Frau "Nein"

With Germany’s Chancellor Angela Merkel leading the debate on Greece’s debt bailout via the IMF rather than a European-led endeavor (a stance counter to her French counterpart Nicolas Sarkozy), she recently earned the title of Frau “Nein” by the European media.  While Merkel’s stance is fiscally rooted, politically she also wants to avoid tapping into German coffers, an important point as confidence in her party’s management toward the return of economic growth has waned in recent months.

 

As we get more vocal on owning quality on the long side (own High Grade Versus High Yield) in the face of domestic and global PIIGS, Germany’s fiscal conservatism continues to be a factor we’re bullish on. And recent German fundamentals suggest a favorable environment of low inflation, with CPI registering +0.5% in February Y/Y [versus +3.0% in the UK and +2.1% in the US] and lower input prices benefiting Producers, with PPI at -2.9% in Feb. Y/Y [versus +4.1% in the UK and +4.4% in the US].

 

While exports took a dive of -6.3% in January sequentially, we’d expect the weakness in the EUR versus the USD (EUR is down 6.8% versus the USD YTD) to benefit exports in the months ahead. As an aside, consensus is clearly now short the Euro; we’d guide to TRADE the range in a narrow band – buy/cover at $1.33 and sell/short at $1.36.

 

Additionally, over the last two days we received German business and consumer sentiment surveys. Although we don’t put our chips on surveys alone, the charts below show (consensus) trends. IFO’s business survey is making higher highs since early 2009, confirming margin improvement and global demand acceleration. On the consumer front, the fear of unemployment remains a dominating force, underlining the sideways trend, despite unemployment holding stable at ~8.2% over the last months. 

 

In terms of German stocks, our intermediate term TREND line of support on the DAX is now 5791. The DAX is building another bullish long term base.

 

Matthew Hedrick

Analyst

 

Frau "Nein" - G1

 

Frau "Nein" - G2

 


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more