CHART OF THE DAY: Fed Forecast Versus #TheCycle

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.


"... And now, markets are “gonna rip” based on a low-probability scenario that the Fed’s forecast for growth to magically re-accelerate (into peak of #TheCyclecompares in Q2) is accurate? #Cool. Good luck with that.


We’re sticking with our forecast of GDP sub 1% for Q2 and the worst profits of #TheCycle in Q2 and Q3. Alongside #EmploymentSlowing, we remain The Bears on #EarningsSlowing. We expect The Financials (XLF) to lead on the downside of earnings with the Yield Spread (10yr minus 2yr) not budging last week (still at YTD lows of 94 basis points wide)."


CHART OF THE DAY: Fed Forecast Versus #TheCycle - 05.31.16 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. Steiner: ‘China Is An Enormous Systemic Risk’ (5/26/16)




In this brief excerpt from The Macro Show, 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.


2. McGough: 10 Reasons Why I Don’t Like Hanesbrands | $HBI (5/25/16)



Retail analyst Brian McGough hosted a Black Book presentation earlier this week to update his short call on Hanesbrands (HBI). In this brief video excerpt, McGough lays out the ten reasons HBI shares are headed lower.


3. McCullough: Stop Whining, Stick With The Process (5/25/2016)



During the live Q&A section of The Macro Show earlier today, Hedgeye CEO Keith McCullough provides a “stick with the process” pep talk for a subscriber worried about his short positions.


4. Why We Remain Bearish On Junk Bonds (5/24/2016)



In this brief excerpt from The Macro Show earlier today, Hedgeye Macro analysts Darius Dale and Ben Ryan respond to a subscriber’s question about our views on the credit cycle and high-yield debt.


5. What The Yield Spread Reveals About Growth (5/23/2016)



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.

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. The Writing On The Wall (5/27/2016)

This Week In Hedgeye Cartoons - Bull case cartoon May 2016


With a "0" in front of GDP and S&P 500 earnings growth -8.5% year-over-year, the writing is on the wall for investors.


2. Piggy Banks (5/26/2016)

This Week In Hedgeye Cartoons - Financials cartoon May 2016


Our Macro team's favorite sector short, Financials (XLF), is the second worst performing S&P sector year-to-date at down -0.7%.


3. Incredulity (5/25/2016)

This Week In Hedgeye Cartoons - Long incredulity cartoon 05.25.2016


A sign of the times.


4. Atlas (5/24/2016)

This Week In Hedgeye Cartoons - growth cartoon 05.24.2016


Global growth continues to surprise Macro consensus to the downside.


5. The Hourglass (5/23/2016)

This Week In Hedgeye Cartoons - hour glass cartoon


The central planning #BeliefSystem is breaking down. 

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The Week Ahead

The Economic Data calendar for the week of the 30th of May through the 3rd of June is full of critical releases and events. Here is a snapshot of some of the headline numbers that we will be focused on.



The Week Ahead - 05.27.16 Week Ahead

A Few Brief Thoughts On Janet Yellen's Speech Today

Takeaway: The probability is rising that Janet makes her 2nd policy mistake (raising into a slow-down) in 8 months.

A Few Brief Thoughts On Janet Yellen's Speech Today - rate hike cartoon 12.04.2015


I just spent the last 30 minutes in the car listening to maybe the most complacent recap of Fed forecasting risk yet. Today Janet sounded as hawkish as she's been (mainly because her assessment of the economy is as off as it's been). Here's what she said:


“It’s appropriate, and I’ve said this in the past I think, for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate."


In other words, the probability is rising that Janet makes her 2nd policy mistake (raising into a slow-down) in 8 months. 


You go rate hike pro – you go.


A Few Brief Thoughts On Janet Yellen's Speech Today - Rate hike cartoon 11.30.2015


The biggest risk to both markets and the country remains the Fed's forecast. With a "0" in front of GDP and S&P earnings growth down -8.5% y/y, should the Federal Reserve raise rates in June? 


I'll let you be the judge of that but consider this: If the US Government used the Fed's prefered measure of inflation, US GDP would have been NEGATIVE in Q1.


If you didn't listen to Hedgeye and sold on the last policy (hike) mistake in December, you're being advised to listen now.


Hillary's Headache... Trump's Triumph... & Why $50 Oil Creates Tension At Next Week's OPEC Meeting

Takeaway: Hillary's Headache, Trump Triumphs; Bernie v. Donald?; OPEC

Hillary's Headache... Trump's Triumph... & Why $50 Oil Creates Tension At Next Week's OPEC Meeting - capital brief


Editor's Note: Below is a brief excerpt from Hedgeye Potomac Chief Political Strategist JT Taylor's Capital Brief sent to institutional clients each morning. For more information on how you can access our institutional research please email


Hillary's Headache... Trump's Triumph... & Why $50 Oil Creates Tension At Next Week's OPEC Meeting - hillary clinton 44


The State Department’s IG released an in-depth report regarding Hillary Clinton’s controversial email use when she was Secretary of State. The report comes as Clinton continues to struggle with trust and favorability numbers. Although Clinton did not break any laws, it’s clear that she didn’t follow the rules. Despite her confidence moving forward, the controversy will continue to saddle her throughout her campaign - and if that doesn’t give one a big enough headache - the FBI is conducting a criminal investigation that could result in the DOJ pressing formal charges.  Did you hear that roar coming from Trump Tower?


Hillary's Headache... Trump's Triumph... & Why $50 Oil Creates Tension At Next Week's OPEC Meeting - trump 7


Well, it’s official. Donald J. Trump is the official Republican nominee garnering enough delegates to secure his spot on the ballot come November. Although Trump has surpassed the amount of delegates needed to win the nomination outright, look for Senators Ted Cruz and Marco Rubio, and Governor John Kasich to play roles in this year’s convention agenda as they attempt to leverage their respective delegates.


Another primary debate is the last thing this country needs, but what if it’s between two diametrically opposed candidates (with a few exceptions) - one who has his nomination locked up and the other who doesn’t and won’t?  Sure, we’ll tune in. Bernie and the Donald are considering debating each other on the main stage ahead of the CA primary on June 7.  Now for two minutes ponder all of the issues that will come to the fore. In our opinion, Sanders has an opportunity to inflict more damage given that “he’ll do everything to defeat Donald Trump” hence softening him up for Hillary - or will it backfire and end up hurting her?

Why $50 Oil Creates Tension At Next Week's OPEC Meeting

Oil bulls are no doubt pleased that oil passed the $50 threshold on Thursday but the recent rally may create tension at the June 2 OPEC meeting. Our colleague Joe McMonigle departs tonight for Vienna to attend various pre-meeting salons and the meeting on Thursday. Joe will write notes from Vienna and hold a client call on Wednesday, June 1 to provides the latest updates.


While the rally is certainly welcome news for many OPEC members, Joe believes the Saudis see the price rebound as premature serving as a lifeline for US shale production. Stay tuned for daily reports on OPEC week in Vienna from Hedgeye in the bullets.

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