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DISCLAIMER Hedgeye Risk Management is a registered investment advisor, registered with the State of Connecticut. Hedgeye Risk Management is not a broker dealer and does not provide investment advice to individuals. This research does not constitute an offer to sell, or a solicitation of an offer to buy any security. This research is presented without regard to individual investment preferences or risk parameters; it is general information and does not constitute specific investment advice. This presentation is based on information from sources believed to be reliable. Hedgeye Risk Management is not responsible for errors, inaccuracies or omissions of information. The opinions and conclusions contained in this report are those of Hedgeye Risk Management, and are intended solely for the use of Hedgeye Risk Management’s clients and subscribers. In reaching these opinions and conclusions, Hedgeye Risk Management and its employees have relied upon research conducted by Hedgeye Risk Management’s employees, which is based upon sources considered credible and reliable within the industry. Hedgeye Risk Management is not responsible for the validity or authenticity of the information upon which it has relied. TERMS OF USE This report is intended solely for the use of its recipient. Re-distribution or republication of this report and its contents are prohibited. For more detail please refer to the appropriate sections of the Hedgeye Services Agreement and the Terms of Use at www.hedgeye.com.
LEGAL
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HEDGEYE ASSET ALLOCATION
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0%
10%
20%
30%
40%
50%
60%
70%
CASH U.S.EQUITIES
INT'LEQUITIES
COMMODITIES FOREIGNEXCHANGE
FIXED INCOME
67%
0% 0%
18% 12%
70%
HEDGEYE ASSET ALLOCATION
The maximum preferred exposure for cash is 100%. The maximum preferred exposure for each of the other asset classes is 33%.
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#LOWERHIGHS
EARNINGS
EUROPE
#LOWERHIGHS While industrial activity has stabilized against 13 months of negative comps, domestic service sector activity continues to slow off its mid-2015 highs. Headline ISM Services along with the Employment and New Orders components improved sequentially in March but the 9-month trend remains one of lower highs and lower lows. On the Labor Front, the trend has been similar as yesterday’s JOLTS data for February showed Job Openings decline by -159K, continuing the 8-month retreat off the mid-2015 peak.
EARNINGS Q1 earnings season kicks-off next week with the bulge bracket banks leading the way (JPM next Wednesday). If you think we’ll follow-up an awful Q4 2015 reporting season (S&P revs -4.0% Earnings -6.9%) with a rebound, think again. We won’t be lapping bad comps until at least Q3 of this year (reported in Q4). In Q1 of 2015, 8/10 sectors saw Y/Y earnings growth, and the one sector with awful earnings was energy, where WTI averaged $48.57 vs. $33.63 in Q1 0f this year. Don’t get excited about Q1 earnings season. It will be more of the same. #thecycle.
EUROPE Eurozone conflicted? If the Brexit debate wasn’t enough, German Finance Minister Wolfgang Schaeuble is out saying “It's a problem of our common currency union that we have ... an independent central bank, which conducts unified monetary policy for 19 member states that is less favorable for Germany than for other countries.” While we’ve identified the ECB’s conflicted policy framework for years, it underlines just how quickly risk can form across Eurozone assets. For the EUR/USD cross we continue to suggest trading the immediate term range, $1.11-$1.14.
RESTAURANTS & CONSUMER STAPLES
HOWARD PENNEY
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HEDGEYE RESTAURANT IDEAS LIST
LONG LIST TRADE TREND TAIL SHORT LIST TRADE TREND TAIL
1) MCD McDonald's 1) CMG Chipotle Mexican Grill X X X2) PNRA Panera Bread Company - 2) DRI Darden Restaurants X X X3) YUM Yum! Brands - 3) PLAY Dave & Buster's - X X4) DFRG Del Frisco's Rest. Group - 4) SBUX Starbucks X X -5) ZOES Zoe's Kitchen - 5) BWLD Buffalo Wild Wings X X X
6) EAT Brinker International X X -7) SHAK Shake Shack - X X
LONG BENCH SHORT BENCH
PLKI Popeyes Louisiana Kitchen DNKN Dunkin' BrandsHABT Habit Restaurants JACK Jack In The Box SONC Sonic BLMN Bloomin' Brands
TXRH Texas Roadhouse QSR Restaurant Brands Int.
Bench = timing is not right, or research is in progress.
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HEDGEYE CONSUMER STAPLES IDEAS LIST
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HEDGEYE MACRO PROCESS: RATE OF CHANGE
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HEDGEYE SECTOR PERFORMANCE
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HEDGEYE SECTOR RELATIVE PERFORMANCE
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HEDGEYE STYLE FACTOR PERFORMANCE
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HEDGEYE RATES & SPREADS
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CFTC NON-COMMERCIAL NET LONG POSITIONING
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MARKET SHARE VOLUME & TOTAL VALUE TRADED
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CREE, INC.