Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.
Despite the Fed trying to bailout bad decisions that asset allocators made buying super-late-cycle Credit (with US profits going to negative on a year-over-year basis), High Yield OAS Credit Spread continued to WIDEN +21 basis points last week to +942bps over.
And in US Equities, the worst places to have your capital remained HIGH BETA and/or SMALL CAP Factor exposures:
A) HIGH BETA US Equities dropped another -11.0% last week, crashing -42.4% in the last month alone
*Mean performance of Top Quintile vs. Bottom Quintile, SP500 Companies
That’s right. Write it down. You’d have to be up +67% (from Friday’s close) to get your money back to break-even if you made the terrible Full Investing Cycle mistake of buying “Small Caps” (Russell 2000) from the Triple Cycle Peak in US GDP, Inflation, and Profits!