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A Brief Warning On Q1 Earnings

Takeaway: Be very careful out there.

A Brief Warning On Q1 Earnings - earnings cartoon 01.27.2015

 

Think first quarter earnings are growing gangbusters? Think again.

 

Here's the latest from our Macro team in a note sent to subscribers this morning:

 

"Q1 earnings season kicks-off next week with the bulge bracket banks leading the way (JPM next Wednesday). If you think we’ll follow-up an awful Q4 2015 reporting season (S&P revs -4.0% Earnings -6.9%) with a rebound, think again. We won’t be lapping bad comps until at least Q3 of this year (reported in Q4). In Q1 of 2015, 8/10 sectors saw Y/Y earnings growth, and the one sector with awful earnings was energy, where WTI averaged $48.57 vs. $33.63 in Q1 0f this year. Don’t get excited about Q1 earnings season. It will be more of the same. #thecycle."

 

Here's the chart highlighting why all of this is so significant.

 

A Brief Warning On Q1 Earnings - z 77

 

 


ISM Services: The Cycle Peaked In July 2015

ISM Services: The Cycle Peaked In July 2015 - sine of the times cartoon 03.03.2016

 

It's all about the Rate of Change...

 

While many on Wall Street cheered an expectations-beating sequential uptick in the ISM Services index, one data point does not make a trend. More importantly, the Services index and its individual components continue to trend lower year-over-year.

 

Here's some brief analysis from our Macro team in a note sent to subscribers earlier this morning:

 

"While industrial activity has stabilized against 13 months of negative comps, domestic service sector activity continues to slow off its mid-2015 highs. Headline ISM Services along with the Employment and New Orders components improved sequentially in March but the 9-month trend remains one of lower highs and lower lows.  On the Labor Front, the trend has been similar as yesterday’s JOLTS data for February showed Job Openings decline by -159K, continuing the 8-month retreat off the mid-2015 peak."

 

Here's the key chart on ISM Services

(Notice the peak in July 2015 and the year-over-year slowing in the data)

 

Stick with the process. Don't get sucked into Wall Street's storytelling. 

 

ISM Services: The Cycle Peaked In July 2015 - Math   Myth cartoon 03.30.2016


CHART OF THE DAY: Post-NIRP, European & Japanese Stocks Still Crashing

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Director Darius Dale. Click here to learn more.

 

"... In light of all the above, it’s easy to see why European and Japanese capital markets are imploding. The EuroStoxx 600 Index and TOPIX Index have crashed -20.7% and -25% from their respective 52-week closing price highs. Bank stocks are feeling the brunt of the pain amid NIRP-fueled scrutiny of their business models. Specifically, the EuroStoxx Banks Index has crashed -24.6% YTD, while the TOPIX Banks Index has crashed -22.6% from the BoJ’s 1/29 announcement of NIRP."

 

CHART OF THE DAY: Post-NIRP, European & Japanese Stocks Still Crashing - 4 6 Chart of the Day


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[UNLOCKED] Keith's Daily Trading Ranges

We've made some new enhancements to Daily Trading Ranges - our proprietary buy and sell levels on major markets, commodities and currencies sent to subscribers weekday mornings by CEO Keith McCullough. Click here to view a brief video of McCullough explaining how to use it most effectively.

 

Subscribers now receive risk ranges for 20 tickers each day -  the last five of which are determined by what's flashing on Keith's screen and by what names subscribers are asking about. Click here to subscribe.

 

  • Bullish Trend
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  • Neutral

INDEX BUY TRADE SELL TRADE PREV. CLOSE
UST10Y
10-Year U.S. Treasury Yield
1.83 1.70 1.73
SPX
S&P 500
2,020 2,077 2,045
RUT
Russell 2000
1,066 1,130 1,095
COMPQ
NASDAQ Composite
4,737 4,933 4,843
NIKK
Nikkei 225 Index
15,590 16,640 15,723
DAX
German DAX Composite
9,508 9,798 9,563
VIX
Volatility Index
13.01 19.38 15.42
USD
U.S. Dollar Index
94.01 95.99 94.64
EURUSD
Euro
1.11 1.14 1.14
USDJPY
Japanese Yen
110.19 112.95 110.29
WTIC
Light Crude Oil Spot Price
35.09 38.12 36.56
NATGAS
Natural Gas Spot Price
1.84 2.05 1.94
GOLD
Gold Spot Price
1,206 1,245 1,232
COPPER
Copper Spot Price
2.10 2.23 2.14
AAPL
Apple Inc.
104 112 109
AMZN
Amazon.com Inc.
560 609 586
MCD
McDonald's Inc.
122 128 127
XLU
Utilities Select Sector SPDR
48.06 50.13 48.67
TSLA
Tesla Motors Inc.
219 257 255
GM
General Motors Co.
29.15 30.99 29.60


Cartoon of the Day: US Growth Stinks

Cartoon of the Day: US Growth Stinks - growth  cartoon 04.05.2016

 

"Unlike many strategists (who missed calling the cycle top in US Consumption, Employment, and Profits last year), we have stayed with The Cycle call we’ve had all along here in Q2," Hedgeye CEO Keith McCullough wrote today.


Game Over. Central Bankers Can’t Do Anymore

In this brief exchange on The Macro Show, Hedgeye Demography Sector Head Neil Howe and CEO Keith McCullough discuss how global markets are closing in on a critical monetary policy exhaustion end point. “Why don’t people accept that?” Howe asks. “[Central bankers] can’t do anymore!”

 


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