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CHART OF THE DAY: Fed Forecast = WRONG

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

 

"... Why does the Fed have to keep making up new policies? That’s simple. It’s because they keep getting their growth and inflation forecasts wrong. Since the Fed is un-elected and un-accountable, they tend to corroborate a view from the highest office in the land, where Obama was allowed to call people like me “peddlers of economic fiction” in his State of The Union Address."

 

CHART OF THE DAY: Fed Forecast = WRONG - 4 29 cod


My Thoughts On This Lousy GDP Report

Takeaway: We're the only firm to have called the slow-down from its 2015 cycle peak.

This morning's bad 0.5% US GDP report didn't surprise us. It didn't surprise the Long End of The Curve (Long Bond) either. We're the only firm to have called the slow-down from its 2015 cycle peak.

My Thoughts On This Lousy GDP Report  - GDP cartoon 10.29.2015

 

Macro markets have been discounting GDP #GrowthSlowing for months now. That's why the Fed has pivoted back to dovish, devaluing the Dollar, in a last gasp hope to "reflate" asset prices. 

 

In the next 3 months, we think the probability is at its highest point that US GDP goes negative sequentially (Hedgeye Predictive Tracking Algo is currently forecasting +0.3% QoQ SAAR for Q2). While many are trying to make the argument (Bloomberg, CNBC, etc.) that GDP "doesn't matter" like it used to ... we've never traveled with that conflict of interest crowd, and we won't this time either. (See Shame On You Mark Zandi for more on this).

 

Instead, we'll remind you that there is an epic amount of credit cycle risk associated with the profit cycle going to negative on a year-over-year basis. And tell you to short both Junk and High Yield (again).

 

As my colleague Darius Dale wrote in a note to institutional subscribers today,

 

Assuming Q1 isn’t revised in any material way, our forecast for 1H16E represents the slowest pace of domestic economic growth on a multi-quarter basis since 2H12. Any downside surprises from there will surely translate to renewed recession fears.

 

Stay long The Long Bond, Utilities, Gold, MCD, etc.


Cartoon of the Day: High Finance

Cartoon of the Day: High Finance - Easy money cartoon 04.28.2016

 

This one speaks for itself.


the macro show

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Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

REPLAY: Healthcare Earnings Takeaways | $ATHN $HOLX $MD $ZBH

WAtch the replay below. click here to access the associated slides.

...INSIGHTS YOU CAN'T AFFORD TO MISS

 

After a busy week of earnings, our Healthcare analysts Tom Tobin and Andrew Freedman provided a recap and takeaways of our top ideas athenahealth (ATHN), MEDNAX (MD), Hologic (HOLX) and Zimmer-Biomet (ZBH).

 

 


A Look At Wall Street's Ex-Energy Earnings Fallacy

Takeaway: Well into earnings season, six of ten S&P 500 sectors have negative earnings growth.

A Look At Wall Street's Ex-Energy Earnings Fallacy - earnings cartoon 04.12.2016

 

It's earnings season.

 

Permabulls on Wall Street are terribly fond of the narrative that "Ex-Energy" earnings look great! We understand this proclivity, Energy earnings are terrible (down -132% so far). Just look at the chart below.

 

Click to enlarge

A Look At Wall Street's Ex-Energy Earnings Fallacy - earnings q1

 

But what this narrative lacks is cohesiveness. In fact, six of ten S&P 500 sectors have negative earnings growth so far, with Financials (-14.1%) and Materials (-14.8%) companies putting up double-digit earnings losses.

 

In other words, Energy has company.

 

Here's a thought... Since permabulls are more than happy to strip battered sectors out of earnings, why not (for the sake of consistency) just go ahead and strip out the performance of Energy, Financials and Materials companies from the recent market rally as well? Oh yea, because those sectors have led the pack. 

 

Bottom Line: Stripping out sectors of the S&P 500 to fit some permabull narrative is as nonsensical, as it is wrong. 


About Everything | The Surge in Mental Health Services

 

In this complimentary edition of About Everything, renowned demographer and Hedgeye Sector Head Neil Howe discusses why "mental health services spending is riding a long-term attitudinal shift that has brought mental health issues out into the open." Howe explains why it's happening and explores the broader societal and investing implications.

 

Click here to read Howe’s associated About Everything piece.


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