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Editor's Note: Below is a brief excerpt from today's Early Look written each morning by Hedgeye CEO Keith McCullough. Click here to get a free month of the Early Look.

This is What It Sounds Like When (Fed) Doves Cry - yellen dove

For the last 3-6 months, US stocks have loved the Dovish Fed, Down Dollar moves (the USD has a trending 90-120 day inverse-correlation to the SP500 of -0.80), but they did not last week:

  1. Nasdaq led the major US Equity Index pullbacks, closing -1.2% to +18.2% YTD
  2. The Financials laden Russell 2000 continued to lag, closing down -1.0% at +3.1% YTD
  3. SP500 corrected -0.6% on the week to +9.9% YTD

In other words, the “Lower-Beta” Style Factor out-performed last week (SP500 has a lower beta than the Russell, for example) and you can see that’s been consistent within the SP500 for the past 1-3 months in addition to the YTD:

A) High Beta was down -0.5% last week, is -2.2% in the last month, and is only +6.8% YTD
B) Low Beta was +0.7% in a down tape last week, is +0.7% in the last month, and is +10.7% YTD
*Mean performance of Top Quintile vs. Bottom Quintile of SP500 companies

This is What It Sounds Like When (Fed) Doves Cry - 09.11.17 EL Chart