Earlier today the Hedgeye Macro Team, led by CEO Keith McCullough, hosted its quarterly Macro Themes conference call in which it detailed the THREE MOST IMPORTANT MACRO TRENDS it has identified for 2Q16 and the associated investment implications.
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Q2 2016 MACRO THEMES OVERVIEW:
#TheCycle: With the recessionary industrial data ongoing, employment, income and consumption growth decelerating, corporate profits facing a 3rd quarter of negative growth and Commercial and Industrial credit tightening, the domestic economic, profit and credit cycles are all past peak and continue to traverse their downslope. We’ll update our cycle view and detail why growth slowing – and its associated allocations – remains the call as the U.S. economy faces its toughest GDP comp of the cycle in 2Q16.
#BeliefSystem: The notion that central bankers are increasingly pushing on a string is being progressively priced into global financial markets – with one lone holdout: U.S. equities. While we admire the blind faith of domestic stock market operators in Yellen’s ability to keep “the game” going, we are keen to cite specific risks that marginally dovish policy in the U.S. will fail to overcome the depths of the domestic economic, credit and corporate profit cycles.
#DemographyDebates: We’re entering an election season that could hugely impact markets – and probably not in a good way! What’s the impact of a Clinton or Trump victory and how will market practitioners react? We’ll also discuss housing and the impact of millennials and immigrants in shifting demand. Finally, we’ll exam a recurring theme of U.S. growth slowing – what’s under the hood for earnings and inflation expectations in 2016?
-The Hedgeye Macro Team