3 Things Could Trigger Massive Market Volatility

In this excerpt from The Macro Show today, Hedgeye CEO Keith McCullough explains why the decline in stock market volatility this week will prove short-lived. He discusses three catalysts that could cause a massive spike in the VIX volatility index.


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Algiers Freeze Plan On The Rocks

Takeaway: Saudi Arabia wanting Iran to freeze production is nothing new. Iran saying no to freeze also not new.

Last weekend OPEC Secretary General Mohammed Barkindo announced that there would be only consultations, but no freeze decision at the upcoming Algeria meeting. On Thursday, it was revealed that mid-level officials from Saudi Arabia and Iran were holding talks in Vienna in preparation for Algiers, leading to speculation about an impending freeze deal. But on Friday “sources” speaking for Iran and Saudi Arabia both said no deal.


In our notes on the topic, we have stressed two fundamental positions that have not changed: Saudi Arabia wants Iran to freeze production & Iran says it cannot freeze so soon after nuclear sanctions were lifted. Thus it’s not hard to see why the push for a September freeze is now on ice.

Algiers Freeze Plan On The Rocks - Iran.Saudi.oil cartoon 01.22.2016

Reuters also reported late Thursday that Saudi Arabia had offered to share in a combined one million barrels a day production cut with Kuwait, UAE and Qatar in exchange for an Iran freeze. We continue to think a change in production policy now is too soon for the Saudi market share strategy as it would boost US production. So if the Reuters report is accurate, we view it more as a public relations move - the Saudi’s knew Iran could not agree and now Iran looks like the uncooperative party within OPEC. Cue the Russians to say asking Iran to freeze is unfair.


As a result, we think a September production freeze is off the table. To reset expectations, Secretary General Barkindo might want to repeat his announcement from last weekend that Algiers will be about consultations not decisions. 


*This is an excerpt from a longer note for institutional subscribers. For more information email

5 Things I'm Doing This Morning

Editor's Note: This is a complimentary excerpt from today's Early Look. Click here to subscribe for $1 a day.


5 Things I'm Doing This Morning - z cash


Back to what to do this morning:


  1. After, as they say on the Old Wall, “putting money to work” getting longer of duration in SEP, I say raise some CASH
  2. I’m going to raise my CASH position in the Hedgeye Asset Allocation Model by 31% this morning (rate of change!)
  3. Short some cyclicals and industrials in preparation for the #DoubleDipRecession in those sectors
  4. In Real-Time Alerts I’m re-shorting Wabtec (WAB) and shorting Industrials (XLI) for the 1st time in a long time
  5. And sell some super long-term bonds (ZROZ) and Gold (GLD) as they tapped the top-end of their range yesterday


I know, going both ways (within the risk range) is quite liberating. It used to be orthodox to “buy low and sell high.” Somewhere amidst the bull though, that discipline has been exchanged for chart chasing. You know, bro - buy high, and hope to sell higher…


I don’t do that.

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Our Top Macro Call Is More Than Double The S&P 500's Return Year-To-Date

Takeaway: Long Bonds (TLT) are beating the return of the S&P 500 by more than 7% year-to-date.

That's right... 


Fed fades, rates fall, stocks/bonds/commodities all ramp – so easy a #GrowthSlowing guy can do it!


The 10yr Treasury yield is all the way back down to 1.61% this morning (10s/2s back down to 84bps) – that’s 6x in 16 months that you had an outstanding buying opportunity in long-term bonds and/or stocks that look like bonds. Now we go back to no Fed to stress over as both the slowing economic data and Q3 earnings season take over.



 Editor's Note: The snippet above is from a note written by Hedgeye CEO Keith McCullough and sent to subscribers this morning. Click here to learn more.

Daily Market Data Dump: Friday

Takeaway: A closer look at global macro market developments.

Editor's Note: Below are complimentary charts highlighting global equity market developments, S&P 500 sector performance, volume on U.S. stock exchanges, rates and bond spreads, key currency crosses, and commodities. It's on the house. For more information on how Hedgeye can help you better understand the markets and economy (and stay ahead of consensus) check out our array of investing products




Daily Market Data Dump: Friday - equity markets


Daily Market Data Dump: Friday - sector performance


Daily Market Data Dump: Friday - volume


Daily Market Data Dump: Friday - rates and spreads


Daily Market Data Dump: Friday - currencies


Daily Market Data Dump: Friday - commodities

CHART OF THE DAY: Dispelling The Myths Of Consensus Orthodoxy

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.


"... ‘Oh, but I’m not buying Utilities, KM. My orthodox theory of finance says to buy “cheap” stocks and sell “expensive” ones.’ Ok, I hear you brother. But expensive just got more expensive and cheap just got cheaper (again).


That’s right too. For the month of SEP, where the call was to fade the rate hike fear:

  1. Utilities (XLU) are +3.55% for the month-to-date and now leading the league (again) at +17.8% YTD
  2. Financials (XLF) are down -2.32% for the month-to-date and still the cellar dweller at +0.67% YTD

Don’t be “up 0.67% YTD.” That is not cool."


CHART OF THE DAY: Dispelling The Myths Of Consensus Orthodoxy - 09.23.16 EL Chart

Early Look

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