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Editor's Note: Below is a brief excerpt from today's Early Look written by Senior Macro analyst Darius Dale. Click here to learn more about the Early Look. 

What's Driving Our Dour U.S. Growth Outlook  - Chart of the Day 4 13 18

In conjunction with the bounce [to lower-highs] in U.S. equities, we’ve been getting a lot of questions about what’s driving our dour U.S. growth outlook (in RoC terms) for 2H18 and our response is as simple as the unorthodox forecasting processes underpinning it:

  1. Steepening base effects;
  2. Key high-frequency soft data – which led on the way up – is rolling over on a trending basis; and
  3. The corporate profit outlook is more challenging than consensus believes due to rising wage pressures and traversing peak rates of contribution to sales and EPS growth from a falling U.S. dollar. Recall that corporate profit growth leads hiring and capex.

What's Driving Our Dour U.S. Growth Outlook  - early look