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Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.

CHART OF THE DAY: Tune Out Non-Data-Driven Opinions  - z 05.25.2017 things are good cartoon

Since so many people don’t look at “the market” the way we do, they didn’t see what FX and RATES markets in particular were seeing prior to the last 3 trading days.

Many US “stock market” only folk didn’t quite look at developing risks at all until the Dow was down 1,000 points!

But isolating that part of that Global Macro Market’s positioning revealed absolute complacency by Dow Bro (in points!) Perma Bulls (and capitulation by the bears) between FEB 13th and FEB 18th when:

  1. SPY’s implied volatility dropped to a -6% to -8% DISCOUNT vs. 30-day realized volatility and …
  2. Tech’s (XLK) implied volatility collapsed to a -8 to -11% DISCOUNT vs. 30-day realized

Be serious. Does the dude or dudette who bought TSLA in that week of fun and stock chart chasing games have any idea where futures & options markets are pricing in “risk”? Would they know what an implied vol discount is, never mind what it implies?

A “market” of “stocks” with an over-supply of non-data-driven opinions provides Global Macro Market pros a huge edge.

CHART OF THE DAY: Tune Out Non-Data-Driven Opinions  - Chart of the Day