Earlier today the Hedgeye Macro Team, led by CEO Keith McCullough, hosted its quarterly Macro Themes conference call in which it detailed the THREE MOST IMPORTANT MACRO TRENDS it has identified for 4Q16 and the associated investment implications.
- For the video replay CLICK HERE
- For the audio replay CLICK HERE
- To access the presentation materials CLICK HERE
Q4 2016 MACRO THEMES OVERVIEW:
- #DoubleDipRecession: The cyclical-industrial complex peaks ahead of the peak in the economic cycle and the current cycle has not proved different. Globally, growth and inflation expectations continue to be marked lower while PMI’s and Industrial activity remain in Trend retreat. Domestically, manufacturing ISM’s remain peri-contractionary while industrial production and corporate capex remain mired in their worst non-recession streaks of negative growth ever. We’ll detail why industrial activity is not poised for sustainable improvement and why, after another round of policy catalyzed reflation, the risk to cyclicals has again become acute.
- #Labor’sLags: After peaking in 1H15, employment, income and consumption growth have all continued their negative 2nd derivative convergence towards zero. With credit growth now beginning to slow, asset price inflation and the wealth effect past peak, high ticket discretionary consumption at 6-year lows, and rising prospects for broader implementation of higher minimum wages, the risk to labor and consumption slowing faster is rising. We’ll explore labor's current catch-22 situation in which further strength in the labor markets is paid for via continued negative productivity growth and falling corporate profitability while labor market softening would amplify the negative trend in income and consumption growth.
- #ClintonvsTrump: With one of the US's most important presidential elections ever just over one month away, most investors are still unsure on just how to position for the highest probability outcome. With political uncertainty at historic highs across the buyside and in corporate boardrooms, we thought it would be helpful to provide a scenario analysis on the respective policy platforms for each candidate. Perception is not necessarily reality when the rubber meets the road.
Kind regards,
-The Hedgeye Macro Team