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The Energy Election: Trump Provides More Clues on Energy Priorities in North Dakota Speech

Takeaway: Energy policy will play a prominent role in the 2016 presidential election.

The Energy Election: Trump Provides More Clues on Energy Priorities in North Dakota Speech - trump 44

 

Energy promises to play a big role in the 2016 presidential election and will provide sharp contrasts between the candidates on energy policies. The November election will be a key catalyst on several issues of interest to investors. This is the first in a series of client notes on The Energy Election.

 

As with most issues, Donald Trump has not provided much if any details on his energy policies to date. There is no energy plan on his campaign web site so we have been left with some campaign trail rhetoric with some snippets in press interviews and tweets.

 

Today we got a little more visibility on Trump’s energy policies during the candidate’s speech to the annual Williston Petroleum Conference in North Dakota. It was an important venue and the home state of Trump energy advisor - Congressman Kevin Cramer.

 

While the speech was still lacking details, it likely provided some reassurance to those in the oil, natural gas and coal sectors.


Steiner: ‘China Is An Enormous Systemic Risk’

 

In this brief excerpt from The Macro Show earlier today, Hedgeye Financials analyst Josh Steiner discusses why the “unbelievable rate of credit growth” in China is now slowing and why it could pose risks for investors long the stock market.


FYI: Using Fed's Inflation Measure GDP Would Be Negative

Takeaway: Today's update on 1Q16 GDP was revised up to 0.8% vs the prior estimate of 0.5% but while using a misleading measure of inflation.

FYI: Using Fed's Inflation Measure GDP Would Be Negative - GDP cartoon 02.29.2016 

 

With a "0" in front of GDP and S&P earnings growth -8.5% y/y, should the Federal Reserve raise rates in June?

 

There's no debating the earnings recession anymore but, with Macro consensus predicting 2Q16 GDP growth of +2.3%  and the Atlanta Fed’s GDPNowcast at 2.9%, so it's worth reviewing our #GrowthSlowing call.

 

Today's 1Q16 GDP estimate was revised up to 0.8% versus the first estimate of 0.5%.

 

That's misleading.

 

In calculating economic growth, the government used the sub-1% GDP Deflator, which stands at 0.6%. Meanwhile, if the US Government used the Federal Reserve's prefered measure of inflation, core PCE which now reads 2.1%, US GDP would have been NEGATIVE in Q1.

 

Look at the difference between the two inflation measures in the table below:

 

 

In related news, this marks the 5th straight quarter where Hedgeye's Predictive Tracking Algorithm has been within 20-30bps of nailing GDP. That's more than we can say for the Fed and Old Wall Consensus which have an average quarterly intra-quarter tracking error of between 152 to 246 basis points.

 

#AccuracyWins


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Just Awful: An Update On S&P 500 Earnings

Takeaway: A total of 491/498 S&P 500 companies have reported aggregate sales and earnings growth down -2.3% and -8.5% respectively.

Just Awful: An Update On S&P 500 Earnings - empty pockets

 

A total of 491/498 S&P 500 companies have reported aggregate sales and earnings growth down -2.3% and -8.5% respectively.

 

HERE'S THE BREAKDOWN BY SECTOR:

 

  • So far, 6 of 10 sectors have reported negative sales and earnings growth;
  • Our favorite sector short, Financials (XLF), reported sales and earnings growth down -1.7% and -14.2%;
  • Energy (XLE) sales and earnings growth down -30.1% and -109.1% respectively;

 

Just Awful: An Update On S&P 500 Earnings - s p earnings 5 27


Daily Market Data Dump: Friday

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: Friday - equity markets 5 27

 

Daily Market Data Dump: Friday - sector performance 5 27

 

Daily Market Data Dump: Friday - volume 5 27

 

Daily Market Data Dump: Friday - rates and spreads 5 27

 

Daily Market Data Dump: Friday - currencies 5 27


Behind The No-Volume Month-End Markup & An Update On Volatility

Takeaway: US Equity Volume was -23% yesterday vs its 1 month average. Meanwhile, the VIX is poised to make yet another lower high in the coming week.

Behind The No-Volume Month-End Markup & An Update On Volatility - Volatility cartoon 09.02.2015

 

Isn't it funny that on up days market volume disappears?

 

Here's volume and volatility analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning: 

 

"Post another no-volume month-end markup in US Equity beta (Total US Equity Volume -23% yesterday vs. its 1 month avg!) to lower highs, my front-month volatility signal says we see another higher low in VIX in the coming week – VIX risk range = 13.16-16.90; buying stocks (chasing beta) at 12-13 VIX has not worked in 2016."

 


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 80.65%
  • SHORT SIGNALS 78.63%
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