US-Israel Strike on Iran: What It Means for Global Markets & Oil Prices w/ Keith McCullough

Quick Overview

Keith McCullough advises that investors should not be scared by the current market volatility, as his firm's models suggest that the next quarter (Q2) will likely be a "Quad 4" environment (disinflation/decelerating growth), which historically favors long-term bonds and commodities like gold and silver over high-growth tech stocks like NVDA and MSFT.

Key Points: McCullough advises that the market reaction to geopolitical events (like the Israel-Iran conflict) is often front-running actual changes, with markets already pricing in certain outcomes. Hedgeye's model suggests Q2 will be a Quad 4 environment (decelerating growth and disinflation), which historically favors long-term bonds and commodities like gold and copper. He notes that tech stocks like NVDA and MSFT, which were previously leading, are now showing signs of deceleration in revenue growth, making them less attractive in a Quad 4 setup. McCullough explicitly states he is long 30-year Treasury bonds and short tech/crypto, believing this is the best macro environment for bonds. He considers the current narrative around AI breaking the moat of software companies to be a major problem, leading to increased volatility in those sectors. The 10-year Treasury yield breaking below December lows is a key signal supporting the bond trade, indicating the market expects the Fed to cut rates soon. The firm's specific signals have been accurate, leading them to be long long-term bonds and short specific high-growth/crypto assets.

Context: John Gillen of Milk Road Macro interviews Keith McCullough, founder and CEO of Hedgeye Risk Management, a firm providing real-time macro-economic and market analysis. The discussion centers on navigating the current volatile macroeconomic environment, particularly McCullough's firm's proprietary Quad models, which categorize economic regimes based on growth and inflation rates, and how these models inform their current asset allocation favoring bonds and commodities over high-flying tech stocks.