[COMPLIMENTARY] Top 3 Things | China / Oil / VIX

FROM THE DESK

After another fun no-volume summer Friday US FOMO ramp, it’s a Global #Quad4 Recession (in demand) morning…

1. CHINA – when the Chinese guys (they’re all guys) withdrew their GDP guidance a few weeks ago, they weren’t lying – this must be ugly with another across-the-board #slowing of July economic data (Industrial Production, Retail Sales, etc.) overnight (despite easing base effects) = our #Quad4 Commodity Shorts working again (Copper down another -3.1%, Corn -2.5%, Oil -4.4%, etc.).
2. OIL – getting #Quad4’d this morning with WTI down another -4.4%, taking its crash to -28.4% from its Cycle Peak. Consensus is chasing a hopeful narrative that US Consumption isn’t going to keep #slowing with major cost centers of inflation (like rent) sticking CPI > 8% for months from here – there is no “Fed Pivot” in the UST 2yr Yield up at 3.25% with the curve inverted by -42bps on 10s/2s either.
3. VIX – they got front-month VIX to close under 20 with Total US Equity Volume DOWN -18% day-over-day on a summer Friday with Goldman’s “Most Short Basket” +21% in August alone. “They” being those who need SPY to hold above certain strikes pre this week’s Options Expiration. Short Covering since July 15^th has been in the Top 3 Squeezes of the last decade! That’s not The Cycle. That’s capitulation.

OUR LEVELS

Immediate-term @Hedgeye Risk Ranges: SP500 = 4016-4299; UST 10yr Yield = 2.65-2.95%

KM   

Keith R. McCullough
Chief Executive Officer