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Takeaway: The U.S. economy is slowing, despite what the Fed says.

BREAKING: Atlanta Fed's Economic Forecast Is Out To Lunch - Fed forecast cartoon 11.13.2015

The latest Atlanta Fed GDP reading is a head-scratcher.

In case you missed it, their forecast for Q1 2016 came in at 2.6% today.

2.6%!

That's well above rosey Wall Street consensus estimates of 2.1% and stands in stark contrast to Hedgeye's latest (revised) forecast... 0.6%. 

BREAKING: Atlanta Fed's Economic Forecast Is Out To Lunch - gdp fed q1

For the record, our Macro team has nailed the last five GDP reports.

Then there's the Atlanta Fed's own track record... You'll recall that Q4 2015 GDP came in at 0.7%. Back in October, the Fed's estimate for Q4 2015 GDP was almost 3%. That was ratcheted way back to a final estimate of 1.0%.

BREAKING: Atlanta Fed's Economic Forecast Is Out To Lunch - gdp fed q4

Part of the inaccuracy of Atlanta Fed's model is methodological. Here's Hedgeye U.S. Macro analyst Christian Drake:  

"The GDPNow model is never accurate in the early part of a quarter  - that’s because it’s a tracking model and uses reported data for the quarter to drive the estimate. At the beginning of the quarter it is largely interpolation and estimates, which subsequently get revised as the actual data comes in.

 

We don’t even have January data yet across a number of material series which means the Atlanta Fed model has incorporated zero actual data across many of the expenditure types in the 1Q16 estimate so far."

 

Hedgeye Senior Macro analyst Darius Dale adds even if there is a "sequential acceleration by the time Q1 GDP is reported... that would not be unlike 2Q 2000 and 2Q 2008 (both #SuperLateCycle head-fakes)."

The broader point here is that our Macro team reiterates its #GrowthSlowing theme per the preponderance of economic data that is rolling over of late and in spite of the Q1 2016 GDP number.

If we're right and historical precedence (per 2Q '00 and 2Q '08) is our guidepost, stay away from equities. As Dale points out, back then "You could've bought all the stocks you wanted en route to peak-trough decline on the order of -49.1% and -56.8%, respectively (S&P 500)."

in other words ... Watch out.