Earlier today we held a live webcast of our quarterly investment themes, which are three top-down catalysts our models indicate are increasingly likely to drive returns that our proprietary sentiment indicators suggest investors are not yet broadly positioned for. We are humbled by the record attendance, as well as the thoughtful feedback, and believe the presentation is worth your while to review as time permits.
CLICK HERE to access a replay of the webcast and the associated slide deck.
2Q19 Macro Themes:
USA: Three Quad 3’s | In the wake of a harrowing entry into Quad 4 in Q4 and the associated, proactively predictable monetary policy pivot, the multi-quarter rotation into domestic stagflationary conditions is set to begin. While Quad 4 and Quad 3 are both defined by slowing growth, a discrete and extended move into Quad 3 carries specific cross-asset and factor exposure implications. We’ll detail how to risk manage the traversal into Quad 3 and how to best be positioned for a protracted run in that particular regime.
Profit #Recession │ The confluence of accelerating, late-cycle wage inflation, ongoing deceleration economic growth both globally and domestically, as well as a fading fiscal impulse into peak earnings cycle comps and further, negative strong dollar translation effects are all set to conspire against peak corporate profitability as we move through 2019. We’ll discuss the implications for both equities and credit in the context of an investor consensus that has still not sufficiently discounted the increasingly acute risk to corporate profits in the US.
Long Ideas: Energy, EM, etc. | New Quad, Same Process. We’ll detail the factor-level, sector-level and global, cross-asset playbook for effectively risk managing local Quad 3 conditions amidst a prospective re-emergence of global divergences in 2H19.
As always, if you have any follow-up questions, please feel free to email the team.
Many thanks for continuing to support our business.
-The Hedgeye Macro Team