Last week was a wake-up call for many investors.
Inflation is re-accelerating, and the markets had no choice but to face it. If you’ve been following Hedgeye, you knew this was coming. Now, it's time to adjust.
What you’re about to read below is a very small glimpse of the in-depth, data-driven, and professionally crafted research that our subscribers rely on to stay ahead of the markets.
Top 3 Trends:
1. High Yield (HYG): Time to Buy in Quad 2
With inflation back on the rise, we’re seeing a buying opportunity in High Yield (HYG). Last week’s correction was all about rates, but credit spreads are tight, and we’re bullish on HYG in this environment. The risk/reward here is solid.
2. Bitcoin: New All-Time Highs
Bitcoin is on fire, hitting new cycle highs. Our quantitative signals suggest more all-time highs ahead. This bullish momentum is spreading to crypto-related stocks.
We’re staying long and loving it. If you want to ride this bull market and know when it’s time to pivot, try Bitcoin Trend Tracker!
3. SMALL CAP STOCKS: after a Bearish Week, OPPORTUNITIES AHEAD
Small-cap stocks had a rough week, down over 2%. While the ETFs may be weak in the short-term, focus on handpicked small-cap stocks for the real gains. To get access to Hedgeye's highest-conviction stock picks from our analyst team, handpicked by our Founder/CEO Keith McCullough, try Investing Ideas.
The Big Picture: Inflation is Re-Accelerating
The Commodities Market and our Inflation Nowcast told us this was coming. The CRB Index shot up 2.7% last week, hitting new cycle highs. Oil, corn, natural gas, and live cattle all saw price hikes. This is the third straight month of inflation pressure—and it’s only going to get more intense.
Bond Yields on the Rise
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2-year UST Yield: +15bps to 4.24%
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10-year UST Yield: +25bps to 4.40%
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30-year UST Yield: +28bps to 4.61%
If you’re still holding long-term treasuries or the 60/40 portfolio, it’s time to rethink things.
Buy/Sell Recommendations:
Buy: High Yield Bonds & Bitcoin
With inflation accelerating, high-yield bonds and Bitcoin are still among our top picks. Both have historically outperformed in this environment.
Sell: Defensive Sectors
With the shift into Quad 2 (inflation & growth accelerating), sectors like utilities and healthcare, which are more defensive, tend to underperform. Our data-driven process moved subscribers out of these to asset classes to ETFs that are more suited to the current economic environment.
Fact of the Day: $4 Trillion Options Expiration
This week, $4 trillion in S&P 500 options will expire—one of the largest expirations on record! 0DTE options now make up 47% of SPX volume (up from 5% in 2016), so expect some major market moves. Buckle up!
Take Action:
Don’t wait for consensus—be ahead of the curve. Try Hedgeye's Core Macro research package!
