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Takeaway: We reiterate our non-consensus bearish bias on U.S. consumption growth and domestic retail stocks.

The presentation hyperlinked below is jam-packed with our latest proprietary analysis on the domestic consumption cycle. It is broken into three distinct sections; the key takeaways are as follows:

  1. Key High-frequency Indicators (slides 5-34): Across the preponderance of relevant macroeconomic data, domestic consumption growth is markedly decelerating and is set to continue decelerating on a trending basis through at least 3Q16.  
  2. Household Debt Dynamics (slides 35-43): While consumer debt is certainly not the boogeyman it was leading up to and through the last downturn, the growth rates of auto and student loans remain worrisome to say the least. Moreover, peak household net worth portends a substantial degree of capital destruction in the months and quarters ahead.
  3. Domestic Demographic Trends (slides 44-51): The U.S. is currently experiencing the sharpest contraction in its core consumption demographic in modern history. Additionally, peak rates of ageing (think: Baby Boomer downsizing) are set to continue through the balance of the decade.

Click on the following link to download the associated PDF: http://docs3.hedgeye.com/macroria/Hedgeye_U.S%23ConsumerSlowing.pdf

In #ConsumerSlowing we trust,

DD

Darius Dale

Director