The #BeliefSystem that central planners can arrest economic gravity is breaking down.
Takeaway: Two words .. be careful.
Below are five charts and brief analysis from Hedgeye Financials analyst Jonathan Casteleyn. Spoiler Alert ... all is not well in credit markets, equities and the U.S. economy.
You can follow him on Twitter @hedgeyeJC.
Global growth is on fire for sure!
S&P 500 earnings to be up +11% for 2018? Giddy up (not)!
Upgrade to Downgrade ratios in corporate credit has ALWAYS lead equity prices and the ratio is declining again
The current short squeeze in EM stocks is right within the +20% gain which has happened 8 times since '11
U.S. distressed rates lead defaults and the distressed category is again breaking out for a new bankruptcy cycle
In this brief excerpt from The Macro Show, Hedgeye Senior Macro analyst Darius Dale discusses how the U.S. economy has entered the toughest part of the cycle and why our growth estimate remains so bearish.
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If only the truth were black and white.
Here's analysis in a note sent to subscribers this morning in which our Macro team pieces together recent comments from the PBoC and the country's state-owned news agency Xinhua to arrive at some interesting conclusions:
"The Shanghai Composite Index dropped -2.3% overnight despite the PBoC injecting 250B of liquidity into the banking system, which represents the largest such injection since February 26th. Weighing on sentiment was a Xinhua report that monetary policy will likely be more prudent in 2016 than it was last year, according to sources close to the PBoC, as well as PBoC Chief Economist Ma Jun commentary about future monetary policy needing to guard against financial risks.
With Chinese corporate leverage high and getting higher (166% of GDP) and property prices running up 30% YoY in first tier cities, we expect the PBoC to rein in the liquidity provision meaningfully from here now that economic stabilization is in the rear view mirror."
More from China's state-owned news agency Xinhua:
"China will continue to implement a prudent monetary policy this year, and, in the context of the economic slowdown, top officials have described the prudent policy as one 'with a slight easing bias.'
As the economy is yet to fully restore its strength, China will not shy away from using the ample tools at its disposal to bolster the economy. But it will be more careful to prevent the easing from going too far."
Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Senior Macro analyst Darius Dale. Click here to learn more.
"... With respect to Equities: Simply put, we do not think Janet Yellen can authorize QE4 without another leg down in domestic credit and equity markets – which, if prescient, calls into question the sustainability of this rally. As such, we believe the late-cycle sectors (i.e. Financials, Healthcare and Consumer Retail) are in the earlier innings of pricing in the depths of the cycle, while reflation sectors have clearly priced in some version of approaching the ninth inning; it’s not at all clear that the latter sectors will make lower-lows on the next leg down. Given our bearish outlook for the domestic equity market from here, we still want to be short the opposite of our preferred style factors on the long side – i.e. low beta, high quality, capital return stories like GIS and MCD."
Hedgeye's Restaurants team shares their three conclusions from Brinker's earnings report.
The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.