Mr. Market Morphs Into Mike Tyson (What Comes Next)

Mr. Market is delivering a serious beat down to U.S. stocks.

• S&P 500: -9%

• Nasdaq: -12%

• Russell 2000: -14%

(Performance is year-to-date peak to present)

In other words, our Macro team’s prescient warning on #Quad4 in Q4 is working out even better than we had anticipated.

It's not just the U.S.

Here's a look at the Quad 4 Hurricane of risk in Global Equity Markets:

1. Europe (EuroStoxx600) was down another -2.5% last week to -9.5% YTD and remains Bearish TREND @Hedgeye
2. Emerging Markets (MSCI) were down another -2.3% last week to -18.1% YTD and remain Bearish TREND @Hedgeye
3. Japanese Stocks (Nikkei) were down -6.0% last week to -6.9% YTD and remain Bearish TREND @Hedgeye
4. Canadian Stocks (TSX) were down -3.8% last week to -8.1% YTD and remain Bearish TREND @Hedgeye
5. Turkish Stocks were down -6.1% last week taking their crash to -21.5% YTD and remain Bearish TREND @Hedgeye

Q: What the heck is #Quad4?

A: Quad4 is the term we use to describe when U.S. growth and inflation are slowing at the same time in rate of change terms. These two factors – growth and inflation – are the two most consequential things to watch when forecasting future financial market returns.

As Hedgeye CEO Keith McCullough recently explained on The Macro Show: “I'd suggest you get the understanding of what helped us make that call. So again, it's the rate of change in growth and inflation. Those are the two most important factors that nobody talks about on Old Wall TV. We have growth and inflation decelerating in rate of change terms.”

Historically, #Quad4 has been negative for U.S. equities and credit. We pointed this out to our subscribers in late September before the market storm hit.

What comes next?

Sign up for Hedgeye's FREE Market Brief to see.