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Fantasy Land! A Look at This “Final” GDP Report

In this brief excerpt from The Macro Show this morning, Hedgeye CEO Keith McCullough rips apart the government’s latest GDP calculation. “You couldn’t make this up if you tried,” said McCullough. “And you wonder why people are getting upset with the establishment and the making up of numbers.”



Subscribe to The Macro Show today for access to this and all other episodes. 


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Capital Brief: Clinton & Warren Team Up To Trash Trump

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 sales@hedgeye.com.


Capital Brief: Clinton & Warren Team Up To Trash Trump - JT   Potomac under 1 mb


“It doesn't matter how smart you are unless you stop and think.”

― Thomas Sowell


So far, so good for Donald Trump 3.0, who has maintained a relatively low profile while his campaign continues to improve on all fronts (except his poll numbers). His newfound path forward continues to drive donations and improve its advertising capabilities, focusing on digital media outside of his well-worn Twitter account. The Republican nominee has rolled out websites and attack ads, as he continues to pitch his agenda to supporters and reshape his demeanor.


These factors signal that the Trump campaign is finally gaining some footing and it couldn’t come at a better time - with less than three weeks until the convention Trump still hasn’t nailed down key party endorsements or even solidified speakers for the convention.


Hillary Clinton and MA Senator Elizabeth Warren teamed up to trash Trump, knocking him for his self-promotional trip to Scotland and for his celebratory musings amidst Brexit global turmoil. Clinton and Warren highlighted their blue-collar upbringings, promoted the importance of strong union values, and called for the need to rebuild the middle class.


While many progressive tongues were wagging at the prospect of the two women on the ticket, we feel Warren’s appearance is more of an affirmation of Clinton’s commitment to winning over the progressive wing of the party. Further, Clinton’s increasingly robust surrogate list continues to cast a large shadow over Trump, who seems to have very few major allies by comparison.


Freedom Partners Action Fund, a super PAC financed by the network of billionaire brothers Charles and David Koch, has pledged $2.7 million in television and digital ad buys in the OH Senate race where incumbent Senator Rob Portman faces a tough battle with former Governor Ted Strickland. News of the spending spree comes just days after the group announced it will spend $1.2 million on advertising in the NV Senate race where Senate Minority Leader Harry Reid’s open seat is up for grabs.


Republicans are stepping up their fundraising efforts ahead of what will be a dogfight for the House and Senate (perhaps at the expense of the White House) - and we expect no changes to this strategy for the foreseeable future.


A Brief History Of The US #CreditCycle From Past To Present

Takeaway: Delinquencies are rising and credit conditions are tightening as the U.S. economy heads into the 9th inning of economic expansion.

A Brief History Of The US #CreditCycle From Past To Present - The Cycle cartoon 03.04.2016


As is typical in any #LateCycle economy, U.S. companies are resorting to all manner of corporate chickanery to mask financial deterioration. In response to a Wall Street Journal article about companies inflating their financial results by obscuring generally-accepted accounting principles (GAAP), Hedgeye Senior Macro analyst Darius Dale wrote, "The U.S. #CreditCycle continues to deteriorate and no amount of non-GAAP accounting will stop it."


A key callout for our Macro team has been the rollover in the credit cycle. Essentially, the natural progression of any economy in the final stages of expansion is for a protracted breakout in corporate credit spreads. (Hence our short Junk Bonds call.)


As proof of deteriorating fundamentals in the credit cycle, Dale offered the following charts with key takeaways for investors:


Click to enlarge

A Brief History Of The US #CreditCycle From Past To Present - credit darius 2


A Brief History Of The US #CreditCycle From Past To Present - credit darius 3 

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Europe's Got 99 Problems (And Brexit's Just One)

Takeaway: Despite today's pop, European equity markets like Italy and Germany are crashing.

Europe's Got 99 Problems (And Brexit's Just One) - Growthslowing europe


If you think Brexit fallout and uncertainty are the only catalysts for further European equity declines, think again.


As Hedgeye CEO Keith McCullough writes in a note sent to subscribers earlier this morning:


"As we’ve outlined since the beginning of the year, #EuropeSlowing will become more obvious when Germany, France, Italy, Spain, etc. lap peak cycle GDP comps in Q2/Q3 - #Brexit was just a preview to what Europe will look like as the causal factor (#GrowthSlowing) becomes obvious; watch out below if EUR/USD $1.05 breaks."


Here's what that damn #EuropeSlowing data looks like this morning... a sea of red:



This is what #EuropeSlowing looks like in equity market terms...


Take a look at Germany's DAX... just terrible:



And Italian equities:



And here's the European equity market drawdown map with the pop today versus the crash from 2015 highs for context:


Europe's Got 99 Problems (And Brexit's Just One) - european equities 6 28


In essence, bear markets bounce but peel back the charts a little bit further to reveal the underlying reality.


And now for a bit of math:


Using the 35% drawdown in Italian equity markets as an example...



Don't do that to your portfolio. We've told our subscribers to have a 0% allocation to International Equities for some time now. Here's why:


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




Daily Market Data Dump: Tuesday - equity markets 6 28


Daily Market Data Dump: Tuesday - sector performance 6 28


Daily Market Data Dump: Tuesday - volume 6 28


Daily Market Data Dump: Tuesday - rates and spreads 6 28


Daily Market Data Dump: Tuesday - currencies 6 28

CHART OF THE DAY | Japan: "Every Key Growth & Inflation Measure Is Slowing"

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.


"... As the Chart of the Day below details, EVERY key category of Japanese high-frequency growth and inflation data is slowing on a trending basis, with every growth metric experiencing some form of contraction and headline CPI and PPI in deflation territory as well."


CHART OF THE DAY | Japan: "Every Key Growth & Inflation Measure Is Slowing" - 06 28 16 Chart of the Day

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