Below is a brief excerpt transcribed from Friday's edition of The Macro Show hosted by Hedgeye CEO Keith McCullough.
Let's talk about the VIX.
Only two days ago, an amazing but unsurprising thing happened. The bulls bought the damn dip (which was not a dip by the way).
We had an implied volatility discount just two days ago of -19% on SPYs. That implied an epic amount of complacency was baked into market expectations. As of last night's data, the implied volatility premium on SPY was still only 4%, with Tech still showing an implied volatility discount of -6%.
So when you wonder why futures are down 30, 40, 80, or 100 handles, it’s because Wall Street is still long.
At the end of the day, you’re not long. They’re wrong. And you continue to make money as a function of their positioning, never mind the economic quadrant that we’re in.
When you add up Quad 4, plus VIX greater than 31, implied volatility discounts, plus high yield spreads widening what do you get? You get what is technically known as a sh#t show.
