Watching the mainstream media's post-Fed meeting Q&A with newly-selected Fed chair Jerome Powell was enlightening. It illuminated a sad reality: News outlets are hyper-focused on politics, not the U.S. economy.
The questions ranged from the implications of President Trump's "trade war" tariffs to the impact of the GOP's tax plan (and the resulting debt). Of course, there were a few surface level inquiries about the pace of future rate hikes and the Fed's economic projections, also known as the "dot plot."
Any line of question that could be construed as relevant to investors fell short.
One journalist even asked about the Fed's 2020 economic projections. Powell's response was great...
What Did the Fed Have to Say About the U.S. Economy?
So here's some post-Fed Day analysis with investing implications.
Senior Macro analyst Darius Dale wrote the following in a note to subscribers earlier this morning:
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The FOMC members’ economic projections saw an increase in expectations for real GDP growth, to 2.7% in 2018 from 2.5% in the prior report; also up to 2.4% in 2019 vs 2.1% in the December release. The 2020 and longer-run projections were unchanged. There was a slight downgrade of the current economic assessment. Specifically, economic activity was characterized as rising at a “moderate” rate vs . a “solid” rate in December. |
And here's some real-time analysis via CEO Keith McCullough's Twitter feed yesterday.
OUR GDP ESTIMATES: IS U.S. GROWTH SLOWING?
The U.S. economy has rallied for six consecutive quarters now.
The best days may be behind us.
Since the U.S. economy bottomed (on a year-over-year basis) in 2Q 2016, our GDP estimates have been consistently higher than Wall Street’s forecasts. That’s changing.
"We've been super bullish because U.S. growth was accelerating,” McCullough says. “Now we’re getting less bullish because we’re starting to model U.S. growth slowing into the back half of 2018. But you have to be right on market timing."
Our GDP estimate of 2.64% year-over-year for 1Q 2018 implies a 7th consecutive quarter of U.S. #GrowthAccelerating. That implies 1.8% on a quarter-over-quarter SAAR basis. The Hedgeye forecast is now below Wall Street consensus. Bloomberg's consensus estimate is 2.8% year-over-year, or 2.5% QoQ SAAR.
“This is probably the biggest risk and it leads to all the other risks,” McCullough explained. “Growth slowing leads to more inflation slowing. It leads to the profit cycle slowing.”
Want to learn more about the other two market risks (besides our GDP estimates) that could crack this bull market? Here you go...
[WEBCAST] MCCULLOUGH: 3 MARKET RISKS I’M WATCHING CLOSELY
It’s been 9 years since this big bull market began.
The S&P 500 is up 305% since the March 2009 bottom—15% in the past year alone.
Our favorite pick over the past year (Technology) is up over 25% alone.
It won’t go on forever.
A number of imminent catalysts could crack this market.
Join Hedgeye CEO Keith McCullough for the no-punches-pulled, investing webcast above…
Keith discussed our evolving outlook for U.S. stocks, economy, corporate earnings, inflation and more.
Watch the replay above.
