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The U.S. Economic Message? Buy Stocks, Sell Gold and Bonds



Economic growth in the United States is accelerating. So is inflation. That’s what’s happening now according to the analysts on our Macro team.


In a nutshell for investors, that means:


  • Stocks: Bullish
  • Bonds: Bearish
  • Gold: Bearish


It’s simple, says Hedgeye CEO Keith McCullough in the video excerpt above. U.S. economic data is accelerating.


“Industrial production just slowed at a slower rate. Durable goods just slowed at a slower rate,” McCullough says. (For more on the U.S. economy check out “What The Media Missed: Retail Sales Not ‘Sluggish’ & Industrial Production Not In ‘Steep Decline.’)


Then there are classic “late cycle” economic indicators like employment. These metrics are the last shoe to drop when the economy finally rolls over. On that last point, there’s an interesting dichotomy developing between the Industrial and Cyclical sides of the economy, which appear to have bottomed, and the employment side, which continues to slow.


Here’s something to ponder. “What if it stops slowing?” McCullough asks.


Already, leading, sentiment-driven indicators of employment like consumer confidence and business propensity to hire are improving. “If these are leading indicators for [jobs growth] stop going down, that would be yet another feather in the bull case,” McCullough says.


The data doesn’t lie. For now, it says the U.S. economy is accelerating. So we’re staying bullish.


(It’s uncanny. This is literally the same market call McCullough made nearly four years ago, in 2013. For more, check out his last appearance on CNBC.)


The U.S. Economic Message? Buy Stocks, Sell Gold and Bonds - chart2


Crisis Risk Rising In Emerging Markets: Here's What to Do

Crisis Risk Rising In Emerging Markets: Here's What to Do - dominos12

"We find it imperative that investors who’ve appropriately pivoted into Emerging Market assets in 2016 in order to play a dovish Fed pivot right back out ASAP," writes Hedgeye Senior Macro analyst Darius Dale. Here's why we don't like Turkey.

The Investor’s 2017 GOP Policy Checklist: Here’s What to Expect


After eight years of Obama’s Democrat-led White House, the pendulum is beginning to swing the other way.


Not only did Trump win the White House. Republicans also swept the Senate and the House of Representatives. This consolidation of control will clearly have wide-ranging ramifications for investors. Most of it hasn’t been properly digested yet.


The coming indigestion may be hard to swallow for some investors (particularly so if you’re a card-carrying Democrat).


To be sure, the party of Lincoln is eagerly awaiting the first meeting of the 115th Congress on January 3rd. There they will attempt to rebuke, and largely disassemble, eight years of President Obama’s legacy.


Here’s Hedgeye Potomac Chief Political Strategist JT Taylor’s GOP policy check-list.


  • Tax Reform
  • Supreme Court nomination
  • Remove elements of Dodd Frank financial legislation
  • Roll back a number of President Obama’s Executive Orders
  • Repeal and replace the Affordable Care Act (better known as Obamacare)


It gets a little dicey from there.


Especially when it comes to anything that may add to the deficit, like a transportation/infrastructure bill, Taylor says. Keep an eye on a debt ceiling vote in March. That may be a critical acid test to gauge just how unified the GOP actually is, he says.

Early Look

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Why $47 Trillion In US Debt Doesn't Mean Disaster (In 3 Charts)

Why $47 Trillion In US Debt Doesn't Mean Disaster (In 3 Charts) - iou

Permabears are passing around the narrative that sooner or later the U.S. is going to topple under the weight of its own debts. Isn't this alone reason to be skeptical of stock markets tapping all-time highs, they ask? It doesn't hold together under closer scrutiny of the data.

Can U.S. Stocks Make New All-Time Highs? Yes

Can U.S. Stocks Make New All-Time Highs? Yes - trump sig image


(In case you were wondering, that's Donald Trump's signature emblazoned across the bull above).


The Donald's largely unexpected Election Day victory delivered financial markets the jolt it needed to push U.S. stocks to all-time highs. We're now just shy. Is the #TrumpTrade over?


Many institutional investors think so. According to data from the CFTC, on futures and options contracts data, institutional investors are very short the S&P 500. To be exact, as you can see below in our Chart of the Day (from today's Early Look), they are as short today as they were in April of 2016.


Remember: Back then, it was just two months after the S&P 500 bottomed, a result of the Fed's pivot from hawkish (the December rate hike being the first in a decade) to dovish on deteriorating economic data. On the Fed's about-face, small cap stocks went from crashing (the Russell 2000 was down -24% from the July peak to the February lows) to a massive bull market run. The Russell 2000 is up 20.8% year-to-date. 


Once again, we think, investors are too bearish when economic data favors the bulls. 


Everything from Retail Sales to Industrial Production to Durable Goods reports are showing improvement. Meanwhile, measures of consumer, business and homebuilder confidence are hitting cycle highs. For the time being, Trump has convinced most of the country he can, in fact, "Make America Great Again. Let's call it, "Trumphoria."

What does it all mean for U.S. stocks?


In today's Early Look, Hedgeye CEO Keith McCullough writes:


"Looking at current consensus macro positioning (CFTC futures & options data), I’d bet that the current net SHORT position of -127,358 contracts in the SP500 Index burns off. And the bull will mature, no matter how many people missed making the pivot."


in other words ... The #TrumpTrade lives.


Can U.S. Stocks Make New All-Time Highs? Yes - 12.20.16 EL Chart

Cartoon of the Day: Whack-A-Market

Cartoon of the Day: Whack-A-Market - emerging markets cartoon 12.19.2016


Emerging Markets (EEM) are down -6.4% in the quarter-to-date as the Strong Dollar continues to ravage foreign country stock indices. The U.S. dollar index is up +8% over that same period. Take a look at this excerpt from Hedgeye Senior Macro analyst Darius Dale's recent research note, "Emerging Markets: Protect Your Neck From #StrongDollar."



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The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

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