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Editor's Note: Below is an excerpt and chart from this morning's Early Look market note. It was written by our U.S. Macro analyst Christian Drake.

I wanted to re-highlight the base effect dynamics for a couple reasons:

  1. It’s not our call that growth is at risk of imminent collapse.  We’re simply and proactively highlighting the impending 2nd derivative reality - a reality that may be increasingly relevant to asset prices if domestic growth accelerating does, indeed, peak in 1H18.  
  2. We got a sample of this dynamic in yesterday’s Durable and Capital Goods data for January.

The Data: 

  • Headline Durable Goods = -3.7% M/M and decelerating -440bps to +6.8% Y/Y
  • Durables Ex-Defense and Aircraft (i.e. the closest proxy for stuff actual households purchase) = -1.0% M/M and decelerating -200bps to +6.1% Y/Y

CHART OF THE DAY: U.S. Durable Goods - CoD1 Durables Ex Defense   Aircraft Comp