“Nothing is more obstinate than a fashionable consensus.”

-Margaret Thatcher

My teammates and I spent all of yesterday meeting with Institutional Investors in New York City. If you’re looking for a consensus that came out of that small sample size, it was all over the place. I liked that, a lot.

On the ride home I reviewed what remains an obstinate consensus – that of the Old Wall’s financial media outlets and their troupes of group-thinking pundits. They’re basically bearish on down days and cautious on up ones.

With consensus positioning (CFTC futures & options contracts) currently net SHORT the Russell 2000, I wasn’t surprised to see it close up on a “market down day.” Meanwhile, the “expensive” Nasdaq corrected a whopping -0.12%.

Obstinate Consensus - 04.06.2017 stay alert cartoon

Back to the Global Macro Grind

With the inflexible and intractable mainstream media anchoring on Trump trauma, you have to love the opportunities that have been born out of being data dependent rather than politically driven for the last 6 months.

You can tell me if I’m cherry picking data or not here (I am), but why wasn’t this the focus of yesterday’s “news”?

  1. US Industrial Production Accelerates To Its Fastest Pace Since FEB 2015
  2. USA’s Architectural Billings Index Hits New Cycle Highs
  3. SP500 Earnings Season Off To a +16.5% Start!

I guess I am building an independent and bi-partisan media (content) company, so I just popped all 3 of those headlines into my Google and 0% of them came up as yesterday’s news.

Zero percent. Why? They’re all more factual than almost any politically biased economic conjecture you read elsewhere…

To review that data underpinning the Hedgeye Headlines:

  1. US Industrial Production growth accelerated to +1.5% year-over-year growth in MAR vs. +0.3% in FEB
  2. USA’s Architectural Billings Index (ABI) accelerated to 54.3 in MAR vs. 50.7 in FEB
  3. Aggregate year-over-year Earnings Growth for 50 of the SP500 companies that have reported = +16.5%

Now if I was really cherry picking I’d run a headline this morning that Tech Earnings are leading the +16.5% SP500 aggregate gain at +27.4% year-over-year growth so far here in Q117 reporting season. But let’s talk about Trump’s tax plan instead, ok?

In every single meeting yesterday, clients asked us what Trump gets done on taxes does to our GDP forecast. Darius Dale and I answered “zero percent”, 100% of the time. There is no line item in our predictive tracking algos for that or his hair.

As one investor kindly complimented us, “so, basically… all of your GDP forecasts are apolitical and dispassionate.” Yep. I told him I “feel” absolutely nothing when we issue updated growth and inflation forecasts. It’s all math.

So, after yesterday’s Industrial Production #acceleration:

  1. Our US GDP tracker for Q117 ticks back up to +2.29% year-over-year
  2. That imputes a q/q annualized GDP forecast of +2.09% vs. the Atlanta Fed at 0.5%

Rather than anchoring on March “Auto Sales Slowing” in the middle of a northeast blizzard (Autos have very little predictive value in forecasting GDP, but Industrial Production does)…

Our model ticked down on last week’s Retail Sales report and back up yesterday. That’s what data does – it ticks.

Now if I was really yougely cherry picking for a qualitative offset to the data mining associated with one month of US Auto Sales predicting the next zero edge depression, I’d highlight European Auto Sales coming in at a record high (+11%) in March…

I wonder if the obstinate Old Wall Media will call that market “news” this morning?

Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND views in brackets) are now:

UST 10yr Yield 2.17-2.41% (bullish)

SPX 2 (bullish)
RUT 1 (bullish)

NASDAQ 5 (bullish)

XOP 35.66-37.99 (bearish)

Nikkei 185 (bearish)

VIX 11.69-15.96 (neutral)
USD 99.25-101.41 (bullish)
EUR/USD 1.05-1.07 (bearish)

GBP/USD 1.24-1.28 (bullish)
Oil (WTI) 51.27-54.12 (bullish)

Gold 1 (bullish)
Copper 2.50-2.62 (bearish)

AAPL 140.18-145.03 (bullish)

AMZN 883-917 (bullish)

FB 139-143 (bullish)

GOOGL 836-859 (bullish)

Best of luck out there today,

KM

Keith R. McCullough
Chief Executive Officer

Obstinate Consensus - 04.19.16 EL Chart