In this special HedgyeTV video, Hedgeye CEO Keith McCullough discusses why the establishment media is “fast becoming irrelevant” with Demography Sector Head Neil Howe.
Every active stock fund category saw withdrawals last week, including a -$7.5 billion redemption from domestic equity. This is a complimentary research note originally published last week by our Financials team.
The Fed's economic narrative is that "all is good." But with little evidence to back this claim up, complacency appears to be at an all-time high.
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Earnings season is underway and the results aren't looking good, particularly for the Industrials sector (see pre-announcements from Dover and Honeywell).
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Cue the barf bags. Chipotle (CMG) is down -2.5% today after a Wall Street analyst cut his outlook. It's down -45% since Hedgeye Restaurants analyst Howard Penney turned bearish in October 2015. He says Wall Street consensus remains “far too optimistic.” Here's why.
Takeaway: Disappointment continues for investors searching for a bottom in the industrial economy.
An industrial production update today confirmed yet another month of contraction in the industrial economy. Growth was negative for the 13th consecutive month at -1.03% year-over-year. That makes it the longest non-recessionary losing streak ever. Att the same time, earnings from manufacturers in the industrial complex are reporting dismal financial results.
In other words, investors searching for a bottom in the industrial economy have been disappointed for over a year now.
Our quarterly Macro Themes for the Q4 highlighted the #DoubleDipRecession risk embedded in the recent runup of the Industrials (XLI) sector. XLI is up +8% versus just 4% for the S&P 500. Here's what our Macro team wrote:
"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."
More bad news today for the industrial sector came from J.B. Hunt Transport Services' (JBHT). The freight trucking company cut its sales guidance for the year today to 7% growth from a prior range of 9% to 12% growth. The trucking industry has struggled with excess capacity, pricing pressures, and weak customer demand.
Double dip Recession? Yes.
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