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Crash! Boom! Bang! (Asia Getting Whacked)

Crash! Boom! Bang! (Asia Getting Whacked) - China crash cartoon 08.25.2015 large

 

Amazing.

 

Not one Old Wall Media channel is discussing what happened in Asian Equity markets overnight. In Japan, the Nikkei fell another -0.9% and has officially moved back into crash mode. It’s down -21% from July's Equity #Bubble High of 2015. (Nikkei actually DOWN on Yen DOWN – that’s new.)

 

Then there’s China. Take a look at what’s going on there below.

 

Crickets.

 


Daily Market Data Dump: Tuesday

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

 

CLICK TO ENLARGE

 

Daily Market Data Dump: Tuesday - equity markets 5 24

 

Daily Market Data Dump: Tuesday - sector performance 5 24

 

Daily Market Data Dump: Tuesday - volume 5 24

 

Daily Market Data Dump: Tuesday - rates   spreads 5 24


CHART OF THE DAY: What Gives Us Confidence In Our Bearish Growth Forecast?

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.

 

CHART OF THE DAY: What Gives Us Confidence In Our Bearish Growth Forecast? - chart of the day image 5 24

 

CHART OF THE DAY: What Gives Us Confidence In Our Bearish Growth Forecast? - Chart of the Day 5 24


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Cartoon of the Day: The Hourglass

Cartoon of the Day: The Hourglass - hour glass cartoon

 

The central planning #BeliefSystem is breaking down. 


What The Yield Spread Reveals About Growth

 

In this brief excerpt from The Macro Show this morning, Hedgeye Senior Macro analyst Darius Dale provides an in-depth, granular look at why investors should pay close attention to the yield curve and what it says about growth.


You Banking On Those Fed Minutes? Bad Idea Brofessor

Takeaway: Anyone anchoring their investments to the picture of positivity painted by the Fed in their meeting minutes is missing the bigger picture.

You Banking On Those Fed Minutes? Bad Idea Brofessor - yellen 5 23

 

Well... a lot.

 

None of it is good for the Fed's rosy economic narrative either.

 

Anyone anchoring their investments to the picture of positivity painted by the Fed in their meeting minutes is missing the bigger picture. First off, much has changed since the Fed's meeting about four weeks ago, especially in the labor market which FOMC members have proudly pointed to as the reality belying soft economic data.

 

In actuality, history tells us that jobs numbers are the last bastion of positive economic data to roll over at the end of the cycle. That's why the latest jobs data is concerning to say the least.

 

  • The April Jobs Report was an absolute bomb, missing Wall Street consensus numbers by a wide margin and continuing to slow from its February 2015 peak. 
  • Jobless Claims increased 2% on a year-over-year basis, rising for the first time since 2012. Prior to that you'd have to go back to 2007 to find the last time claims were rising. In other words, the recession countdown begins.

 

Meanwhile, the U.S. Dollar Index is up for the third straight week, the S&P 500 is down -2% since the meeting and the all-important U.S. #GrowthSlowing indicator, the 10s/2s yield spread, continues to hit levels not seen since 2007.

 

For what it's worth, we've noted before that instead of data dependent, Yellen & Co. are actually "S&P 500 dependent."

 

Just saying.

 

You Banking On Those Fed Minutes? Bad Idea Brofessor - Yellen cartoon 03.31.2016

 

All is not well abroad either.

 

As the U.S. Dollar has strengthened here at home, emerging markets have sold off. (Since the meeting Emerging Markets (EEM) are down -7%.) The elephant in the room, of course, is China where, in April, manufacturing data has been soft, fiscal spending is decelerating and monetary policy is becoming less accomodative. So ... not good.

 

As Hedgeye Senior Macro analyst Darius Dale writes in an institutional research note:

 

"Save for the housing sector, Chinese economic growth has clearly faltered here in APR amid tighter administered policy and increasingly hawkish policy expectations, at the margins. All told, we reiterate our structural bearish bias on China amid what is quite possibly the world’s longest list of secular headwinds – not the least of which is demographics."

 

All told, that's why despite delusional comments from Fed heads, like San Francisco's John Williams, calling for two, even three rate hikes in 2016, macro markets still aren't biting. The hawkish jawboning hasn't been able to push the implied rate hike probability above 30% (see below). 

 

You Banking On Those Fed Minutes? Bad Idea Brofessor - rate hike probability 

 

Clearly, there's a lot of skepticism about the Fed's forecasting credibility. 

 

And justifiably so... we've shown before (in "5 CHARTS: Fed Forecasters Flat-Out Wrong" and "Fed Watch: Next Rate Hike In April 2018???") that the Fed's best estimates for GDP are little more than the hopes and whims of unelected bureaucrats.

 

No matter.

 

All of the aforementioned risks and market selloffs don't equate to the Fed's rosy economic picture. It adds up to something else entirely...

#GrowthSlowing

 

(That's been our call for well over a year now. Our investment conclusions are working. Stick with them here.)


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