3 Economic Charts Of Concern

Takeaway: The Fed has little or no juice left.

"This morning's data confirms our view that the economy continues to slow on a trending basis and is set up to slow fairly sharply here in Q2," Hedgeye Senior Macro analyst Darius Dale wrote earlier this morning.

3 Economic Charts Of Concern - GDP cartoon 05.29.2015 large


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


"Since the late-September lows, the S&P 500 has held a reasonably tight positive 0.75 correlation with the Citi U.S. Economic Surprise Index, which itself has rallied hard off it's early-February lows as U.S. economic data stabilized in rate-of-change terms and perpetuated a waning of recession fears.


3 Economic Charts Of Concern - s p citi surprise


Now, a topping process in the latter index appears to have gotten underway over the past two weeks, as most recently highlighted by this morning's meaningful misses in the Chicago Fed National Activity Index and the Philly Fed Business Outlook Survey. We reiterate our view that [pending] dour economic data itself is the catalyst for the market to decline from here." 


Digging deeper into the data...


As you can see below in the "high-frequency" data series that we track for the U.S. economy, many of these indicators stabilized on a sequential (month-over-month) basis but are in the red versus their 3-month average:


Click image below to enlarge

3 Economic Charts Of Concern - U.S. data


As Dale points out, dovish Fed commentary can't add much more juice to the markets. The most recent read on implied yield on Fed Fund futures suggests investors don't see a rate hike until December 2017.


3 Economic Charts Of Concern - Chart of the Day 4 20


"There's no more juice left to squeeze out of rates markets w/ dovish talk," Dale writes. "She actually has to do QE4 to get rates spreads to compress further from here. QE4 before the crash?"


Yet more reasons why we're holding the line on our bearish views.


For more...


Watch Dale in the video below, "U.S. Economy Enters Most Difficult Part of Cycle":

[UNLOCKED] Keith's Daily Trading Ranges

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  • Bullish Trend
  • Bearish Trend
  • Neutral

10-Year U.S. Treasury Yield
1.87 1.69 1.85
S&P 500
2,036 2,118 2,102
Russell 2000
1,089 1,159 1,142
NASDAQ Composite
4,845 4,999 4,948
Nikkei 225 Index
15,583 17,448 16,906
German DAX Composite
9,497 10,544 10,421
Volatility Index
12.82 18.40 13.28
U.S. Dollar Index
93.77 95.18 94.47
1.12 1.14 1.13
Japanese Yen
107.51 110.74 109.79
Light Crude Oil Spot Price
39.41 44.54 43.97
Natural Gas Spot Price
1.86 2.23 2.18
Gold Spot Price
1,225 1,269 1,245
Copper Spot Price
2.07 2.27 2.23
Apple Inc.
105 110 107
586 647 633
McDonald's Inc.
126 130 128
Utilities Select Sector SPDR
47.81 49.65 47.93
Netflix Inc.
92 102 96
Kinder Morgan Inc.
17.02 19.25 19.00

CHART OF THE DAY: S&P 500, Shiller PE & Forward-Looking Returns

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Financials analyst Josh Steiner. Click here to learn more.


"... Now consider the longstanding relationship described by Cliff Asness between current CAPE ratio levels [aka Shiller PE] and forward 10yr market returns (HERE). What he shows is that there’s a near perfect relationship between forward 10yr returns on the S&P 500 and starting CAPE ratio multiples over the last 85 years (see table below).


The market is currently trading at a CAPE ratio of 26.4x, which puts it in the 10th [the most expensive] decile. Forward 10yr real returns from this decile have averaged just +0.5% per year over the 1926-2012 period. The best period saw returns for this decile of +6.3% per year, while the worst saw losses of -6.1% per year."


CHART OF THE DAY: S&P 500, Shiller PE & Forward-Looking Returns - Cliff Asness Guide to CAPE implied future returns

Source: Cliff Asness, AQR (An Old Friend: The Stock Market’s Shiller P/E)

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 80.64%
  • SHORT SIGNALS 78.59%

REPLAY | Healthcare Earnings Preview of Top Ideas and Q&A - $ZBH $ATHN $MDRX $MD $HOLX $ILMN

Key Earnings Previews Ahead of Healthcare Earnings Season

CLICK HERE to access the associated slides.




Join Hedgeye Healthcare Sector Head Tom Tobin and analyst Andrew Freedman today at 12:00PM ET as they discuss their top ideas and what they will be focused on as earnings season progresses.


Topics will include:

  • ZBH: Read-through from SYK and JNJ earnings
  • ATHN: Tracker Update, will they miss the doc count?
  • MDRX: latest thoughts on attrition
  • MD: Maternity Tracker Update
  • HOLX: Facility Penetration by MSA
  • ILMN: Opportunity or is the end just beginning?

Have a question on a specific name? there will be a live q&A session at the end of the show!

Cartoon of the Day: Painting Themselves Into A Corner

Cartoon of the Day: Painting Themselves Into A Corner - Central bankers in corner cartoon 04.20.2016


The #BeliefSystem that central planners can arrest economic gravity is breaking down.

5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn

Takeaway: Two words .. be careful.

5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - Bull SCREAM 01.06.2015


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.

Click on Each chart to enlarge


Global growth is on fire for sure!


5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC bond yields 



S&P 500 earnings to be up +11% for 2018? Giddy up (not)!


5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC s p earnings expec



Upgrade to Downgrade ratios in corporate credit has ALWAYS lead equity prices and the ratio is declining again


5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC upgrade downgrade ratio



The current short squeeze in EM stocks is right within the +20% gain which has happened 8 times since '11


5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC EM



U.S. distressed rates lead defaults and the distressed category is again breaking out for a new bankruptcy cycle


5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC default

Daily Trading Ranges

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