2010


January 22, 2009


With the online channel proving to be an important driver of sales in 2009, retailers are now looking to leverage mobile applications in much the same way in the year ahead.





With the online channel proving to be an important driver of sales in 2009, retailers are now looking to leverage mobile applications in much the same way in the year ahead. The technology here is very much in its infancy providing first movers significant latitude and creative license. Case in point, the unveiling of Abercrombie’s new transactional m-commerce site and sexy new application.


While ANF’s m-commerce site enables consumers to purchase product anytime-anywhere along with handy functionality including a store locator, the company’s application is nothing more than a hot model gallery – brand relevant of course. What’s interesting to note here is that when the teen panel out at ICR was asked how many use mobile devices to shop, only one of the twelve teens raised their hand suggesting this channel is indeed in its infancy – not for long.


At NRF’s recent Retail BIG Show, several companies exhibited their mobile offerings including features such as accelerated checkout, personalized service, and inventory verification. One of the key hurdles for technology providers is consumer comfort with online/mobile payment, which many view as a compromise to personal security. Technology offered by mFoundry provides one solution to this concern with its mobile application designed for Starbucks that lets customers check their card balances, reload, view transactions, and even pay using an iPhone at 16 Starbuck stores in Silicon Valley and Seattle. With the company targeting retailers, expect to see more early movers launching apps in the months ahead. As online was for retailers in 2009, we expect mobile applications to be a key incremental driver in 2010 for those that get it right.


R3: Mobile Apps Will Matter in 2010 - 1


R3: Mobile Apps Will Matter in 2010 - 2




  • A local New York news site is reporting that Costco Harlem store is laying off employees, just two months after opening. The article suggests that the layoffs are a result of disappointing December sales at the location. The article goes on to explain that it is not entirely clear if the layoffs are “seasonal” in nature or actually a cost cutting exercise.
  • After a successful Fall sale featuring Gucci product, DSW is back at it with a recent shipment of Gucci bags. The $200-$400 products are available in select stores and were briefly available online. We now wonder how much past season Gucci merchandise is sitting around to fuel a steady stream of product flows…
  • For those following the explosive popularity of Lady Gaga and her foray into fashion, design, and other non-music ventures this quote sums her efforts up best. When her personal costume designer, Zaldy Goco, was asked, “Can you tell me exactly what the Haus of Gaga is?”, the reply was, “I’m not even sure exactly what it is.”




Target to Bring Message Back to Quality; Unveils Store Growth Plans - Wal-Mart Stores Inc.’s positioning as the country’s rock-bottom low-price leader has put it in an enviable position during the recession, which left Target frantically scurrying to change its perception as the “upscale” mass merchant with an emphasis on great design and the price premium it implied. Target shifted its advertising message from highlighting the “Expect More” part of its “Expect More, Pay Less” brand promise, to playing up the “Pay Less” aspect. But virtues such as quality, sharp design and designer-driven fashion will continue to be the retailer’s raison d’être, Gregg Steinhafel, Target’s chairman and chief executive officer, told Wall Street analysts on Thursday, adding that “apparel and home have recovered.” The Minneapolis-based retailer, which operates 1,744 stores in 49 states, plans to invest about $1 billion in the renovation of approximately 340 existing stores this year, which will include expanded grocery content in general merchandise stores and boosting layout, assortment and in-store experience in beauty, home, electronics and video games. Target will also focus on opening no more than 10 new stores this year with further opening plans in 2011, as well as testing out a smaller store format concept with an edited merchandise offering. Finally, Target is eyeing expansion outside of the U.S., within the next three to five years, in Canada, Mexico or Latin America. <licensemag.com>  <wwd.com>


The North Face Names VP, Global Product - The North Face today announced the addition of Philip Hamilton, VP of  global product. Hamilton, formerly of Nike, will be responsible for leading The North Face global product strategy to continually drive and execute innovative products, contributing to the brand’s global and regional growth initiatives. “Philip brings 20 years of experience in product design and development within the apparel industry,” said Steve Rendle, president, VF Outdoor Americas. “Throughout his 18-year career at Nike, Philip held progressive product management leadership roles in Europe, Asia and the U.S. We are thrilled to bring his expertise and leadership to our global product organization.” Hamilton most recently served as VP of product merchandising with Nike Asia-Pacific in Hong Kong, where he was responsible for managing the multi-billion dollar footwear, apparel and equipment business and leading a team of over 200 associates. He holds an MBA from University of Oregon, Eugene.  <sportsonesource.com>


Macy's Might Turn to Outlet Stores - Macy’s might follow Bloomingdale’s in the industrywide push to open outlets, a sector surging in popularity among brands, retailers and consumers. “To me, Bloomingdale’s was the first priority and a natural opportunity,” Terry Lundgren, chairman, president and chief executive officer of Bloomingdale’s parent Macy’s Inc. told WWD, referring to the retailer’s move into outlets this year. “The upscale specialty department store group is well known in the outlet centers,” Lundgren added, referring to Nordstrom Rack, Neiman Marcus’ Last Call and Saks Fifth Avenue’s Off 5th chains. “Bloomingdale’s would be a natural addition. There is no plan for Macy’s outlets at the moment. As we learn the business with Bloomingdale’s, it could be something we consider.” Bloomingdale’s said Thursday it will open its first four fashion outlets this summer or fall, confirming a WWD report on Jan. 13 that the chain was headed toward the lucrative distribution channel. The outlets will be about 25,000 square feet each and will sell apparel, accessories, shoes and jewelry. They are opening in Bergen Town Center, Paramus, N.J.; Dolphin Mall, Miami; Potomac Mills, Woodbridge, Va., and Sawgrass Mills, Sunrise, Fla.  <wwd.com>


Steve Madden Adds Jewelry Partner - Lucas Design International is on board to design a women's fashion jewelry collection for the Steve Madden brand. The range will hit better department stores and fine retailers, as well as Steve Madden stores and Web site this fall. "We look forward to working with the Lucas Design team to offer a jewelry collection that will reflect the Steve Madden design image," says Edward Rosenfeld, chairman and chief executive officer of Steve Madden. "We believe that fashion jewelry represents a great complement to the portfolio of categories that carry the Steve Madden name and that Lucas Design's expertise in the fashion jewelry business makes them an excellent partner for this endeavor." <licensemag.com>


Jessica Simpson to Introduce Jeanswear Offering - Jones Apparel Group has tapped Camuto Group to develop and distribute jeanswear under the Jessica Simpson Collection exclusively for fall. The range will include jeanswear ($20 to $24), as well as woven and knit tops ($9 to $20). The Jessica Simpson Collection already spans 20 apparel and accessory categories. <licensemag.com>


"New Normal" Psychology Dominates Consumer Behavior - Consumer psychology continues to feel the aftershocks of the financial crisis, as the "new normal" still dominates self-reported spending behaviors. While it is encouraging that 48% of Americans say they are feeling better about their financial situations and 56% say they are feeling pretty good about the amount of money they have to spend, their behavior seems to reflect something different -- a new normal. Seven in 10 consumers (70%) say they are cutting back on how much money they spend each week and 22% say they worried yesterday that they spent too much money. Consumer "new normal" behaviors have remained largely consistent since Gallup began monitoring these consumer spending perceptions and behaviors on a daily basis since June 2009. The December 2009 results reported here essentially reflect the aggregated monthly trends. The degree of consumers' optimism about their personal finances has remained about the same across age and income groups. At the same time, so have consumer "new normal" behaviors. <gallup.com>


The Macau Metro Monitor. January 22nd, 2010



According to the Statistics and Consensus Service, total visitor arrivals increased 6.7% y-o-y to 2.04MM in December. Visitors from the PRC accounting for nearly 50% of the arrivals, grew 17.8% y-o-y to 1.01MM, while visitors from HK, Singapore, Japan and Malaysia all decreased in December. For 2009, visitor arrivals grew 5.1% to 21.75MM.




China's recent announcement of bank loan tightening and fears of a rate rise could have a negative impact on the junket generated business that makes up the majority of Galaxy and SJM's business. Destination Macau believes that bank tightening efforts will be aimed at hot money sources like junkets rather than the growing Masses. As "social harmony" continues to be government's prime directive, the authors believe that projects that create employment and consumer spending will be supported by generous monetary policy.  At the same time, wealthy individuals who have the large portions of their wealth parked internationally are also less likely to be impacted by bank tightening.  While Destination Macau doesn't see any immediate slowdown, as the first 20 days of the year saw gaming receipts grow 67% and are on track to hit MOP 12MM, they do think that gaming revenues will slow down post Chinese New Year.




It sounds like Sands is about to resume construction on sites 5 & 6. Apparently they sat down with their contractors this week and assured that all their suspended contracts would be honored.  The $1.75BN needed to fund the project is already in place as five banks (Barclays, Goldman, Citi, BNP Paribas, and UBS) are beginning to syndicate their generous commitments. David Sylvester, the group's head of retail, will be relocating back to Macau once Marina Bay Sands is open, as will Matthew Pryor, global head of construction for LVS. The opening date is tentatively set for third quarter of next year.


LVS is also likely to put the 300+ apartment-hotel units managed by Four Seasons on the market shortly. According to Destination Macau the marketing strategy will involve asking the hundreds of high-rollers who currently are required to deposit sums of "front-money" into bank accounts if they want to play at the VML properties to use use those millions of idle dollars to buy an apartment instead. LVS can then simply put a lien against the asset to cover the gaming account.


Property prices have been strong lately, but its unclear if LVS will be able to get $300MM or $900MM of proceeds (based on original price talk of $2,000 psft).  In order to get around government restrictions of residential sales on Cotai, the units will be sold under a "co-op" model, rather than as strata-title.  If LVS is successful, there is little doubt that others will follow suit.



COD GOES ALL-OUT Destination Macau

According to gaming regulator sources, COD's mass floor winnings are up more than 25% (m-o-m) after the first 3 weeks of the year. Crown Towers were also full this past weekend, suggesting that VIP play was doing okay as well.  COD has been pursing a very aggressive marketing campaigning, blanketing the HK ferry terminal, the TurboJet boats, and every access point to Macau with coupons leading gamblers to a HK$14MM in total giveaways at COD (compared to just HK$1.5MM at the Wynn).  Despite all the promotions and marketing efforts, there can be little doubt that Venetian is still the preferred property in Cotai.

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 80.48%
  • SHORT SIGNALS 78.35%

Obama Needs A Win

“Desperation is sometimes as powerful an inspirer as genius.”

-Benjamin Disraeli


Benjamin Disraeli was one of the more socially conservative political leaders of 19th century Britain. He was twice the Prime Minister of the United Kingdom. He was a romance novelist. He was Liberal Party leader, William Gladstone’s, intense rival.


Disraeli’s aforementioned quote has stood the test of political time. Today’s meme machine of CNBC has reduced the political senses of this fine nation’s said leaders to a numbness that sometimes easily confuses capitalism with socialism and morality with morass. Sadly, political desperation has become the only light that guides them.


I’ve been chirping for some time now that President Obama Needs A Win and that the probability was heightening of his advisors having him go deep for the political end-zone against Wall Street’s bankers. No matter where you go this morning, there it is.


The President appears to be serious, so I say Game On. This is a short term fight that this country needs to have unless we want to make this a long term Japanese experience.


Here are the two teams (represented by two partisan newspaper headlines this morning):


1.       Wall Street – “Wall Street reacts badly to President Obama’s bank regulation proposals” (Wall Street Journal)

2.       Main Street – “President Obama makes Paul Volcker flavor-of-the-month” (Washington Post)


Here are the team Captains:


1.       Wall Street – Timmy ‘The Squirrel Hunter’ Geithner

2.       Main Street – Paul ‘Lord Voldemort’ Volcker


Here is the score: Wall Street 7, Main Street 7.


Wall Street scored first (earlier this week) with a big political win in Massachusetts. Some Republicans won’t like the sounds of that because they want to be considered the good guys who really get economics, who had nothing to do with creating this mess to begin with - but I guess that’s too bad. The reality is that the SP500 hit a 15-month high that day (1150, up +70% from the March 9th low), the Piggy Banker Spread hit all-time wides (+286 basis points), and Bankers issued themselves record bonuses.


Main Street scored in the back half of this week with Obama benching a conflicted and compromised Geithner defense, and putting the ‘C’ back on the old veteran Volcker’s jersey. Some Democrats won’t like the sounds of that because I’m suggesting that this appointed Democrat bench of economic soothsayers is incompetent. I guess that’s too bad too…


Have no fear political partisan, I am not taking sides here. Remember, I AM Canadian!


After all of these politicians and bankers missed calling the crash that they created, they have assigned themselves the titles of professional Crash Callers and Risk Managers. It’s a joke. Now that we have pricked the intermediate term bubbles in gold and short term treasuries, the only long term bubble that remains is that in which these politicians and bankers live.


Where will the score go from here? Well, we will have to see  - but I am certain of the game plans:


1.       Wall Street will try to scare the hell out of the American citizenry with threats of what this could do to their stock market, jobs, and children

2.       Main Street will try to cry to the referee on  a 10% unemployment rate and a Piggy Banker chowing down on the rate of return on their savings accounts


Scare and whine tactics. It’s going to be the Super Bowl of political bubbles, and Obama Needs A Win!


We’ve cornered the market on front row seats for this one. We’ll be in it to win it with a daily risk management view of all the moving parts. For now, we remain bullish on the US Dollar and bearish on Gold. Rather than supporting an unreasonable and unsustainable view of ZERO percent rates of return on Main Street’s savings accounts, we currently have a ZERO percent allocation to Commodities in our Asset Allocation Model. Everything, however, has a price.


As prices and player performance in this new game change, we will. After seeing Tuesday’s +1.3% Massachusetts melt-up, and yesterday’s -1.9% Main Street melt-down, does macro matter? The fans apparently think it does, and we think you should too. So let’s get our real-time risk management game faces on and get at it.


The SP500 broke its immediate term TRADE line of support (1126) yesterday. Now that’s your line of resistance. The intermediate term TREND line of support is down at 1095.


Best of luck out there today,






EWC – iShares Canada — We remain bullish on the intermediate term TREND for Canada. With a pullback in the ETF, we bought Canada on 1/15/10 and 1/21/10.


XLK – SPDR Technology — We bought back Tech after a healthy 2-day pullback on 1/7/10.


UUP – PowerShares US Dollar Index Fund — We bought the USD Fund on 1/4/10 as an explicit way to represent our Q1 2010 Macro Theme that we have labeled Buck Breakout (we were bearish on the USD in ’09).

VXX - iPath S&P500 Volatility — The VIX broke down to our immediate term oversold line on 1/6/10, prompting us to add to our position on VXX.


EWG - iShares Germany —Buying back the bullish intermediate term TREND thesis Matt Hedrick maintains on Germany. We are short Russia and, from a European exposure perspective, like being long the lower beta DAX against the higher beta RTSI as well.

EWZ - iShares Brazil — As Greece and Dubai were blowing up, we took our Asset Allocation on International Equities to zero.  On 12/8/09 we started buying back exposure via our favorite country, Brazil, with the etf trading down on the day. We remain bullish on Brazil's commodity complex and believe the country's management of its interest rate policy has promoted stimulus.

CYB - WisdomTree Dreyfus Chinese Yuan — The Yuan is a managed floating currency that trades inside a 0.5% band around the official PBOC mark versus a FX basket. Not quite pegged, not truly floating; the speculative interest in the Yuan/USD forward market has increased dramatically in recent years. We trade the ETN CYB to take exposure to this managed currency in a managed economy hoping to manage our risk as the stimulus led recovery in China dominates global trade.

TIP - iShares TIPS — The iShares etf, TIP, which is 90% invested in the inflation protected sector of the US Treasury Market currently offers a compelling yield. We believe that future inflation expectations are mispriced and that TIPS are a efficient way to own yield on an inflation protected basis.



IEF – iShares 7-10 Year TreasuryOne of our Macro Themes for Q1 of 2010 is "Rate Run-up". Our bearish view on US Treasuries is implied.
RSX – Market Vectors Russia
We shorted Russia on 12/18/09 after a terrible unemployment report and an intermediate term TREND view of oil’s price that’s bearish.


EWJ - iShares JapanWhile a sweeping victory for the Democratic Party of Japan has ended over 50 years of rule by the LDP bringing some hope to voters; the new leadership  appears, if anything, to have a less developed recovery plan than their predecessors. We view Japan as something of a Ponzi Economy -with a population maintaining very high savings rate whose nest eggs allow the government to borrow at ultra low interest levels in order to execute stimulus programs designed to encourage people to save less. This cycle of internal public debt accumulation (now hovering at close to 200% of GDP) is anchored to a vicious demographic curve that leaves the Japanese economy in the long-term position of a man treading water with a bowling ball in his hands.

SHY - iShares 1-3 Year Treasury BondsIf you pull up a three year chart of 2-Year Treasuries you'll see the massive macro Trend of interest rates starting to move in the opposite direction. We call this chart the "Queen Mary" and its new-found positive slope means that America's cost of capital will start to go up, implying that access to capital will tighten. Yields are going to continue to make higher-highs and higher lows until consensus gets realistic.


Despite some embarrassing pleading on the conference call, analysts may have it wrong about IGT’s level of conservatism. Guidance looks realistic to us.



IGT missed on revenues but produced better EPS due to cost controls and some one-time items.  By our math, if you adjust out all the noise and one-time items the actual EPS result was more like $0.22, exactly in-line with our projection.  The revenue miss and unsustainably low SG&A/R&D indicates that fundamentals are a little worse than we expected.  We are particularly concerned with lower than expected yield per game in gaming operations and a market share that appears to be lower than the company indicated on the call.


On the call, one analyst was almost begging IGT to acknowledge that they should do $1 in earnings in fiscal 2010.  His logic was that FQ1 is seasonally slow and they did $0.25.  IGT wasn’t biting.  What should’ve been clear to the analysts is that:

  • slot sales to new/expanded casinos will be way down in FQ2 and FQ3
  • there were a number of one-time items – management acknowledged that the “real” number was $0.22 for FQ1
  • the low levels of SG&A and R&D in FQ1 are not sustainable
  • replacement demand was disappointing in FQ1 so no evidence yet of a v-shaped recovery as projected by some analysts
  • market share may be a concern again

Thus, IGT’s unchanged guidance of $0.77-0.87 seems reasonable.  So what else did we learn from this release?


Product sales takeaways

  • Replacements have troughed but have yet to show real signs of big improvement. 
  • Since IGT gets a higher % share of new and expansion units than replacement units, replacements units need to show some hockey stick like growth in order to get to Goldman Sach’s magic $1.00 number
  • We’re still confused on how IGT came up with over 50% share of new shipments when they only sold 2,500 new and expansion units…. Unless our math is seriously off there is no way that new unit shipments this quarter were only 5,000
  • ASP’s were actually down 6% sequentially – higher priced Multi Layer Display games (MLD) were 32% of the mix vs. 34% in FQ4, and there are two types of MLD’s and there were less of the more expensive ones that sold this quarter
  • International shipments will be up a little y-o-y and assuming anemic Japan sales, pricing should be better


Game operations

  • Game operations continues to suffer from “mix issues” so yields will likely remain depressed from last years’ levels
    • Some of the legacy “higher” yielding units are coming off and being replaced with deals that are more favorable to casinos
    • We’ve been hearing this from the operators for months now and it looks like we’re seeing the “discounting” in the yields now
    • If interest rates trend upwards IGT will continue to have a favorable impact from jackpot funding (higher the interest rate, the lower the PV of the liability)
    • If IGT can continue to manage its install base churn margins should continue to benefit from lower D&A expense, although its sounded like they are doing some refreshing over the next few quarters so this quarter’s margin is not likely to be repeated


Other stuff

  • The amazingly low SG&A and R&D numbers from this quarter are not sustainable and therefore, nor is the $0.25 EPS number at the current revenue run-rate
  • SG&A was unusually low because there was lower incentive comp due to the timing of stock issuance, higher stock forfeitures, and an related $3MM benefit
  • Tax rate will also be “normal” and higher going forward 


Bottom line… fundamentals are no better than we thought, possibly a little worse, but cost controls were commendable.  Should IGT sustain this discipline they can approach the high end of their guidance range for the year, which still implies a miss from sell-side expectations.  The question is with such a favorable long-term sector outlook, will it matter?


The deterioration in the S&P 500 that started on Wednesday accelerated to the down side on Thursday.  The S&P posted its first back-to-back decline since December 8, 2009. Volume was above average, and up 42% day-over-day.  


The VIX was up 19.2% and posted its biggest one-day spike since November 27, 2009 and finished at its highest level since December 17th. The Hedgeye Risk Management models have the following levels for VIX – buy Trade (19.76) and Sell Trade (22.51).


From a MACRO perspective, there were a number of factors weighing on stocks yesterday.  First, China tightening concerns increased after another batch of strong economic data that helped to solidify fears about a bubble.  With our “CHINESE OX IN A BOX” theme we continue to be bearish on China for the immoderate term.  Last night the Shanghai index declined 0.95% and is now down 4.5% year-to-date.  This is putting pressure on the RECOVERY trade, as the Materials (XLB) was down 4.3% on the day.  The XLB is now down 2.2% year-to-date, which makes it the worst performing sector this year. 


Second, the job picture got a little worse last week.  Initial claims jumped 36,000 to 482,000 for the week ended January 16th -- the highest level in two months. Consensus expectations were for a small decline to 440,000. How convenient that the Labor Department noted that the increase was due to "administrative issues" related to a backlog of claims from the holiday season.


Third, the regional Philadelphia Fed Index fell to 15.2 in January from 20.4 in December, below the consensus of 18.0 and snapping a five-month streak of increases.  While new orders fell to 3.2 from 8.3 and shipments slipped to 11 from 14.9, the bulk of the other components of the report, including six-month expectations, showed some signs of improvement in January.


The Hedgeye Risk Management models had six sectors breaks the TRADE line yesterday and the Financials (XLF) broke both TRADE and TREND.  The only sector that is positive on both durations is Healthcare (XLV). 


The Financials were the second worst performing sector as the there was a sharp selloff in the group following President Obama's latest financial reform proposal.  Hit the hardest were the large-cap banks and investment banks with JPM -6.6%, BAC -6.2%, C -5.5%, MS -4.2% and GS -4.1%.  The banking group outperformed for a second straight session yesterday, with the regional banks among the standouts in the group.  Signs that credit quality is improving ahead of expectations seem to provide support to the group. 


The best performing sector yesterday was Technology (XLK).  A batch of largely upbeat earnings guidance out of the Technology sector was the primary factor.  The software sector remained under pressure however, with the S&P Software Index down for a second straight session.  The semis were mostly weaker with the SOX down 0.5%. 


Earning out of the consumer space helped the Consumer Discretionary outperform by 30bps.  Yesterday, EL +9.2%, PNRA +7.3% and SBUX +1.7% all reported better that expected results. 


As we look at today’s set up the range for the S&P 500 is at 16 points or 0.53% (1,110) downside and 0.90% (1,126) upside.  At the time of writing the major market futures are trading up on the day.  


Copper prices fell to the lowest level in almost four weeks as a drop in equity markets has cooled demand expectations and the dollar’s strength.  The Hedgeye Risk Management Quant models have the following levels for COPPER – buy Trade (3.30) and Sell Trade (3.38).


In early trading today Gold is declining for the third straight day.  The Hedgeye Risk Management models have the following levels for GOLD – buy Trade (1,097) and Sell Trade (1,117).


In early trading, crude oil is trading flat after declining 2.1% yesterday.  Crude looks poised for a second weekly decline, on the back of a slowing China and increased supplies.  The Hedgeye Risk Management models have the following levels for OIL – buy Trade (75.63) and Sell Trade (77.98).


Howard Penney

Managing Director














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