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Economic Acceleration? Your Decision Will Impact Your Portfolio Performance

Economic Acceleration? Your Decision Will Impact Your Portfolio Performance - boxing gloves image

 

There's a fight playing out right now among investors in the U.S. stock market on which way economic growth is heading. As you’ll see in the numbers below, it's a fair fight right now from a performance perspective. But we think that's going to change very soon. 

 

(For more, click here to get 3 specific trading ideas from this morning's Early Look.)

 

Breaking down the S&P 500 year-to-date performance by sectors reveals this emerging conflict:

 

  • Financials (XLF): +5.2%
  • Utilities (XLU): +5.5%
  • S&P 500: +6.2%

 

As a reminder, the Utilities sector outperforms the broader stock market when U.S. economic growth slows and interest rates fall. On the other hand, Financials outperform the broader stock market when U.S. economic growth accelerates and interest rates rise. 

 

Investors placed bets last week that were crystal clear. Interest rates fell and here's what happened in Utilities and Financials:

 

  1. Financials (XLF) were down -1.3% week-over-week
  2. Utilities (XLU) were up +0.5% week-over-week

 

Which side of this fight are you on? U.S. #GrowthAccelerating or U.S. #GrowthSlowing...

 

In today's Early Look, Hedgeye CEO Keith McCullough explains which side we’re on, why we’re on it and how investors can take advantage of this emerging fight.

 

In fact, we've got three specific ideas.

 

Click here to learn more.

 

Economic Acceleration? Your Decision Will Impact Your Portfolio Performance - 03.20.17 EL Chart 2

 


Cartoon of the Day: Happy St. Patrick's Day!

Cartoon of the Day: Happy St. Patrick's Day! - 03.17.2017 pot of dollars cartoon

 

We've been bullish on the U.S. Dollar since August 2014. We still like it here.

 

 

Click here to receive our daily cartoon for free.

 


Poll Of The Day: What's The LIKELIEST Next Stop For Oil Prices?

Poll Of The Day: What's The LIKELIEST Next Stop For Oil Prices? - oil prices question2

 


Early Look

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Capital Brief: 5 Things to Watch In Washington

Capital Brief: 5 Things to Watch In Washington - z troo

 

Say what you will about him, there's never a dull moment with Donald Trump in the White House. 

 

Following another event filled week which included MSNBC's Rachel Maddow "exposing" 2 pages of Trump's 2005 tax return, the president is now set to sit down face-to-face with German Chancellor Angela Merkel for the first time.

 

Recall that during his campaign, Trump attacked Merkel for “ruining” Germany and labeled her decision allowing over 1 million refugees into Germany “insane.” He even pulled out his crystal ball and predicted her citizens would overthrow her.

 

 

On that note, here's a quick, distilled look at five other key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

 

SWEETEN THE PILL

#HealthcareReform

Capital Brief: 5 Things to Watch In Washington - Obamacare cartoon 12.07.2016

The Republican goal of health care reform is to move toward a system that has more choice and competition that will stabilize the marketplace. The pharmaceutical industry is moving to preemptively find common ground with Trump Administration on the issue.  Given the president’s goal to streamline and improve the FDA process, drug companies acknowledge that the pricing model needs to evolve.

 

But they feel that it is a tough proposition as the approval process takes several years. They are hoping to move towards an outcome based system and believe that can help speed up the approval process.

 

“TRUMP IS TEMPORARY, REGULATORY REFORM IS FOREVER*”

#RegulationNation

Capital Brief: 5 Things to Watch In Washington - z capdome

With almost everyone on Capitol Hill rushing the legislative gates of regulatory reform, Ohio Senator Rob Portman is the stand out with his Regulatory Accountability Act -- the preferred industry approach and the bane of dozens of interest groups. House Republicans have tried introducing more draconian bills that would allow Congress to have veto authority on any new regulations. But those bills won’t pass the Senate.

 

With his eye on 60 votes, Portman is reaching across the aisle to include Senators Claire McCaskill and Heidi Heitkamp in his more pragmatic effort. This may not be Steve Bannon’s ideal way “to deconstruct the administrative state,” but it has the best hope in taking a major step in that direction.

 

FRACK IS BACK

#oil #fracking

Capital Brief: 5 Things to Watch In Washington - z froyo

The Trump Administration is planning to repeal Obama’s landmark rule setting standards for hydraulic fracturing on federal land. The Obama Justice Department had been fighting the oil and natural gas industry and conservative states to get the rule reinstated.

 

The Department of the Interior would likely propose an repeal of the rule within the next 90 days. It will likely become official early next year. This rule was a top target of key industry allies to President Trump.

 

OFF THE RAILS

#infrastructure

Capital Brief: 5 Things to Watch In Washington - z infro

While Trump is calling for $1 trillion in infrastructure spending over the next ten years, his budget proposal looks to cut funding for the Department of Transportation by 13 percent. The main cuts are to the Federal Transit Administration's Capital Investment program, as well as the elimination of funding for the Essential Air Service program and federal support for long-distance Amtrak trains.

 

The cuts have raised bipartisan anger as both sides view this as a step in the wrong direction to Trump’s proposed infrastructure spending. 

 

PRIMPING FOR PARIS

#climate

Capital Brief: 5 Things to Watch In Washington - z pa

Trump officials are working with energy companies to determine the future of America’s involvement in the Paris climate agreement. Many companies are pushing the Administration to remain in the pact, but to dial back President Obama’s greenhouse gas emissions with the original pledge committing the U.S. to reduce emissions by 26 to 28 percent by 2025.

 

While no action has been taken just yet, the climate agreement is pitting Secretary of State Rex Tillerson and Ivanka and Jared Kushner against the more conservative wing of the Administration.


The Saudi Oil Minister's Gonna Need a Bigger Jaw

Takeaway: It's not easy trying to manipulate oil markets.

The Saudi Oil Minister's Gonna Need a Bigger Jaw - z oil

 

Below is one of Hedgeye CEO Keith McCullough's top-3 things today. Email our sales guy Matt Moran for more info.

 

  1. OIL – Saudi Oil Minister jaw-boning, but he’s going to need a bigger jaw if he wants to clear WTI’s long-term TAIL risk bar of $51.53 resistance; I think Oil, CRB Index, etc. Deflation Risk is right back on the table and probably why Global Equity markets are signaling overbought and/or exhaustion to the upside – they need Energy!

 

Meanwhile ... 6,503 miles away from New York City...

The Saudi Oil Minister's Gonna Need a Bigger Jaw - OPEC cartoon 04.24.2015

 


U.S. Manufacturing Is Still En Fuego

U.S. Manufacturing Is Still En Fuego - manufacturing activ

Source: The National Archives UK

 

U.S. manufacturing and industrial is white hot. You might say it's "en fuego."

 

Inside regional manufacturing data out of Philadelphia and New York, certain key components are hitting multi-decade highs. As Hedgeye Senior Macro analyst Christian Drake writes in today's Early Look:

 

"Philly Fed: Beat expectations for March as New Orders rose to the highest level since 1987.  We certainly don’t anchor our outlook on a single regional survey but multi-decade highs are notable, particularly when the series is trending with the balance of the other regional and national manufacturing/industrial activity indicators.

 

Also notably, the capex plans component rose to its highest level in 18 years, according with the investment plans component of the Empire Manufacturing Index. As can be seen in the Chart of the Day below, the early March data has our composite Capital Expenditures Plans Index tracking at its highest level in over a decade."

 

(On a related note, read "2 Charts: Reiterating Our US #GrowthAccelerating Call.")

 

U.S. Manufacturing Is Still En Fuego - CoD Capex 3 17 17


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