CHART OF THE DAY: High-Beta Cyclicals In Quad 4

Can High Yield Spreads widen to 600-800 “over”? Obviously, yes. This Credit move at this stage of The Cycle is not different this time, especially as US Corporate Profit Growth continues to slow to NEGATIVE on a year-over-year basis.

That’s why other valuable assets to a Full Investing Cycle #Quad4 portfolio are:

1. QUALITY (balance sheets)
2. LIQUIDITY (large cap)
3. LOW BETA

You’ll see those types of portfolios crush LEVERED SMALL CAP portfolios with HIGH BETAs again today. HIGH BETA, as a Factor Exposure, lost -7.0% of its value with the SP500 “up” +0.6% last week (with Utes and Staples carrying the “up” part of the move).

If I was selling all bounces in Tech, High Beta, etc. at VIX > 31, I think you get the drill at VIX > 41.