KEITH'S CHART OF THE DAY: So What Am I Going to Do From Here? (Asset Allocation)

Editor's Note: This is a special excerpt from Hedgeye CEO Keith McCullough's morning strategy note to customers this morning. If you'd like to leave the "excerpt scraps" behind, upgrade your market game, and become a full-fledged subscriber click here.


KEITH'S CHART OF THE DAY: So What Am I Going to Do From Here? (Asset Allocation) - z chart DAY


So what am I going to do from here? Here are my thoughts, from an asset allocation perspective:

  1. CASH – I am going to raise cash to 52% (love selling on green, buying/covering on red)
  2. US EQUITIES – keeping my net position (+4%) low, and my Style Factor setups the same – long LOW BETA; Short HIGH BETA; LONG Healthcare, REITS, Consumer Staples; SHORT Cyclicals and Reflation sectors
  3. INT’L EQUITIES – we’ve been out of European Equities since April so nothing do to there (not buying them) as #EuropeSlowing remains the tail wagging the dog; still like Japanese Stocks, but only on oversold days
  4. COMMODITIES – after being net LONG them for part (not all – didn’t nail that) of the reflation trade in Q2, all we’ve signaled is sell those in Q3, and we’ll keep doing so as #StrongDollar’s long-term bullish TAIL continues to wag that #Deflation dog
  5. FIXED INCOME – still The Treasuries Bull, and won’t apologize for that (was The Bear in 2013 and have been bullish since early 2014 – like any long-term investor, I’m staying with slower-for-longer); Short Junk + Credit Risk; Long Liquidity
  6. FX – probably the best place to be incrementally allocating right now – buying US Dollars on all pullbacks (selling commodities and commodity linked stocks/bonds/countries, on centrally-planned ramps, bounces, etc.)


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