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The Week Ahead

The Economic Data calendar for the week of the 9th of February through the 13th of February 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 - week


Commodities: Weekly Quant

Commodities: Weekly Quant - chart1 deltas

Commodities: Weekly Quant - chart2 deltas2

Commodities: Weekly Quant - chart3 usd correls

Commodities: Weekly Quant - chart4 volume

Commodities: Weekly Quant - chart5 open interest

Commodities: Weekly Quant - chart6 volatility

Commodities: Weekly Quant - chart7 sentiment

 

 

Ben Ryan

Analyst


The Week Ahead

The Economic Data calendar for the week of the 9th of February through the 13th of February 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 - 02.02.15 Week Ahead

 

 


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The Best of This Week From Hedgeye

Here's a quick look at some of the top videos, cartoons, market insights and more from Hedgeye this past week.

HEDGEYE TV

Morning Macro Call Replay: If USD Goes Up, Gold Will Go Up

Please enjoy this complimentary look at our Morning Macro Call, a daily conference call for institutional investors.  On Thursday’s Morning Macro Call, Hedgeye CEO Keith McCullough explains why inverse correlations matter, talks about the recent moves in oil, and debates Macro Analyst Darius Dale about which moving average is best.  

 

Keith's Macro Notebook 2/3: USD | Oil | Europe 

Hedgeye CEO Keith McCullough shares the top three things in his macro notebook Tuesday morning.

 

CARTOON

SNOW JOB

The Best of This Week From Hedgeye - SPX earnings snow

Investors aren't exactly digging the fourth quarter earnings season, which has been a disappointment so far.

 

GROUNDHOG DAY FOR THE FED

The Best of This Week From Hedgeye - Fed Yellen groundhogDay

Expect more of the same from the world’s unelected central planners including America’s own Fed chief Janet Yellen.

CHART

PATIENCE + TIME (U.S. DOLLAR CORRELATIONS)

The Best of This Week From Hedgeye - COD CRB USD 2.4.15

 

This is a brief excerpt from Thursday's Morning Newsletter written by Hedgeye CEO Keith McCullough.

 

To review this most recent 3-day counter-TREND move in macro markets:

  1. It’s all about the Dollar
  2. Reversing an epic 6 month #StrongDollar move started with a bad US GDP print on Friday
  3. Down Dollar’s counter-TREND move picked up momentum when the ISM # slowed on Monday
  4. By Tuesday, the EUR/USD was headed to the top-end of its $1.11-1.14 risk range
  5. USD had one of its biggest DOWN days in a year (yesterday)
  6. CRB Index had one of its biggest UP days in a year, closing +3.2%

poll of the day

HOW LOW CAN IT GO? (10-Year Treasury Yield Edition)

 

We wanted to know what you think? Will the 10-year U.S. Treasury go below 1.50% this year? Cast your vote and let us know!


Cartoon of the Day: A Mountain of Trouble

Cartoon of the Day: A Mountain of Trouble - Yelp cartoon 02.06.2015

 

Hedgeye Internet Analyst Hesham Shaaban has been the bear on Yelp, and Yelp stock is getting pummeled today.


Rainbows & Puppy Dogs | January Employment

Employment data re-hashing is pretty much ubiquitous across the financial media and there’s little value-add in dog-piling on the data reporting so we’ll keep it tight here.   

 

Immediately below is our summary review of the data followed by a few data points and trends we think are worth highlighting.  

 

January Employment | Summary Review:   Net Payrolls adds were strong on an absolute basis and accelerating on YoY basis, wage growth accelerated back up to +2.2%, hours worked held above trend, the positive balance of hiring at the sector/industry level continued, slack measure extended their slow march southward, revisions were unanimously positive and unemployment rose for the right reasons as participation bounced off multi-decade lows.  Manufacturing and Energy employment showed little evidence of ROW demand and Oil-price pressures, respectively.  

 

Rainbows & Puppy Dogs | January Employment - Employment Summary Table

 

 

HOUSING: Residential Construction employment rose +13K MoM, marking the largest sequential rise since November of 2005.  On a year-over-year basis, growth accelerated to +8.7% with the trend remaining one of ongoing improvement.  After having been bearish on housing in 2014 through October, we continue to think housing outperforms over the intermediate term in 2015.  (*Note:  if you do not currently receive our housing sector research but would like access please let us know.)

 

Rainbows & Puppy Dogs | January Employment - Resi Cons Employment

 

Rainbows & Puppy Dogs | January Employment - 20 34YOA ST

 

Rainbows & Puppy Dogs | January Employment - 20 34YOA LT

 

Consumption/Income Growth:  Today’s report augurs strength for the Consumption and Income/Spending data for January. 

 

The math is straightforward:   Accelerating employment base + an acceleration in wage growth will = accelerating aggregate income growth. 

 

Even if a further increase in the savings rate mutes the translation to actual consumption growth (as it did in December), it’s hard to characterize accelerating income growth and rising savings as fundamentally negative. 

 

Whether increased savings and rising corporate confidence actually translates into an acceleration in business investment – and a support to flagging productivity growth – remains a pretty big “if”, particularly as we traverse the late-cycle period of the current expansion. 

 

Rainbows & Puppy Dogs | January Employment - Salary   Wage Dec

 

Rainbows & Puppy Dogs | January Employment - Income   Spending Table

 

Energy Related Employment:  The BLS classifies oil & gas related employment within four major subsectors:  Oil and Gas Extraction, Oil & Gas Pipeline Construction, Support Activities for Oil & Gas Operation and Mining/Oil/Gas field Machinery.   The data is reported on a one month lag so the January release this morning provided December data for the respective industries. 

 

In short, payroll employment directly tied to Oil & Gas extraction, while slowing, has yet to show a conspicuous decline. 

 

We’ll be interest to see if that changes in the February report as the (more leading) initial jobless claims data continues to show a moderate negative divergence in energy state job separations.

 

Rainbows & Puppy Dogs | January Employment - Oil Industry Employment

 

Rainbows & Puppy Dogs | January Employment - Claims 020615

 

Cycle Accounting | Best Before the Crest:  It’s our view that we’re currently late-cycle in the current expansion.  Employment and wage growth always look best before the crest and handicapping where we are on the slope of the cycle line remains the game. 

 

With the incremental acceleration in employment growth in January, and inclusive of the 2014 revisions, we have now eclipsed the peak rate of payroll growth observed in the last cycle.  Whether January represented the trough in Initial Claims (3-mo rolling ave basis) remains to be seen but historical cycle precedents suggest the clock tick starts to get louder following a negative inflection off peak improvement in initial claims

 

 Rainbows & Puppy Dogs | January Employment - Cycle Profile

 

Rainbows & Puppy Dogs | January Employment - NFP YoY

 

Rainbows & Puppy Dogs | January Employment - Claims cycle

 

Rainbows & Puppy Dogs | January Employment - NFP cycle

 

“Patience”:   The “tough March decision for the Fed” headlines are in full crescendo this morning.  For the sake of taking the other side of the strength in the employment report, the charts below are probably the ripest fodder for the “push out the dots” folks. 

 

Is an acceleration in wage inflation imminent as slack continues its slow march southward, minimum wage changes take effect and net payroll add mix shifts modestly in favor of higher paying jobs?  Perhaps, but that’s been the perennial panglossian talking point for at least the last 18 months.  Elsewhere, the employment-to- population ratio, while improving, continues to signal ongoing slack while labor’s share of income remains decidedly depressed as the transmission of policy from financial asset inflation (wall street) to the real Main St. economy remains doggedly slow.   

 

Rainbows & Puppy Dogs | January Employment - Emp to Pop Ration total LT

 

Rainbows & Puppy Dogs | January Employment - Labor Share Income

 

SLACK:  The painstakingly sluggish trend towards labor market tautness remains ongoing.  Below are the updated charts

 

Rainbows & Puppy Dogs | January Employment - Workers per job opening

 

Rainbows & Puppy Dogs | January Employment - ST unemployment

 

Rainbows & Puppy Dogs | January Employment - NFIB Hiring

 

Rainbows & Puppy Dogs | January Employment - NFIB Compensation

 

Rainbows & Puppy Dogs | January Employment - NFIB Hard to Fill

 

 

Christian B. Drake

@HedgeyeUSA 


Daily Trading Ranges

20 Proprietary Risk Ranges

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.

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