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And in case you weren’t sure, our Quad 4 in Q3 call is already impacting financial markets. What’s Quad 4? In our Growth, Inflation, Policy model, that means both U.S. growth and inflation slowing at the same time.
As Hedgeye CEO Keith McCullough explains in the clip above from The Macro Show a couple weeks ago, this shift to a Quad 4 market environment in the third quarter of 2019 helped investors nail the direction of bond yields, oil and commodities. All of these assets fall alongside the slowdown in growth and inflation.
“What you want to do is sell the thing – whatever it is – every time it bounces to lower highs. You had all these opportunities, then it crashes like the 10-year yield or commodity expectations like the CRB Index,” McCullough explains in the clip above.
“The number one thing to get right in terms of bond yields is the rate of change in growth and inflation expectations – that’s it.”
If you’ve been paying attention to three key charts in recent months, it would have been easier to see Quad 4 coming.
Watch the full clip above for more.
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