• Avoid This ‘Bearish Black Hole’ → Get Our Favorite ETF Ideas

    We warned investors about a “black hole of risk.” It’s here. Prepare yourself for what comes next. Get our Macro team’s favorite ETF ideas (and risk management levels) with 30-days free of “ETF Pro Plus.”

Editor's Note: Below is a brief excerpt from today's edition of Market Edges, our weekly big picture Macro newsletter featuring investable market insights. Click here to learn more about Market Edges.

Are You Prepared For #Quad4? Short Small Caps & High Beta - 60B12435 450F 420D 9D9D ABCBAE570EE8

Are you prepared for the likely #Quad4 scare in 3Q 2019? You should be.

Last week Hedgeye CEO Keith McCullough hosted our Mega Market Trends investing webcast, a Hedgeye Risk Manager-exclusive event. During the webcast, McCullough outlined our U.S. economic outlook and market implications.

Reality check. The stock market is already trading like Quad 4 (i.e. an environment of U.S. growth and inflation slowing). Here's a quote from this morning's Early Look written by McCullough:

"In addition to being underweight and/or short SMALL CAP (down another -2.0% last week and down -7.7% for May to-date), you also want to be short HIGH BETA as a Factor Exposure in Quad 4."

We want you prepared for the developing Quad 4 market risk.

Digging still deeper into recent performance data.

  1. SP500 down -4.1% for May to-date with Tech leading Sector Style losers at -6.9%
  2. HIGH BETA (-8.6% in the last month) and SMALL CAP (-7.7%) Factor Exposures continue to get smoked

This is exactly what you'd expect to see in a #Quad4 market environment.

Are You Prepared For #Quad4? Short Small Caps & High Beta - style factors

Are You Prepared For #Quad4? Short Small Caps & High Beta - s p performance

Are You Prepared For #Quad4? Short Small Caps & High Beta - market edges