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Yep, US GDP Growth Is Slowing

Takeaway: 3Q growth estimates coming down....again. Don't say we didn't warn you.

This note was originally published August 29, 2014 at 13:56 in Macro

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.

 

Yep, US GDP Growth Is Slowing - drake222

 

Yep, US GDP Growth Is Slowing - consumer spending YoY

 

Yep, US GDP Growth Is Slowing - Chart of the Day normal

 

 

 

Christian B. Drake

cdrake@hedgeye.com

@HedgeyeUSA


Commodities: Weekly Quant

Commodities: Weekly Quant - chart1 divergences

Commodities: Weekly Quant - chart 2 CRB Deltas

Commodities: Weekly Quant - chart3 USD Correls

Commodities: Weekly Quant - chart4 S P Correls

Commodities: Weekly Quant - chart5 Volume

Commodities: Weekly Quant - chart6 implied vol

Commodities: Weekly Quant - chart7 cftc sentiment

Commodities: Weekly Quant - chart8 1month correls

Commodities: Weekly Quant - chart9 3 month correls

Commodities: Weekly Quant - chart10

Commodities: Weekly Quant - chart11 1 YR correls

Commodities: Weekly Quant - chart12 3 yr correls

 

 

Macro Team


The Week Ahead

The Economic Data calendar for the week of the 1st of September through the 5th of September is full of critical releases and events.  Attached below is a snapshot of some of the headline numbers that we will be focused on.

 

The Week Ahead - 08.29.14 Week Ahead

 


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#Q3Slowing

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.

 

#Q3Slowing - PCE   RS MoM

 

#Q3Slowing - consumer spending YoY

 

#Q3Slowing - Chart of the Day normal

 

 

 

Christian B. Drake

@HedgeyeUSA


Cartoon of the Day: Fightin' Words

Takeaway: Don't look now (if you're in the macro consensus) but the 10-Year is at 2.33%.

Cartoon of the Day: Fightin' Words - Fightin  Words 08.29.2014


Macro Consensus Remains Royally Flummoxed Over Epic Move in Treasuries

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?

 

Macro Consensus Remains Royally Flummoxed Over Epic Move in Treasuries - TLT Chart


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