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Below is a brief excerpt transcribed from Monday's edition of The Macro Show hosted by Hedgeye CEO Keith McCullough.

McCullough: Don't Trust Central Planners... Trust This Volatility Signal - 3 23 2020 11 45 15 AM

Lets talk volatility.

I don’t particularly care what a central planner or Mnuchin has to tell me is going to happen next because I won’t believe them. I’m going to believe my signal.

Don’t forget that coming into this morning we’re going to get another implied volatility discount. The last five implied volatility discounts that we’ve had (all this past month) have all been absolute sell signals.

I haven’t shorted the SPY yet, but I will if we get it off at the right spot. Within the Risk Range we have plenty of upside, but you still have a lot more downside in my probable range as you go throughout all of this.

Think about this in the terms of where the implied volatility discount was on Friday. It got to -19% and there were a couple of reasons for that.

  1. There were option expiration's and
  2. People were hoping for this congressional bailout package earlier Friday morning (we’ll see how that goes today).

We deal with this within the risk range. Volatility on the low end was 45.86 and I still have the high end of the range on front month VIX going to 91.17.

What could take you there is after the Fed gasses all options. They have basically been calling for unlimited QE. They’ve tried that in Japan by the way and it didn’t work.

Don’t panic and pray. Get a process.

McCullough: Don't Trust Central Planners... Trust This Volatility Signal - 3 23 2020 11 47 16 AM