Editor's Note: Our world-class macro team hosted its highly anticipated macro themes call earlier this month with institutional subscribers. Led by CEO Keith McCullough, the presentation detailed the THREE MOST IMPORTANT MACRO TRENDS we have identified for the quarter and the associated investment implications. For more info on how you can access this and other Hedgeye research please email firstname.lastname@example.org.
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Q3 2015 MACRO THEMES OVERVIEW:
Amid consensus expectations for a return to “normal” economic conditions, our analysis shows ample evidence of secular stagnation. In light of that, we reiterate our “lower-for-longer” thesis on growth, inflation and interest rates and continue to find the FOMC’s hawkish guidance wholly misplaced.
With our proprietary GIP (growth, inflation, policy) model we’ll outline the top 6 European economies that will be most impacted by real GDP growth slowing as inflation accelerates in the back half of 2015. The timing of ECB head Mario Draghi’s eventual response will be critical in terms of risk managing the EUR/USD exchange rate, as well as any associated spillover risks.
Consumption peaks late cycle and with domestic and global growth set to slow alongside easing inflation comps in 2H15, it looks increasingly likely 1H15 marked the current cycle peak in household spending growth. We'll contextualize the current cycle, discuss the implications and detail how best to be counter-cyclically positioned as the consumer cycle enters its twilight.