Early Look: Dangerously Normal

Takeaway: This is a brief (complimentary) excerpt from this morning's Early Look note.

Early Look: Dangerously Normal - jeb el


What’s really dangerous are politicians, on both the left and the right, having absolutely no clue about economic cycles. What’s dangerously normal about this cycle is that GDP isn’t going to hang out around 2% forever. It’s already gone to 1%. After that is 0%.


Unlike one of my competitors (Hyman) who said (yesterday) “I think the economy has years to run and a recession is years away”, I’m here to remind you that Industrials/Cyclicals are already in a #DoubleDipRecession and a broader slowdown towards 0% is months away.


You’ll have to fact check this, but I think I’m one of the few who has proactively called the last 3 US recessions, whereas most of my Old Wall competition hasn’t called one. The establishment of consensus economics is dangerous. That’s not a new normal either.




Am I concerned about this? You’re damn right I am. How many times can the “blue chip” economists who have been advising both Republican and Democrat Presidents not only miss the topping process of cycles, but their inevitable rate of change slow-downs?


Click here to continue reading (subscribe to the Early Look). 

Poll of the Day: Who Is MOST GUILTY Of 'Peddling Fiction' On The US Economy?

Takeaway: What do you think? Cast your vote. Let us know.

Poll of the Day: Who Is MOST GUILTY Of 'Peddling Fiction' On The US Economy? - poll of the day 10 12


McMonigle: What’s Next For Oil Prices --> Putin’s Pop & OPEC’s Freeze

McMonigle: What’s Next For Oil Prices --> Putin’s Pop & OPEC’s Freeze - mcmon bnn


Cunning Russian President Vladimir Putin said his country would sign onto a deal with OPEC members to limit oil output on Monday:


“Russia is ready to join in joint measures to limit output and calls on other oil exporters to do the same. In the current situation, we think that a freeze or even a cut in oil production is probably the only proper decision to preserve stability in the global energy market.”


Not so fast, says our Senior Energy Policy analyst Joe McMonigle. As he points out in his interview on BNN, Russia is essentially telling OPEC "you go first" ... get the deal signed and we'll follow. Questions clearly remain. 


Russia's largest oil company, Rosneft, said yesterday it would actually increase oil production above 2015 levels. Meanwhile, OPEC's "deal to agree to  a deal" would likely exempt Nigeria, Lybia and Iran "creating a million per barrel day hole" in the proposed oil production freeze, McMonigle says.


Click video above to watch McMonigle dissect these developments.

more from Hedgeye:


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[UNLOCKED] Keith's Daily Trading Ranges - Bull and bear extra cartoon

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CHART OF THE DAY: #PastPeak --> Where the U.S. Economic Cycle Is At

CHART OF THE DAY: #PastPeak --> Where the U.S. Economic Cycle Is At - 10.12.16 EL Chart

It's pretty simple.


As you can see in our Chart of The Day, here’s our stylized model for how every economic cycle plays out with commentary from Hedgeye CEO Keith McCullough in this morning's Early Look:


  1. "Cyclicals peak 1st (that’s why we call them cyclicals)"
  2. "Late Cycle (employment and consumption) peak and roll last"


That's the point. Alcoa (AA) is a cyclical. The industrial conglomerate kicked off earnings season yesterday. The stock was down over -10%, missing even Wall Street's bombed out earnings and revenue numbers. Honeywell (HON), PPG Industries (PPG), and Dover Corp (DOV) are industrials too. Those companies all pre-announced ugly revisions to previous earnings and revenue estimates. The stocks got hammered.


In case you missed it, then came Fastenal (FAST) earnings yesterday. Here’s what Fastenal’s CFO, Holden Lewis, had to say on the FAST call:


"Qualitatively, it's not clear to us that the tone changed much in the third quarter. We saw that the sales of fasteners and heavy manufacturing construction end markets were relatively weak as we have seen before. The same could be said of our largest customers, our top 100 was flat to maybe down slightly during the period. But again, these are the same dynamics that have persisted throughout 2016." 


Then, during the Q&A, Fastenal CEO, Daniel Florness was asked whether or not he was “seeing any signs that the industrial economy was bottoming." Florness replied:


“I can’t say that we are… I can’t say that we’re seeing any kind of inflection.”


So there you have it. Industrials are rolling over again (a.k.a. #DoubleDipRecession called out by our Macro team last week) and jobs market growth, the latest of #LateCycle lagging indicators, continues to decline. There's really only one takeaway from all of this...

U.S. #GrowthSlowing.

Cartoon of the Day: Bailouts!

Cartoon of the Day: Bailouts! - bankers bailing cartoon 10.11.2016


Central bankers are trying to bail out the sinking global economy. But the water keeps on coming in.

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