Good morning! You can enjoy today's The Macro Show with Senior Macro analyst Darius Dale and China analyst Felix Wang 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) SPY – The SPY signaled immediate-term TRADE #oversold (i.e. low-end of our @Hedgeye Risk Range) on political/tourist headlines earlier this week; yesterday’s bounce came on #decelerating volume, but implied volatility (vs. 30-day realized) on SPY just went from a -37% DISCOUNT (pre SPY correction) to a +2% PREMIUM this morning.
2) OIL – No #bounce here with WTI flat this morning and, most importantly, still below @Hedgeye TREND resistance of $58.44 as the U.S. Dollar continues to crush anyone who is unaware of what USD does during Global #Quad4 in Q3; Oil Volatility (OVX) would need to break-down below 32-33 to get me long Oil (waiting & watching).
3) GOLD – Textbook immediate-term TRADE #overbought signal earlier this week (alongside a Treasuries #overbought signal when SPY signaled immediate-term #oversold) with a @Hedgeye Risk Range of $1; use these Macro Tourist headlines as your backboard to fade both FOMO and freak-outs.
Bearish Insight
NFLX-TRACKER | AUG/SEP 2019 | SEPTEMBER SLOWDOWN
NFLX-TRACKER | AUG/SEP 2019*
The growth rate in Netflix (NFLX) mobile app downloads accelerated in July/August coincident with the release of hit series "Stranger Things" and "Orange Is The New Black," only to slow again in the first two weeks of September. We continue to believe that as competition intensifies and Netflix raises the price of their service:
- Rate of adoption will slow
- Churn will increase
- Quarterly subscriber metrics will become more volatile and hit-driven
Worldwide NFLX mobile app download growth increased to 18% YoY QTD through 8/30 but is on track to finish the quarter closer to 13% YoY if the September slowdown persists through month-end.
While this growth rate is an improvement from 7% in 2Q19, it is well below the 30% average growth rate from the two years prior. Please see the charts below and slide deck for additional takeaways.
DOWNSIDE RISK TO Q3 SUBSCRIBER ESTIMATES
We believe NFLX mobile app downloads are a good proxy for gross subscriber additions based on the high absolute correlation to NFLX's reported metrics. While the data suggests that Q3 net subscriber additions will be much better than Q2, we believe the improvement is more than reflected in management's Q3 guidance of 7 million net new paid subscribers.
Overall, we see downside risk to Q3 subscriber estimates if the September slowdown persists and churn remains elevated (we will be launching our quarterly churn survey at month-end).
We continue to monitor the data closely and will provide another update in early October with our final thoughts and analysis. This is an excerpt from a recent research note published on 9/18 to institutional subscribers of the Communications vertical.
