A Monster Reality Check Is Careening Toward Wall Street

Takeaway: Current Wall Street and Fed forecasts remain way off the mark.

A Monster Reality Check Is Careening Toward Wall Street - z cons


It’s not 2008... the first week of the year might actually be worse. So called, "blue chip" Wall Street year-end forecasts aren’t even close to the developing reality in financial markets. Take JPMorgan, for instance. Economists at the bank just said there's a "76% chance of recession by 2019."


By 2019? LOL


And then there’s the Fed. “We have to react to incoming events and we will react to them,” Fed Vice Chairman Stanley Fischer told CNBC yesterday.


Right… Let's take a closer look at that statement. What about the second straight month of sub-50 (aka contractionary) ISM manufacturing numbers? How about the latest Chicago PMI reading of 42.9? Or how about the existing industrial and earnings recession? 


Make no mistake, the Fed is tightening into a slowdown. Period. End of story.


Financial markets appear to be coming around to our view. The leading indicator for #GrowthSlowing is the 10-year Treasury (2.20%) minus 2yr (1.01%) and it’s making new lows this morning. In fact, today is a great day for long-term #GrowthSlowing and #LowerForLonger (rates) investors. Long bonds (TLT) are +1.1%.


While everyone on Old Wall is positioned for "rate hikes," rates are actually falling. 



A breath of fresh air (honesty) from former Dallas Fed head Richard Fisher on CNBC yesterday.


"We front-loaded this tremendous rally in stocks since March of 2009... It's going to take a little while [for the market] to digest this. So, I wasn't surprised about last year and I wouldn't be surprised if we had a rather fallow performance this year."


Let's be crystal clear about this. There is only one Wall Street firm that has been making the non-consensus US #Deflation and #Recession call. That would be us. Meanwhile, the Fed and Wall Street want you to believe that everything they missed in the past year is “transitory.”




Oil, down another -1.3% this morning, has to be the darndest looking “transitory” thing I’ve seen in my macro life – it’s not transitory, it’s called #Deflation – and this will continue to perpetuate a credit cycle that is about to break out (credit spreads) to new cycle highs.



Getting back to equity markets, after it crashed from its all-time July #Bubble highs, the Old Wall is "downgrading" Apple (AAPL).


Thanks for coming out.


Lying to people about the economy for your own compensation purposes is fundamentally un-American.


Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more

Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

read more

We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

read more

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more