We think there is an increasing probability that the U.S. economy enters a recession by 3Q 2016.
Below is a brief excerpt from a note that Hedgeye CEO Keith McCullough sent to subscribers earlier this morning:
"... Yep. You got the recessionary industrial production print of down -1.2% year-over-year for NOV last week and you’ll get another recessionary Durable Goods print this morning – we signaled to short Industrials (XLI) and Caterpillar (CAT) and Wabtec (WAB) again on green yesterday."
(Editor's Note: See Real-Time Alerts for more information on these short calls.)
As you can see in the chart below, Industrial Production growth slowed to its lowest level since 2009, down -1.2% y/y...
Oh, and on Durable Goods...
"Durable Goods orders, more colloquially know as recessionary manufacturing data, decelerated across month-over-month and year-over-year," Hedgeye CEO Keith McCullough wrote following the durable goods release. "Core Capex Orders, meanwhile, continued to slump — recording negative growth for the 10th consecutive month. Remember the Old Wall telling you 'capex is going to accelerate" 12 months ago? It slowed, big time."
There you have it. More data confirming our #Recession call.