***Below is a brief excerpt from this morning's Early Look by Hedgeye CEO Keith McCullough.
...Uh, maybe we should be long, “decoupling”? Nope. We’ll stick with the #Quad4 asset allocations, which should have you long low-beta and yield chasing sectors (short Commodities). Currently I like Healthcare (XLV), REITS (VNQ), and Utilities (XLU); not the following:
- Inflation expectations (5yr breakevens) dropped another -13bps = down -28 bps in the last month (1.42%)
- Energy (XLE) and Basic Material (XLB) stocks down -4.0% and -5.4% (-9.1-9.3% in the last month) respectively
- Industrial stocks (XLI) deflated another -3.7% to -6.5% YTD (down -4.5% month-over-month)
If you’re levered long to inflation expectations another way to look at your risk...