McCullough: Alright Financials. If you’ve liked the Financials, your performance has really sucked this year. You know that. You should not be buying the Financials when bond yields are falling. You certainly shouldn’t be buying the Financials in the 4th Quadrant (i.e. when growth and inflation slows in our Growth, Inflation, Policy model).
So the news is Mr. Buffett has bought some JP Morgan (JPM).
JPMorgan is the #6 weight in the Momentum (MTUM) ETF. This is not a value stock yet. This is a momentum stock and it looks like hell.
Now, why does that matter? We think U.S. growth and inflation slows. That’s called #Quad4. #Quad4 is where the most amount of people get plowed. But if you're long the dollar and low beta, defensives in #Quad4 and you're short momentum, growth and Technology stocks, you crush it.
For us, it's not a question of what happens in #Quad4. Those are historical facts. The question is whether or not we're in #Quad4. So what do we do? Every day we get up, put two feet on the floor and the data gives us a refresh on that. We get an opportunity to update our process and update our premise. Every data point we've had so far in the fourth quarter has been #Quad4 data.