• Global ‘Black Hole’ Risk Rising: A Discussion With Danielle DiMartino Booth

    Former Fed advisor Danielle DiMartino Booth will discuss key economic developments and the outlook for Fed rate cuts with Hedgeye CEO Keith McCullough.

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by CEO Keith McCullough. Click here to learn more about the Early Look.

Market History: Here's What Happens to Earnings When The Economy Slows - Earnings cartoon 11.03.2015

How many expert stock pickers of the FAANG and smid-cap cloud cyclical peak know what happened to what used to be called the cloud (the internet) stocks as The Economic Cycle peaked at +5.3% year-over-year GDP growth in Q2 of 2000?

Here’s a quick historical rewind on both peak GDP vs. “it’s different this time” Tech profits back then:

A) Year-over-year US GDP Growth:

  1. Q2 of 2000 = +5.3%
  2. Q3 of 2000 = +4.1%
  3. Q4 of 2000 = +3.0%
  4. Q1 of 2001 = +2.3%
  5. Q2 of 2001 = +1.1%

*note, from #PeakCycle in Q2 2000, every quarter GDP slowed

B) Year-over-year SP500 Tech Earnings Growth:

  1. Q2 of 2000 = +44%
  2. Q3 of 2000 = +40%
  3. Q4 of 2000 = +9%
  4. Q1 of 2001 = -32%
  5. Q2 of 2001 = -56%

*note, from #PeakCycle what EPS growth did as GDP slowed

Market History: Here's What Happens to Earnings When The Economy Slows - Chart of the Day

Market History: Here's What Happens to Earnings When The Economy Slows - early look