We’re seeing 3Q growth estimates come down today (again) alongside soft consumer spending data in July.
Real consumer spending declined the most in 6 months to start 3Q, decelerating on both a 1Y and 2Y basis with softness ubiquitous across Services, Durables and Nondurables. Notably, the savings rate ticked up to 5.7% - the highest level in 18 months.
In short, while the income-savings dynamics are shifting favorably for forward consumption, in the immediate/intermediate term (& inclusive of today’s negative growth revision), we think consensus estimates - which remain laughably linear – need to come in further.
Christian B. Drake
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Takeaway: Macro consensus still doesn’t get it.
The UST 10YR Yield of 2.34% drives our Best Macro Idea (TLT) to a +17.2% gain for 2014 (and that’s pre dividends, the absolute return is even better). We can’t understand why macro consensus still doesn’t get the rate of return on slow-growth vs. Russell 2000 which is 0.0% YTD.
Watching too much TV, perhaps?
Have a wonderful Labor Day Weekend.
The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.