The Most Obvious U.S. #GrowthSlowing Indicator?

Takeaway: A closer look at the 10s/2s yield spread provides an unequivocally bearish signal on U.S. growth.

The Most Obvious U.S. #GrowthSlowing Indicator? - growth cartoon 10.08.2014 large


need convincing of our U.S. #growthslowing call?


Look at the yield spread compression of the 10-year Treasury versus the 2-year Treasury yield spread. Here's analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers earlier today:


"Most things macro (last week) queued off of what I think was another head-fake in rate hike risk; UST 10yr Yield +15 bps w/w was a counter TREND move to 1.90% which has since pulled all the way back to 1.82% this am, flattening the Yield Spread to yet another YTD low of +94bps wide (10s/2s), which is an explicitly bearish GDP growth signal."


Click image to enlarge 

The Most Obvious U.S. #GrowthSlowing Indicator? - 10y2y treasury


Just an FYI, this spread has compressed to levels not seen since 2007.


Still don't believe U.S. Growth is Slowing?

Look Out! European Equities "Teetering On Implosion"

Takeaway: U.S. dollar strength = European equities "teetering on implosion"

Look Out! European Equities "Teetering On Implosion" - Europe Japan cartoon 04.04.2016


Despite the irony of Treasury Secretary Jack Lew scolding Japan for devaluing the yen at the G7 meeting over the weekend (after years of Fed US Dollar devaluation), all the G7 bloviating didn’t change much in macro markets. The top correlation risk in macro markets remains the US Dollar. 


As McCullough writes in a note to subscribers this morning, with the U.S. dollar index up for the third straight week, that's taking the hatchet to European equities: 


"Europe teetering on implosion (Equities) again as USD signals immediate-term TRADE overbought vs. Euro at $1.11-1.12; Italy’s stock market is a bloody mess, -1.5% (leading losers), taking its crash to -26% since this time last year; NIRP doesn’t work."


Look Out! European Equities "Teetering On Implosion" - ftse mib 5 23


With ECB head Draghi struggling to arrest the crash, the continued implosion of European equities is yet more evidence of the central planning #BeliefSystem gone awry.

Daily Market Data Dump: Monday

Takeaway: A closer look at global macro market developments.

Editor's Note: Below are complimentary charts highlighting global equity market developments, S&P 500 sector performance, volume on U.S. stock exchanges, and rates and bond spreads. It's on the house. For more information on how Hedgeye can help you better understand the markets and economy (and stay ahead of consensus) check out our array of investing products




Daily Market Data Dump: Monday - equity markets 5 23


Daily Market Data Dump: Monday - sector performance 5 23


Daily Market Data Dump: Monday - volume 5 23


Daily Market Data Dump: Monday - rates and spreads 5 23

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CHART OF THE DAY: Consensus Macro Positioning Vs. Hedgeye's Macro View

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.


"Another reason not to worry (be happy) if you have Hedgeye’s macro view, is that the crowd still doesn’t agree with us. Here’s what Consensus Macro positioning looks like from a CFTC futures and options perspective:

  1. SP500 (Index + E-mini) net LONG position of +9,630 contracts = +1.83x 1YR z-score
  2. Crude Oil net LONG position of +408,569 contracts = +1.93x 1YR z-score
  3. 10YR Treasury net SHORT position of -131,565 contracts = -2.33x 1YR z-score

For those of you who are new to following us, we measure current macro positioning across multiple durations relative to where the positioning has been in the past. Anything plus or minus 2x tends to be a great contrarian indicator."


CHART OF THE DAY: Consensus Macro Positioning Vs. Hedgeye's Macro View - 05.23.16 chart

REPLAY! This Week On HedgeyeTV

Our deep bench of analysts take to HedgeyeTV every weekday to update subscribers on Hedgeye's high conviction stock ideas and evolving macro trends. Whether it's on The Macro ShowReal-Time Alerts Live or other exclusive live events, HedgeyeTV is always chock full of insight.


Below is a taste of the most recent week in HedgeyeTV. (Like what you see? Click here to subscribe for free to our YouTube channel.)




1. McCullough: If You Don’t Do Macro, Macro Will Do You (5/20/16)



In this brief excerpt from The Macro Show earlier today, Hedgeye CEO Keith McCullough responds to a subscriber’s question about whether he thinks there will be a “20% or more” drawdown in the S&P 500 from here. Spoiler Alert: He does. 


2. REPLAY | Today's Healthcare Q&A with Tom Tobin | $HCA $AHS $MDRX $ATHN $HOLX $ILMN (5/19/16)


Click here to access the associate slides. 


Earlier this week, our Healthcare analysts Tom Tobin and Andrew Freedman discussed their top ideas and the latest trends in the Healthcare space.


Topics included:

  • #ACATaper thesis update with latest employment and JOLTS reports and implications for HCA Holdings (HCA) and AMN Healthcare Services (AHS)

  • Allscripts (MDRX) earnings recap and latest thoughts on attrition

  • Athenahealth (ATHN) and Hologic (HOLX) tracker updates

  • Illumina (ILMN)…. Throwing our hat into the ring


3. McCullough: History Is An Important Guide To Mr. Market (5/19/2016)



In this brief excerpt from The Macro Show earlier today, Hedgeye CEO Keith McCullough responds to a “fantastic question” about the correlation between the U.S. dollar and Treasuries now that the dollar is getting stronger. 


4. Why The 10-Year Yield May Make All-Time Lows (5/19/2016)



In a brief excerpt from The Macro Show earlier this week, Hedgeye CEO Keith McCullough responds to a subscriber’s question about whether the yield on the 10-year U.S. Treasury note will fall below 1.50%.


5. FLASHBACK | McGough: Target Is A ‘Killer Name On The Short Side’ (5/18/2016)



Earlier today, Target management blamed an “increasingly volatile consumer environment” for its weak earnings and guidance. Its shares fell as much as 9% on the news. In this prescient HedgeyeTV video flashback from last week, our Retail analyst Brian McGough discussed why Target (TGT) was among his top short ideas ahead of today’s earnings release.

This Week In Hedgeye Cartoons

Our cartoonist Bob Rich captures the tenor on Wall Street every weekday in Hedgeye's widely-acclaimed Cartoon of the Day. Below are his five latest cartoons. We hope you enjoy his humor and wit as filtered through Hedgeye's market insights. (Click here to receive our daily cartoon for free.)




1. Liftoff! (5/20/2016)

This Week In Hedgeye Cartoons - Helicopter money 05.20.2016


After Quantitative Easing and NIRP (negative interest-rate policy) have failed to deliver economic growth, central planners are now talking about helicopter money. Delusional? Yes.


2. Whole Lotta Bull (5/19/2016)

This Week In Hedgeye Cartoons - Usidedown bull 05.19.2016


The S&P 500 is flat year-to-date. That explains a lot. "There's so much whining out there... Stop it. And start winning," Hedgeye CEO Keith McCullough wrote today. In other words, get long our favorite Macro Ideas... Long Bonds (TLT), Utilities (XLU), and Gold (GLD). 


3. Crash Tech Dummies? (5/18/2016)

This Week In Hedgeye Cartoons - NASDAQ cartoon 05.18.2016


"The Nasdaq moved back into full-blown correction mode yesterday (-10% from its all-time bubble high in 2015)," Hedgeye CEO Keith McCullough wrote earlier this morning. It's now down -9.5% from that high today.




"Inclusive of the Buffett-bounce in AAPL," McCullough continues, "the Nasdaq is down -4.8% in the last month alone. Lots of chart chasers are not liking their Tech charts anymore (reminder: at #TheCycle peaks of 2000 and 2008 the Nasdaq put in its YTD highs in MAR-MAY too)."


4. Oh Fudge (5/17/2016)

This Week In Hedgeye Cartoons - FED fudge cartoon 05.17.2016


The biggest risk in macro? Believing the Fed's serially overoptimistic forecast.


5. Cheap, Cheap, Cheap... (5/16/2016)

This Week In Hedgeye Cartoons - Cheap cartoon 05.16.2016


"I still say short what appears to be “cheap” and keep buying what continues to get more expensive," Hedgeye CEO Keith McCullough wrote in this morning's Early Look.

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