[COMPLIMENTARY] Top 3 Things | Rates / Earnings / Vol

10/21/22 08:30AM EDT

Editor's Note: Below is a complimentary "Top 3 Things" note from Hedgeye CEO Keith McCullough. This note goes out to Macro Show subscribers every morning before the 9am show. (Institutional investors receive it between 6:30-7am. To get on Keith's institutional distribution list email .) Today's Early Look will be sent separately. 

US stocks are down for 16 of the last 22 trading days as consensus keeps living in fear of short squeezes…

  1. RATES – exploding to the upside this morning on 2 major fronts: A) UK 10yr Yield +10bps (right off the low-end of my Risk Range Signal) is leading Bund (and European) Yields to new Cycle Highs… and B) UST 2s, 10s, 30s, all ramping to new Cycle Highs which is precisely why we aren’t long either Duration or Gold
  2. EARNINGS – if you think this morning’s #Quad4 in Q3 Crashes (TSLA, SNAP, THC, RHI, WHR, etc.) are nasty, just wait until you see what companies report in Q4! (as we lap the peak #Quad2 Cycle comps in NOV)… aggregate SPX earnings are running down -2% year-over-year (Old Wall had it +10% 10 months ago), and that’s going nowhere but lower
  3. VOLATILITY – big options expiration day in US Index Equity Options has your regular Vol Suppression by the 3 big dealers in play (then it goes away) – that’s a big reason why everything is trading nasty #Quad4 EX-FOMO-US-Equities (Dollar straight up, Rates Up, European Equities smoked, Crypto Crashing, etc). You should not be surprised if you see VIX 34 next week

Immediate-term @Hedgeye Risk Ranges: SP500 = 3; UST 10yr Yield = 3.80-4.28%

KM  

Keith R. McCullough
Chief Executive Officer

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