Below is some recent analysis from Hedgeye CEO Keith McCullough via The Macro Show, our daily financial market video broadcast:
"Calling tops might make you popular in fits and starts but that’s not a process. Bottoms are processes not points.
If you look at this market cycle we give this one a bronze medal in terms of its longevity. What you’ll notice here, if you study economic history, is that there’s absolutely nothing average about this cycle or any other cycle for that matter. You can see that the second longest expansion without a recession was 106 months in the 1960s and the longest expansion ever comes in at 120 months, which ended in the early 2000s.
No cycle dies of old age. What a cycle does die of however is decelerating data. That’s what I’m on the look out for. What happens with cycles is they stop accelerating first, then they slow and move into recession. In the US’s case, the last one was fairly dramatic in terms of market reaction but you could barely see the one in 2001. So again, focus on the numbers, not what you think the stock market's valuation should be.
The deep simplicity of it is all is just this. If you’re measuring and mapping the data you can unequivocally point to where GDP bottomed which, in rate of change terms, was 1.2% in Q2 of 2016. That’s when bond yields and bond proxies bottomed, you saw multiple expansion, and factors like growth and cyclicals picked up as well.
From that bottom, we've accelerated to 2.2% in the second quarter of 2017. The data, from new orders to productivity to income growth, tells us that U.S. growth continues higher from here."
