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REPLAY | Keith McCullough, Darius Dale and Neil Howe on The Macro Show

Did you miss Keith, Darius and Neil on The Macro Show today? Catch the replay HERE.

REPLAY | Keith McCullough, Darius Dale and Neil Howe on The Macro Show - TMS 3.24

 

This dynamic trio hit on a wide-ranging number of topics in a very thoughtful discussion including:

  • Being The Bear in commodities
  • Another Fed policy mistake
  • What the next Bull Market will look like
  • How much pain (both economically and institutionally) we'll have to undergo to get there
  • Why it's time to be positioned short "rich people"/long "poor people"
  • and much more...

 Don't forget you can watch The Macro Show week-day mornings at 9:00AM ET HERE.


Macro Playbook: Helping Bears Maintain Our Collective Conviction

Yesterday, were asked by a very sharp, longtime client of Hedgeye if we still had conviction in our #USRecession theme after the recent sharp rally in risk assets, which came amid a number of positive surprises across various economic data throughout the YTD. For those economic cycle junkies among you, we expand upon our answer to his question in great detail below:

 

Yes, we still do believe the U.S. economy may experience a shallow recession over the intermediate term and that it has the highest likelihood of commencing in/around 3Q16. Specifically, our top-three U.S. recession indicators (i.e. the Jobless Claims, Consumer Confidence and Corporate Profit cycles) are all continuing to progress according to our previously defined expectations:

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - Recession Watch Jobless Claims

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - Recession Watch Consumer Confidence

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - Recession Watch TTM EPS

 

Additionally, the domestic #CreditCycle continues to deteriorate in kind with the trends we identified at the onset of the year:

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - Hedgeye Macro U.S. Bank Credit Cycle Indicator

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction -  CreditCycle Delinquencies Slide 35

 

That being said, however, the meaningful retreat in HY OAS is new and noteworthy, so we must be cognizant of the extent to which the market is pricing in all of the above fundamental signals as head fakes. On that note, HY spreads would have to get back below their long-term historical mean of ~500bps on an index basis for us to consider that to be true. Right now, they’ve currently retreated back to just above 600bps, which implies a considerable amount of tightening from here for the credit markets to shake us off our recession view.

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - HY OAS by Sector

 

Commensurate with this decline in spreads, Standard & Poor’s notes that the U.S. distressed ratio – a gauge of the proportion of speculative-grade bonds with a spread over Treasuries of more than 10 percentage points – had fallen to 24.8% as of March 15 from 33.9% at the end of February. That’s the first bi-weekly decline since last May. Per S&P via the Financial Times, there were 279 borrowers with bonds trading in the distressed range, affecting total debt of $214B in March, compared with 353 issuers affecting $327B in debt the month prior.

 

Time will tell whether or not the aforementioned sequential improvement is a short-term, reflation-based market head fake. Credit spreads can widen just as quickly as they’ve tightened since mid-February…

 

But above all else, as we’ve stressed repeatedly throughout the year, a U.S. recession is actually the least pressing of what we consider to be the biggest risks to asset markets. Those risks are as follows (in order):

 

  1. Corporate profit recession (ongoing)
  2. Deteriorating credit cycle (ongoing)
  3. #BigBangTheory – i.e. market participants broadly losing faith in central bank Policies To Reflate (TBD domestically)
  4. A technical recession in the U.S. (progressing according to plan, but likely to be shallow like the 2000-02 C&I lending led downturn)

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - Profits Down  Stocks Down Slide 39

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - Spread Risk HY Slide 43

 

Obviously risks #1 and #2 are intricately linked, as is #3 – specifically because that would be proof of the Fed losing its perceived ability to counteract microeconomic gravity with shell games of ZIRP and debt-financed buybacks.

 

We discuss risk #4 in great detail at the conclusion of our 2/3 note titled, “Ex-Energy?”:

 

“And even if the U.S. economy avoids recording a technical recession, we could just have an 2000-02-style corporate deleveraging cycle that drags down equity market cap alongside it. After all, it's EPS that matters most to stocks, not GDP. Recall that the 2001 downturn was the shallowest recession in U.S. history; that didn't preclude the stock market (SPX) from getting cut in half [DESPITE the Fed cutting rates by a cumulative -525bps during the decline].”

 

Like Rome, economic contractions aren’t built in a day. Domestic high-frequency economic data needs to continue decelerating from here in order to become equally as reflexive on the downside as it is during an expansion.

 

And much like with bear markets that are historically rife with massive short squeezes to lower-highs, there will be “green shoots” (i.e. sequential upticks) across several key data sets that lead perma-bulls to believe the bottom is in with respect to growth. The TREND remains your friend on that front, however.

 

As the following chart highlights, every major category of high-frequency economic growth data continue to decelerate on a TRENDing basis in spite of whatever recently released, sequentially positive data points the bulls want to anchor on; meanwhile, every major category of high-frequency inflation data is accelerating on a trending basis. This confluence is a double-negative for TREND real GDP growth expectations for both investors (think: flows) and corporations (think: capex) alike.

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - U.S. Economic Summary

 

Sure, select indicators such as last week’s Retail Sales report or today’s Service and Composite PMI readings have ticked up in the February/March timeframe, but does cheerleading that on A) account for the fact that they are all still making a series of lower-highs on a trending basis; or B) account for the sharp deterioration across the housing sector (CLICK HERE and HERE for more details) or nascent cracks across the commercial real estate sector?

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - RETAIL SALES CONTROL GROUP

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - MARKIT SERVICES PMI

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - MARKIT COMPOSITE PMI

 

Of course they don’t. Anyone who thinks they do likely lacks a repeatable process for contextualizing macro data, which we dissected at length in our recent Early Look titled, “Bull Market Marketing”.

 

It does, however, call attention to the analytically weak nature of the nascent bull thesis for U.S. stocks and credit. As the following table highlights, there’s a lot of green (i.e. accelerating) in the “Sequential Data” column to the right, while the “Trending” and “Quarterly Average” data columns are as red (i.e. decelerating) as ever:

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - U.S. Economic Summary Table

 

Let’s ignore the ongoing, trending slowdown in Industrial Production growth in order to play devil’s advocate for a second. Can the nascent recovery in domestic manufacturing activity get back to healthy enough levels in time to offset ongoing degradation in the growth rate(s) of consumer spending?

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - INDUSTRIAL PRODUCTION

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - DURABLE GOODS

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - CAPITAL GOODS

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - ISM MANUFACTURING PMI

 

To answer the question, base effects support some version of the soft bigotry of low expectations that is “muddle-along nirvana” for a quarter (i.e. Q1) while compares for both “C” and “I” are easier on a sequential basis – but not for much longer than that:

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - PCE COMPS

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - Industrial Production Comps

 

As an aside, base effects for Real PCE in the four quarters ended in 3Q16 remain as tough as anything the U.S. consumer has experienced since the four quarters ended in 3Q08. Recall that Real PCE growth decelerated sharply from +2.7% YoY in AUG ’07 to -1.2% in SEP ’08. As such, we continue to anticipate real consumption growth as having downside risk to +1% YoY in a moderate scenario. As one very astute client accurately pointed out in a recent meeting:

 

“While that may not produce an actual technical recession, it may certainly feel like one – especially relative to consensus expectations of a “resilient” U.S. consumer.”

 

Indeed.

 

As Keith remarked during a client meeting on Tuesday, it’s actually easier to make the bearish economic cycle call today than it was [at the top] in early July, as most economic data series weren’t broadly slowing then. Now we can simply sit back and watch market prices [hopefully] continue to come our way on a trending basis. Sounds simple enough.

 

And by the way, #Quad4 starts next Friday…

 

Macro Playbook: Helping Bears Maintain Our Collective Conviction - Brent Crude Oil

 

Happy Easter,

 

DD

 

Darius Dale

Director


Cartoon of the Day: Permabull Storytelling

Cartoon of the Day: Permabull Storytelling - Bull market 03.24.2016

 

Reality check: The S&P 500 is back to flat for the year after its worst start ever. Meanwhile, the Russell 2000 is down -5% year-to-date.


investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

CME: Adding CME Group to Investing Ideas (Long Side)

Takeaway: We are adding CME Group to Investing Ideas today.

Editor's Note: Please note that our Financials analyst Jonathan Casteleyn will send out a full report outlining our high-conviction long thesis next week. In the meantime, below is a brief summary of our thesis sent today by Hedgeye CEO Keith McCullough in Real-Time Alerts.

 

CME: Adding CME Group to Investing Ideas (Long Side) - trading floor

 

With long-term bond yields signaling immediate-term TRADE oversold (within bearish yield TREND view), I'm going to signal buy here on red on one of the few Financials (XLF down another -1.2% today, crushing the bulls) our Jonathan Casteleyn likes right now: CME Group (CME).

 

"CME Group (CME), one of the few stocks that sits on our Best Ideas list as a long, put up a decent fourth quarter earnings print with a slight revenue and earnings beat. Not that we put much weight on what happened last quarter but trends into the new operating period are looking even better. The exchange guided to just a +1% operating expense increase for 2016, guided to slightly lower annual taxes for '16 (with more activity coming from abroad), and again announced that open interest was setting a new record, at over 111 million contracts.

 

Even assuming some mean reversion to just over 16.5 million contracts (depending on product group), 1Q is running at ~$1.20 per share in earnings, which means the Street will need to perk up its current $1.06 estimate. Simply put, this is one of the few growth stories in the current macro environment within Financials."


DRI: We Are Removing Darden Restaurants From Investing Ideas

Takeaway: Please note we are removing Darden Restaurants from Investing Ideas (short side) today.

"The stock has corrected hard post the squeeze," says Hedgeye CEO Keith McCullough. "I want to take it off, for now, and put on some other short ideas."

 

Please note Hedgeye Restaurants analyst Howard Penney remains bearish on Darden. Here's a distillation of his bearish case from his original stock report on the company:

  • Having pulled all the levers to create shareholder value, it’s now down to the facts about how Darden's core business is performing. 
  • Under the new business model the company is posting peak margins. In addition to significant capital investment, the company will need to invest in incremental food and labor costs to drive positive traffic across the enterprise.
  • Olive Garden has been in need of a major remodel since FY2007. Olive Garden has about 400 older RevItalia restaurant models that are in dire need of remodeling... To date, Olive Garden has done 32 remodels, and is far behind schedule. Olive Garden makes up roughly 56% of sales and is in need of cash just to prevent declines. 
  • The company is in desperate need of a large capital investment to turn around their negative trends. Until management realizes, this the business will continue to decline and the stock will go with it. 

 

DRI: We Are Removing Darden Restaurants From Investing Ideas - darden


[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data?

Takeaway: Investors would do well to appropriately contextualize and actively risk manage head fakes in domestic economic data.

Editor's Note: Earlier today, the Atlanta Fed's GDPNow estimate (which forecasts U.S. GDP growth) hit 1.4% for Q1 2016 versus 2.6% just a month ago. Last month, Hedgeye Senior Macro analyst Darius Dale wrote:

 

"Don’t get caught up in the current strength of the Atlanta Fed’s GDPNowcast or what may actually turn out to be a decent Q1 GDP report on a headline basis. We strongly consider both of those catalysts to be head fakes in the context of the underlying sine curve of U.S. economic and capital markets activity."

 

Below is his prescient research note in its entirety explaining why our own GDP estimate is substantially below Wall Street consensus and Atlanta Fed estimates. For more information on how you can subscribe to our institutional research email sales@hedgeye.com.

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - bear gdp

 

If I’ve heard Keith reference PTJ’s quote about the last third of the move being “the toughest to risk manage” in a meeting once, I’ve heard it a thousand times. In bear markets, those who mismanage “the last third of the move” are short sellers that cover too early (in fear of the policy response) and bulls that cite “valuation” as a reason to purchase securities – quite often far too early. Both are buy orders, FYI.

 

Did the shorts cover too early?

 

No, well at least not from the perspective of our short-term trading signals. Last Wednesday morning, we published an immediate-term risk range of 1835-1899 for the S&P 500, which was an explicit signal for investors to cover shorts well into last Thursday’s low (1810 to be exact).

 

That’s not to suggest that we’ve nailed it by any stretch of the imagination, but rather to reiterate the omnipotence of actively  managing risk in bear markets. We’ve been vocal in stressing that bear-market bounces are typically more sharp than their bull-market counterparts. The +645bps rally in the SPX from Thursday’s intra-day low to today’s closing price is allegedly the sharpest three-day rally since the thralls of our last bear market in late-2008.

 

Indeed, high short interest stocks are the 2nd best-performing style factor on a WoW basis, just behind high beta stocks. We consider that to be ample enough evidence of aggressive covering of crowded momentum shorts. I’m sure there will be plenty of research notes from prime brokers highlighting this very point tomorrow morning – if there haven’t been already. Obvious is as obvious does.

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - WoW Style Factor Performance large  1

 

In light of the aforementioned strength in the U.S. equity market, has anything materially changed, quantitatively speaking?

 

No, certainly not from the perspective of our Tactical Asset Class Rotation Model (TACRM), which shows that:

 

  1. Realized volatility continues to accelerate on a trending basis across asset classes.
  2. TACRM continues to generate a [bearish] “DECREASE Exposure” signal for U.S. Equities at the primary asset class level.
  3. Across the 47 sector and style factor exposures TACRM tracks within U.S. Equites, only two are signaling bullishly from the perspective of TACRM’s multi-duration, volatility-adjusted view of volume-weighted average price momentum.

 

***CLICK HERE to download the latest refresh of our TACRM presentation.***

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - TACRM U.S. Equities 10 10

 

A much more difficult question to answer at the current juncture is, “Has anything materially changed, fundamentally speaking?”

 

On a trending basis, the answer to that question is a resounding “no” – especially with respect to: 1) the corporate profit cycle, 2) the C&I credit cycle, and 3) the monetary policy cycle. As we’ve detailed extensively in recent notes, the confluence of the likely progression of each will be the determining factor for ultimate downside in risk asset prices:

 

  1. The Domestic #CreditCycle Is About to Get A Lot Worse (1/26): “As the ongoing corporate profit recession deepens, we highlight the obvious risk of companies allocating earnings to buybacks and dividends, rather than preserving cash and paying down debt. If our explicitly negative view on the domestic economic cycle continues to be corroborated by the data, then the growth rate of such payouts will likely have to slow dramatically – if not decline outright. That is an obvious headwind to the broader equity market in terms of removing key cogs from the post-crisis secular bull case.”
  2. Ex-Energy? (2/3): “And even if the U.S. economy avoids recording a technical recession, we could just have an 2000-02-style corporate deleveraging cycle that drags down equity market cap alongside it. After all, it's EPS that matters most to stocks, not GDP. Recall that the 2001 downturn was the shallowest recession in U.S. history; that didn't preclude the stock market (SPX) from getting cut in half.”
  3. Sentiment Update: Three Things I Learned Today (and Three Weeks From Now) (1/20): “While ZIRP and LSAP have proven to be powerful tools in perpetuating income-inequality generating asset price inflation throughout this economic and corporate profit expansion, the Federal Reserve has yet to demonstrate the effectiveness of monetary easing during concomitant recessions in economic activity and corporate profit growth.”

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - CORPORATE PROFITS VS. SPX

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - U.S.  CreditCycle Bubble Chart

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - Hedgeye Bank Credit Cycle Indicator

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - U.S. Household Wealth as a   of Disposable Personal Income vs. Shadow FFR

 

On a shorter-term basis, astute investors have been asking us the right questions about sequentially improving high-frequency economic data. In the 1Q16 to-date, we’ve seen three releases that lend some pause to our bearish outlook for the domestic economy – if only for a brief moment:

 

  1. First, the ISM Manufacturing PMI ticked up ever-so-slightly to 48.2 in JAN from a reading of 48.0 in DEC. The New Orders index rose back above 50 for the first time since OCT; its 51.5 reading for the month of JAN is the highest since AUG.
  2. Then, the growth rate of Retail Sales – specifically the omnipotent “Control Group” therein – accelerated meaningfully to +3.1% YoY in JAN from +2.2% in DEC. Per the JAN release, the growth rate of Retail Sales – which accounts for a third of consumer spending and a fourth of GDP – is now accelerating on a trending basis.
  3. Lastly, the growth rate of Industrial Production accelerated to -0.7% YoY in JAN from a downwardly revised -1.9% in DEC. Sequential strength was recorded across all key product categories as Capacity Utilization arrested what had been five consecutive months of MoM contraction and YoY deceleration.

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - ISM MANUFACTURING PMI

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - RETAIL SALES CONTROL GROUP  2

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - INDUSTRIAL PRODUCTION

 

While it would be easy to poke holes in each of the aforementioned releases (for example, the Employment index of the JAN ISM report crashed to a new cycle low of 45.9), it’s not clear to me that that would be a valuable use of your time; nor would it be a valuable endeavor on which to expend analytical credibility. The risk of being perceived as arguing with the data for too long for a research outfit that doesn’t have banking, trading or asset management to support its revenues is arguably just as punitive as the risk of a money manager fighting the market for too long.

 

A better use of our collective time is attempting to determine the sustainability of the aforementioned positive deltas in economic data:

 

  1. With respect to a sustained recovery in domestic manufacturing activity, we flag sequentially declining U.S. dollar comps throughout the balance of the year as positive and consider the high likelihood that we tip back into #Quad4 – which has historically been positive for the USD – in the upcoming quarter to be a potential negative shock.
  2. With respect to a sustained recovery in consumer spending, we still believe the sharp acceleration in base effects through the third quarter of this year will continue to be a material negative catalyst for reported growth rates of household consumption. Specifically, base effects for Real PCE growth in the four-quarters ended 3Q16 are far and away the toughest since the four-quarters ending in 3Q08. Recall that Real PCE growth decelerated sharply from +2.7% YoY in AUG ’07 to -1.2% in SEP ’08.
  3. With respect to a sustained recovery in the industrial sector, we highlight generally receding base effects throughout the balance of the year as a positive catalyst. This is juxtaposed with the negative cocktail of rising credit costs, peak inventories and GDP-negative capital allocation decisions from major U.S. corporations (e.g. AAPL, IBM buybacks).

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - Trade Weighted U.S. Dollar Index

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - UNITED STATES

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - Real PCE Comps

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - Industrial Production Comps

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - Barclays Agg Credit YTW

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - Inventory to Sales Ratio

 

All that having been discussed, let us turn our attention to the Atlanta Fed’s recent revision of their “GDPNowcast” for Q1 to 2.6% per the latest release. That forecast is up from a trough of +0.6% as recently as mid-January and has the attention of many concerned short-sellers and confident bulls alike.

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - Atlanta Fed GDPNow Tracker

 

How important is the aforementioned estimate within the context of the Atlanta Fed’s ~4.5 year-old track record at forecasting U.S. GDP growth? Not very.

 

The following chart shows us the Atlanta Fed’s peak (green line) and trough (red line) estimates 47 days into any given quarter as we are currently. These figures are juxtaposed with the actual recorded QoQ SAAR growth rate of U.S. GDP (blue line) and the maximum tracking error of the Atlanta Fed’s GDPNowcast (black line). The average maximum intra-quarter-to-date tracking error is a startling 248bps over the duration of this study. That is a whopping 113% of average growth rate of GDP over that same time frame (i.e. 2.2%)!

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - Atlanta Fed Tracking Error

 

PLEASE NOTE: We are not showing this analysis with the intention of undermining the Atlanta Fed. Their GDPNowcast estimates are a good barometer of what consensus thinks about near-term growth prospects and their work in charting the “Shadow” Fed Funds Rate has been equally additive to the Macro discussion. We simply highlight the elevated risk of their current forecast for Q1 2016 being revised materially lower (or higher) as the quarter progresses. It’s worth noting that we’ve hardly received much in the way of January data – let alone enough data points to have statistical validity in any regression model.

 

As we highlighted in our 9/2 Early Look titled, “Do You QoQ?”:

 

“In the context of modeling the economy, the more we learn about sequential momentum, the less we are able to know about the underlying growth rate of the economy. Recall that headline GDP growth accelerated +660bps to +7.8% in the 2nd quarter of 2000 and that it accelerated +470bps to +2% in the 2nd quarter of 2008. If you were prescient in forecasting these second-derivative deltas, you could’ve bought all the stocks you wanted en route to peak-to-trough declines on the order of -49.1% and -56.8%, respectively (S&P 500)… Going back to the aforementioned head-fakes, it’s clear that those read-throughs on sequential momentum failed to signal pending material changes to the underlying growth rate of the economy.”

 

In the aforementioned note, we also highlighted the poor track records of both Bloomberg Consensus and the Fed in forecasting quarterly and annual GDP growth rates in the post-crisis era:

 

  • “Over the past five years, Bloomberg consensus forecasts for headline GDP just one quarter out have demonstrated a quarterly average [maximum] tracking error of 145bps. This means that at some point within 3-6 months of any given quarter-end, Wall St. economists’ estimates for QoQ SAAR real GDP growth were off by an average of 145bps. That’s flat-out terrible in the context of actual reported QoQ SAAR growth rates averaging just 2.1% over this period."
  • “Over the past five years, the FOMC’s intra-year U.S. GDP forecasts have demonstrated an annual average [maximum] tracking error of 100bps. Worse, the maximum deviation of their intra-year forecasts from the actual reported annual real GDP growth rate was an upside deviation in every single year, meaning that the Fed’s growth forecasts are consistently far too optimistic.”

 

As the following charts demonstrate, the aforementioned updated quarterly and annual average maximum tracking errors are now 164bps and 91bps, respectively (data through EOY ‘15). These updated figures continue to reflect the fact that investors should remain highly skeptical of even the nearest-term growth forecasts from economists and/or policymakers. At best they’re playing a game of Marco Polo; at worst, they are feeding potentially hazardous information to market participants.

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - Bloomberg Consesus Real GDPTracking Error

 

[UNLOCKED] What’s More Important: the Short Squeeze in the Market or the Data? - FOMC GDP Tracking Error

 

All told, as we discussed at length in our 1/29 note tilted, “What Recession?!”, predicting headline (i.e. QoQ SAAR) GDP is a fool’s errand. Don’t get caught up in the current strength of the Atlanta Fed’s GDPNowcast or what may actually turn out to be a decent Q1 GDP report on a headline basis. We strongly consider both of those catalysts to be head fakes in the context of the underlying sine curve of U.S. economic and capital markets activity.

 

Best of luck out there,

 

DD

 

 

Darius Dale

Director


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.43%
  • SHORT SIGNALS 78.37%
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