• HEDGEYE’S MARKET BRIEF
    Our FREE Investing Newsletter
    Get Exclusive Summer Sale Discounts

    By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails. Not available for current subscribers to that product. Use of Hedgeye and any other products available through hedgeye.com are subject to our Terms Of Service and Privacy Policy New users only.

Editor's Note: Below is a brief excerpt from Market Edges (our weekly Macro newsletter of investable insights). Click here to learn more about Market Edges.

It's Official: 8 Straight Quarters of GDP Accelerating - 02.06.2018 bears and bulls cartoon

On Friday, 2Q 2018 U.S. GDP accelerated 20 basis points to 2.8% year-over-year. This marked the 8th straight quarter growth, the longest streak in U.S. history.

(Note: The headline GDP number, popularly quoted by the mainstream media, was 4.1% quarter-over-quarter SAAR, a wonky and widely-divergent metric each quarter. We closely watch the year-over-year metric because it more accurately predicts future market returns.)

It's Official: 8 Straight Quarters of GDP Accelerating - gdp2

Here's the key takeway from Hedgeye CEO Keith McCullough:

"After the 8th consecutive (new record) year-over-year acceleration in U.S. GDP to 2.8% in 2Q 2018, some of your government guys are calling this “sustainable. Our preliminary headline now-casts for Q3 2018 is 2.34% and Q4 2018 is 1.68%, so it won’t appear to be sustainable if we are right. Growth, as a U.S. Style Factor, was down both relative and absolute last week too."

In other words, the market has been pricing in a 2-year cycle high in US GDP growth, for … 2 years! 

As you can see in the chart below, this is the longest streak of U.S. #GrowthAccelerating in history. U.S. GDP has now accelerated (on a year-over-year basis) for eight straight quarters. Remember, it's the slope of the line that matters in macro. This is not where you start to get bullish on growth.

It's Official: 8 Straight Quarters of GDP Accelerating - gdp1

It's Official: 8 Straight Quarters of GDP Accelerating - market edges