Dear Investor,
The Fed is finally admitting what Hedgeye has been warning about for many (many!) months: inflation isn’t dead—it’s sticky, and it’s rising.
Hedgeye’s data-driven Macro model is also forecasting accelerating economic growth in the months ahead.
When inflation and growth both accelerate, we call that #Quad2—the most bullish economic environment for stocks.
Hedgeye was built to help investors stay ahead of big market trends. That’s why we’re hosting our highly anticipated Q1 2025 Macro Themes on Wednesday, January 8th. This quarterly event has become a staple for some of the smartest and most successful institutional investors in the world.
During this exclusive, deep-dive presentation, our CEO Keith McCullough will cover the most important market and economic trends we believe will drive portfolio returns in the months ahead.
Here's a taste.
Top 3 Macro Trends
1. USA’s #Quad2: Are You Ready to Capitalize on Accelerating Growth and Inflation?
Quad2 is when both growth and inflation accelerate, creating a powerful tailwind for certain investments. For disciplined investors, this is an opportunity to capture outsized returns by leaning into the assets that have historically outperformed in this environment.
- Best Asset Classes: Commodities, equities, credit, FX
- Best Sectors: Tech, consumer discretionary, industrials, energy, financials
- Best Style Factors: Growth, high beta, small caps, momentum
2. Top Trump Trades: How Will Policy Shifts Impact the Markets?
President Trump returns to office this month, and his policy changes will create winners and losers.
Here’s what we’re watching:
- Policy Changes: How tax cuts, deregulation, immigration rules, and trade policies will affect the U.S. and global economy.
- Market Impact: How these changes could influence the Dollar and long-term bonds.
- Sector Reactions: How rising interest rates may impact Utilities, Real Estate, Staples, and Healthcare.
3. Country and Currency Shorts: Assets to Avoid in Risky Markets
Hedgeye’s analysis identifies risks in several global markets:
- South Korea: Weak growth and political instability make the won and equities vulnerable.
- Mexico: Debt issues and trade concerns weigh on the peso.
- Brazil: Rising inflation and slowing growth (Quad3) spell trouble for the real and local stocks.
Buy/Sell Recommendations:
What to Buy:
- U.S. Stocks: Capitalize on “American Exceptionalism,” with the U.S. economy showing relative strength compared to global peers. This supports a tactical overweight in U.S. equities versus international markets.
- Inflation Beneficiaries—like Natural Gas: Keith McCullough added Natural Gas (UNG) to his long-only ETF portfolio on Friday. Pro Risk Manager subscribers who acted on Keith’s call have seen UNG rise more than 8% by noon on Monday (1/6/2025)*!
What to Sell:
- Traditional Inflation Hedges: While inflation is sticky, avoid the inflation hedging bias that overallocates to these assets. Instead, focus on higher-return opportunities in growth-oriented sectors.
- Overexposure to Rate-Sensitive Assets: Avoid sectors and asset classes disproportionately sensitive to rising interest rates, such as fixed-income-heavy plays or overleveraged equities.
Balance broad exposure with strategic protection against market beta risks, particularly as monthly Quad oscillations (Quad2 ↔ Quad3) create volatility.
Fact of the Day: Retirement readiness in the U.S. is looking bleak:
- 36% of adults 65+ have $50K or less in their 401(k).
- 58% of retirees have $100K or less saved.
Low retirement savings across all age groups are being crushed by inflation, debt, and lack of planning.
Final Note:
Navigating today’s volatile macro environment requires more than just headlines—it demands a disciplined, data-driven process. That’s what we do every morning on The Macro Show.
From dissecting the latest Quad shifts to breaking down market implications sector by sector, Hedgeye’s team equips you with the tools to make proactive investment decisions.
Ready to take your macro game to the next level? Subscribe to The Macro Show today and join a community of investors who are mastering the markets—one risk-managed decision at a time.
Click here to subscribe and gain the edge you deserve.
