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Cartoon of the Day: Economic Breakdown

Cartoon of the Day: Economic Breakdown - economic indicators cartoon 02.24.2016

 

"What matters to markets and your returns are expectations and rates of change," Hedgeye CEO Keith McCullough wrote in a note to subscribers. "As critical rates of change continue to slow, the probability of a US #Recession continues to rise."


JT Taylor: Rubio Gets A Bump But Trump Dominates

Takeaway: What to watch on the election 2016 campaign trail.

Below is a brief excerpt from Potomac Research Group Chief Political Strategist JT Taylor's Morning Bullets sent to institutional clients each morning. 

TRUMP TROUNCES:

 

JT Taylor: Rubio Gets A Bump But Trump Dominates - trump 787

 

Donald Trump continues to dominate this election cycle with his strongest double-digit win to date in Nevada last night. Efforts to dent his momentum by Marco Rubio and Ted Cruz were fell dismally short and the heretofore coveted second place became the consolation prize no one seem to want or acknowledge. Trump won with commanding margins in every demographic across the board -- even Hispanics.

 

Bottom line: With less than a week to Super Tuesday -- where Trump continues to be favored in many of the 12 states at stake -- chances to stop him are fading fast.  

SPOILER ALERT:

 

JT Taylor: Rubio Gets A Bump But Trump Dominates - rubio pic

 

Rubio may be getting a bump from capturing most of Jeb Bush's support, but he'll have a tough time growing his lead so long as Kasich remains in the race. Absent consolidation among anti-Trump candidates, the odds are far higher that The Donald will capture the vast majority of the 595 delegates up for grabs on Super Tuesday, potentially giving him an insurmountable advantage. Kasich doesn't have any incentive to get out of the race, and isn't likely to do so despite the number of elbows he's getting from Team Rubio.

THANKS, BUT NO THANKS?

 

The Republican establishment is only now realizing that Trump has both momentum on his side and a series of favorable primary contests ahead. Trump will be more difficult to stop, and we've said that the establishment has no luxury of time to coalesce around Rubio as the anti-Trump.  As last night's Nevada results indicate, the recent outpouring of establishment support for Rubio may be coming too little, too late.

 

The usual advantage of these endorsements -- the donor and organizational access they grant -- is diminished as they only started to roll in for Rubio with just over a week to go before March 1. Moreover, with such an anti-establishment mood this year, the wave of endorsements could tag him as the candidate of the hated Washington class. 


McMonigle: 'Oil Production Freeze Is Melting'

In light of recent commentary from Saudi Arabia, Senior Energy Analyst Joe McMonigle at Potomac Research Group says the idea of an oil production freeze (floated by countries including Russia and Venezuela) "appears to be melting."

 

Click image to watch McMonigle on BNN.

McMonigle: 'Oil Production Freeze Is Melting' - mcmonigle image

 


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BOND MARKET MESSAGE? Say It With Us Now ... #GrowthSlowing

Takeaway: The further compression of the yield spread confirms what we, at Hedgeye, have long known: U.S. growth is slowing.

BOND MARKET MESSAGE? Say It With Us Now ... #GrowthSlowing - Growth cartoon 06.03.2015 large  1

 

Below is a brief update on our U.S. economic outlook from our Macro team in a note to subscribers earlier this morning:

 

"The short-covering, reflation rally is fizzling with crude down another -3% this morning. Meanwhile, the yield spread is back inside 100 bps as the bond market and yesterday's consumer confidence report continue to re-affirm the slower-and-lower-for-longer reality."

 

The chart below shows the compression of the 10-yr / 2-year Treasury yield spread despite the Fed's December 15 rate hike. (Note: This is precisely why we're so bullish on Long Bonds (TLT). With slower U.S. growth and yields headed lower TLT outperforms.) 

 

BOND MARKET MESSAGE? Say It With Us Now ... #GrowthSlowing - rate hike 10yr 2yr

 

ALL TOGETHER now ... U.S. growth is slowing


Another Economic Indicator Signals Recession

Takeaway: An inside look at one of the top three indicators we use to forecast an economic downturn.

Another Economic Indicator Signals Recession - recession cartoon 02.04.2016

 

Below is a brief update on our U.S. economic outlook from our Macro team in a note to subscribers this morning:

 

"Yesterday we received incremental confirmation of our U.S. #Recession theme in the form of a sharp downtick in Consumer Confidence during the month of February to 92.2 from a downwardly revised 97.8 prior. This series is now slowing on a sequential, trending and quarterly average basis."

 

Another Economic Indicator Signals Recession - consumer confidence peaked

 

Recall that a breakdown in consumer confidence is among the top three (of several) proprietary indicators we use to forecast an economic downturn, with the other two being a breakdown in Corporate Profits and a breakout in Initial Jobless Claims. The confluence of these indicators is currently suggesting a recession is likely to commence within 1-3 quarters.

 

How do you play the coming recession? Watch this video...

 

 


McCullough: How To Think About Risk Ranges

 

In this brief excerpt of The Macro Show, Hedgeye CEO Keith McCullough explains how to use his daily risk ranges and why widening risk ranges could be signaling a coming collapse in equities.


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