Editor's Note: Below is a chart and excerpt from today's Early Look written by CEO Keith McCullough.
What a lot of people want is certainty. I don’t sell that. I sell probabilities. What was the most probable outcome for Q4 of 2018? A: Quad 4. What do I think happens next? A: Quad 4.
Still that isn’t enough for some people. What really matters to them are market “levels,” whereas what matters most to me are Rates of Change (ROC). If growth and inflation start to slow faster and market volatility breaks out to higher levels in kind, I see more risk.
If growth and inflation doesn’t slow, the probable outcome (and commensurate market volatility) changes in kind.
Why Rate of Change instead of “levels”?
On slide 11 of the process component of our Q4 Macro Themes Deck, using the SP500’s returns as a case study, we review what we’ve observed via historical back-test vs. what many on the Old Wall believe to be true: