Want to better understand the big picture macro market developments? Sign up for more information about our soon to be released weekly newsletter Market Edges.
To help contextualize this morning's market moves around the world, below are insights and analysis from our research and Hedgeye CEO Keith McCullough's Twitter feed.
An important thing to know about the U.S. Economy
Take a look at the simple chart below. Growth slowed five straight quarters from +3.8% in 1Q 2015 to +1.2% in 2Q 2016. Growth then accelerated off its 2Q 2016 low to +2.2% by 2Q 2017.
What should be surprising to no one is that #SlowGrowth exposures (Quads 3 and 4 in our model) outperformed materially during the first period, while #GrowthAccelerating exposures (Quads 1 and 2) outperformed significantly during the 2nd period, writes U.S. Macro analyst Christian Drake.
Bottom line? If you get the big economic trends right, then you’ll get most of the big sector and style factor allocations right.
This #GrowthAccelerating Trend Explains...
... why the Nasdaq hit an all-time high yesterday.
... why S&P 500 sectors, like Technology (XLK) and Healthcare (XLV), are leading the index year-to-date.
... and why we're seeing all-time highs in the stock markets of emerging market capital goods manufacturing countries like South Korea (EWY). These countries benefit from economic-related U.S. demand.
A quick note on inflation
The Producer Price Index just hit a 68 month high of +2.6% year-over-year. (This is a short-term reflation headfake that we highlighted in our recent 4Q 2017 Macro Themes presentation.)
ATTN: OIL INVESTORS... YOU Need to Understand This
As Senior Energy Policy analyst Joe McMonigle points out in the video below Iran has added 1 million barrels of oil per day since sanctions were lifted as part of the Iran nuclear deal negotiated during the Obama administration. Brand-new U.S. sanctions on Iran could cripple this supply and push oil prices up.
Want to better understand the big picture macro market developments? Sign up for more information about our soon to be released weekly newsletter Market Edges.
