In his morning macro presentation Hedgeye’s Keith McCullough was singing our tune as he fielded the following question:
Note: Hedgeye’s macro process breaks the economic cycle into 4 quadrants, Quad 4 being deep recession. It essentially paints the same picture as does our current PWA Macro Index score of -67.
McCullough’s answer:
“Because we still have remnants of the U.S. stock market bubble, it’s (being the current bear market) only two months old don’t forget. For those of you that remember trading in the year 2000, or in the year 2007 into ’08, you could’ve asked that question every single day. You’d be like “why is tech not down if the future is going to be 2001 and 2002?” Tech ended up going down 50 to 60% from there, post the bounce. It’s just what happens, people still believe, need to believe, have to believe, want to believe in the prior bubble that they owned.”
“There’s a huge crowding factor associated obviously with stories; whether it’s Beyond Meat or Zoom, there’s all these super-cool things. That’s what people do, they chase charts and they love their stocks. We kinda make fun of that a little bit. That doesn’t work as you go further and deeper into 30 million unemployed.”