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 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.
- SP500 down -4.1% for May to-date with Tech leading Sector Style losers at -6.9%
- 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.