CHART OF THE DAY: "It's The [CYCLE], Stupid

Editor's Note: The chart and excerpt below are from today's Early Look which was written by Hedgeye Senior Macro Analyst Darius Dale. Click here if you would like to leave lousy, consensus research behind and up your market game with the fastest-growing Independent Research platform on 2.0.

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• Bayes factor (i.e. the base effect): Roughly two-thirds of the time, the second derivative of GDP in the forecast period carries the opposite sign of the second derivative of GDP in the comparative base period. Moreover, as the Chart of the Day below shows, there is exists a considerable degree of negative cointegration between the comparative base effect and the subsequent YoY growth rate. Translation: we have a reasonable basis for knowing which direction (up or down) to adjust the base rate.