June delivered powerful gains as markets priced in what we call #Quad2 – a regime where growth accelerates alongside rising inflation. Why should you care? Because understanding which Quad we’re in tells you which assets are likely to perform well (or poorly).
With month-end here, it’s the perfect time to prepare for July’s shift towards #Quad3, where growth slows but inflation stays sticky. That’s a very different setup for your portfolio.
1. US Dollar (USD) – Why It Matters
When the dollar weakens, stocks usually rise. Why? Because many global assets are priced in dollars. When the USD weakens, prices adjust higher to keep up.
This morning, the US Dollar remains in a bearish TREND with lower-cycle-lows still intact. Our correlation signal shows a -0.83 inverse correlation to SPY, meaning that as the dollar falls, US equities rise in tandem.
Looking ahead, this weakening dollar sets up the next macro regime: #Quad3 Stagflation, where growth slows but inflation stays sticky.
The USD remains our largest Short Position until the Signal changes.
2. QQQ – Big Tech’s Strength Continues
The Nasdaq (QQQ) has now closed four straight days at new all-time highs, and our Risk Range™ Signals continue to point towards even higher highs ahead.
In a #Quad2 environment, where economic growth accelerates alongside rising inflation expectations, Large Cap Growth stocks like tech tend to lead the market.
As we look ahead to Q3, the economy is shifting into #Quad3 in July – a regime of slower growth with persistent inflation. Historically, large cap tech remains resilient in this setup.
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"S&P 500, many many times, has made all-time highs in Quad 3." —Keith McCullough on the The Macro Show, 6.30.25 |
The key takeaway is that being long Large Cap US Growth continues to be a Core Asset Allocation within our macro framework.
3. VIX – Understanding Market Flows
You often hear us talk about “Flows” at Hedgeye. These flows refer to the movement of capital by large funds, pensions, institutions, and systematic trading strategies. They have the power to drive significant market moves, far beyond what earnings reports or news headlines typically cause.
At the moment, 3-month Realized Volatility (RVOL) for the S&P 500 is resetting as markets work through the elevated volatility that came with April’s #Quad4 conditions.
Alongside this, our partners at Tier1 Alpha are tracking upwards of $100 billion in bullish flows entering the market. This influx of capital is a major reason why stocks with Bullish TREND Signals, such as NVDA and AMZN, continue to ramp higher. These moves aren’t just about individual stock picks – they are expressions of larger Macro Signals playing out through specific names.
Join Us For Our Q3 2025 Macro Themes Webcast
Join us this Tuesday, July 1st at 11:00am ET as Hedgeye CEO Keith McCullough presents our flagship Q3 2025 Macro Themes.
Keith will walk investors through a deep slide deck explaining the three major themes we believe will drive returns in the months ahead—and how to capitalize on them over multiple durations: Trade (immediate-term), Trend (3+ months), and Tail (longer-term).
Here’s what we’re covering in Q3:
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Inflation’s Re-Acceleration (USA)
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Global #Quad2 Remains
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Policy Impact (Tariffs, Tax Cuts, Stablecoins)
WEBCAST DETAILS
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Tuesday, July 1st, 2025 at 11:00AM ET
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Available Live & On-Demand
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Speakers:
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Keith McCullough: Founder and CEO
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Josh Steiner: Financials and Macro Analyst
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Not sure if you have access? Schedule A Walkthrough
