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
Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.
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?
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