Hedgeye CEO Keith McCullough recently sat down with David Lin, host of The David Lin Report. Keith shared actionable insights on the most critical market trends, from DeepSeek and NVDA to Bitcoin (BTC) and the top Trump Trades.
Watch the full 27-minute interview here.
DeepSeek and the Tech Sell-Off
DeepSeek’s ability to develop a world-class AI model for just $6 million (reportedly) has changed the game. It challenges the assumption that cutting-edge AI development requires massive investments in high-end Nvidia chips. The market is reacting accordingly.
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"DeepSeek, they basically broke AI. It’s not that AI is broken—it’s just that it got a hell of a lot cheaper, which means margins are lower. So that’s a big deal." |
- AI development just became cheaper and more efficient.
- Nvidia and other high-margin tech names are feeling the impact.
- Markets are repricing expectations for AI’s future cost structure.
Fed Monetary Policy
The Federal Reserve is behind the curve—again. Investors expecting immediate rate cuts are misreading the data. The Fed is reacting, not leading, and Keith sees no reason for an imminent pivot.
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"The Fed is always late. They’re always looking at lagging indicators, and they’re reacting to what’s already happened in the market." |
- Markets move first, the Fed follows.
- Inflation and growth data will dictate the Fed’s moves—not market expectations.
- A rate cut cycle is not a certainty in 2025.
Bank of Japan
The Bank of Japan (BOJ) is shifting policy, and that matters for global markets. Higher Japanese yields make the yen more attractive, pulling capital away from U.S. assets.
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"The BOJ is just getting started. And that’s a major problem for U.S. equity markets because it competes with where capital flows." |
- A stronger yen means weaker global demand for U.S. stocks and bonds.
- Rising Japanese rates could force portfolio reallocations away from U.S. assets.
Growth Trades
Keith does not buy the growth-at-any-price trade. The market is shifting, and blindly buying high-multiple stocks is a losing strategy.
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"People just assume the growth trade never goes away. That’s not how cycles work." |
- Quad 2 favors selective growth stocks, not broad-based growth chasing.
- Tech leadership is being challenged by market structure changes.
Trump Trades
With Trump back in the White House, markets are positioning accordingly. Key sectors like energy, financials, and defense stand to benefit, while rate-sensitive sectors face headwinds.
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"The Trump Trade is very real. There are sectors that will do well, and others that will struggle. It’s about understanding the setup." |
- Deregulation benefits energy and financials.
- Rate-sensitive sectors could struggle in a higher-rate environment.
Yield Curve Steepening
The yield curve is steepening, signaling inflation expectations and potential growth acceleration. This shifts market dynamics in a meaningful way.
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"A steeper yield curve is the market’s way of saying We’re not in a recession." |
- Bond market signals are contradicting the soft-landing narrative.
- Quad 2 market conditions support a steeper curve.
US Dollar vs. Yen vs. Euro
The U.S. dollar remains a dominant force, but global currency shifts—including the yen and euro—are changing capital flows.
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"It’s all relative. If the yen goes up, something else has to go down." |
- Currency trends impact asset flows and global market positioning. McCullough remained long U.S. dollars (UUP), near his minimum position size.
- Japan’s policy shift is putting pressure on U.S. assets.
‘Darkest Hour’ for Emerging Markets
Emerging markets are getting crushed. A strong U.S. dollar, rising interest rates, and weak capital flows are creating one of the worst setups in years.
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"It’s the darkest hour for emerging markets. And it can always get darker." |
- A rising dollar pressures emerging economies.
- Higher global rates hurt capital flows to emerging markets.
Bitcoin and Gold
Keith sees Bitcoin (BTC) and Gold (GLD) as part of a bigger macro play. Both assets perform well in specific economic conditions, but each requires proper timing.
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"Gold is a currency. Bitcoin is something else. And the market treats them differently depending on the setup." |
- Gold thrives in stagflationary and inflationary conditions.
- Bitcoin trades more like a risk asset, with volatility swings.
BOTTOM LINE
McCullough’s message is clear: Markets move in cycles, and the key to winning is positioning ahead of those cycles.
You can download Keith's new, free 52-page eBook "Master The Market" by clicking below.
