Q: What's winning in 2017?
A: Long U.S. economic growth and short commodities (as inflation falls).
Year-to-date performance below:
- Nasdaq (QQQ): +16.8%
- Consumer Discretionary (XLY): +11.2%
- Metals and Mining (XME): -5.6%
- Energy (XLE): -9.6%
Q: Will this dynamic continue? Can we head higher from here?
A: Maybe not in the immediate-term. As Hedgeye CEO Keith McCullough points out in today's Early Look, a range of asset classes including the S&P 500 are overbought currently. But over the longer-term we're super bullish.
The Nasdaq hit an all-time closing high for the fourth straight day yesterday. Here are a few questions to think about as to whether stocks can head higher from here:
- Why can’t US jobs and consumption growth accelerate in Q2? It can.
- Why can’t US profits continue to accelerate into the end of this Earnings Season and into the next? It can.
- Why can’t Reflation’s Rollover ensure that the GDP Deflator falls and real GDP rises? It can.
We're sticking with our call that stocks can head higher as the U.S. economy heats up and inflation slows.
