Takeaway: What do you think? Cast your vote. Let us know.
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.
"... In the Chart of the Day below we show the spread between Nominal GDP growth and Nominal Wage Growth (aggregate wage income). The intuition for understanding the profitability implications comes from viewing the macroeconomy as you would a company or household. At the aggregate level, Nominal GDP equals National Income or Total Revenue. Aggregate Wages represent Costs (labor costs are typically the biggest input costs for firms).
If costs are growing faster than revenue - which is the case currently and is represented by a negative spread in the chart below – margins and earnings growth becomes increasingly challenged. If labor growth continues to grow at a premium to output growth and if aggregate wages continue to grow at a positive spread to revenues (nominal GDP) then productivity will remain negative and the corporate earnings recession will remain more-or-less the prevailing reality."
Behavioral finance expert Dr. Richard Peterson, a board-certified psychiatrist and CEO of MarketPsych, sits down with Hedgeye CEO Keith McCullough in this edition of Real Conversations. An expert on financial market psychology, Peterson discusses how to potentially time stock market turns by analyzing investor behavior and social media. His firm produces sentiment and macroeconomic indices derived from language analysis of global news and social media. His latest book Trading on Sentiment digs underneath technicals and fundamentals to explain the primary mover of market prices - the global information flow and how investors react to it.
Risk Managed Long Term Investing for Pros
Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.
"US GDP is going to be reported tomorrow and it’s closer to 1% y/y than it’s been all year," Hedgeye CEO Keith McCullough wrote in this morning's Early Look note. U.S. #GrowthSlowing continues.
Takeaway: Let's wait and see the details about this OPEC oil production "freeze."
Oil is up 5% today... WHY?
According to Reuters' two OPEC sources, the organization:
"... Agreed on Wednesday to reduce its oil output to 32.5 million bpd from the current production levels of around 33.24 million bpd. The producing group will agree concrete levels of production by each country at its next formal meeting in November, the sources said.
One source also said that once production targets were reached, OPEC would reach out to non-OPEC producers for cooperation."
Our Quick Take?
Here's Hedgeye Potomac Senior Energy Policy analyst Joe McMonigle who has been spot-on about all the OPEC oil production "freeze" rumors all year.
Here's McMonigle's recent take on an OPEC "freeze" from earlier this month.
Takeaway: Vancouver home sales are still getting slammed, with the Y/Y growth rate further deteriorating to -26% in September from -18.9% in August
Earlier this week Hedgeye Financials analyst Josh Steiner released his proprietary Hedgeye Canada Tracker to keep tabs on what he sees as an “ongoing housing bubble” in the economy.
As Bloomberg reported earlier this month:
“A tax on foreign homebuyers in Vancouver cut luxury purchases in Canada’s priciest housing market by more than half last month, according to a brokerage report. Meanwhile, high-end sales in Toronto surged.
Transactions in Vancouver of at least C$1 million ($759,000) slid 65 percent from a year earlier to 95 units in August, the month that a 15 percent transfer tax on deals by non-Canadian homebuyers took effect, according to Sotheby’s International Realty Canada. At the same time, luxury-home sales in Toronto and its suburbs doubled to 1,459 units, the high-end brokerage said.”
In particular Steiner’s Canada Tracker is picking up a more broad-based slowdown in Vancouver’s housing market.
Here’s Steiner’s analysis:
“Vancouver home sales are still getting slammed, with the Y/Y growth rate further deteriorating to -26% in September from -18.9% in August… Teranet data still shows Vancouver home price growth accelerating, to 24% YoY. However, the deteriorating average home sale price from the Real Estate Board of Greater Vancouver in the chart below makes more sense to us, given the disaster that home sales in the region have become.”
The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.
LONG SIGNALS 80.52%
SHORT SIGNALS 78.67%