Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.
Utes are boring but they do fine in both #Quad3 and #Quad4. Why? Because real yields aren’t going up during either a Stagflating Recession or #Quad4 Deflation. Long Utes (XLU) is really just a rates bet that we have a central tendency to time right.
What’s also obvious is that you can’t buy Utilities or REITS or anything equity when the VIX is about to ramp into the wrong Volatility Regime (i.e. VIX > 30). That said, if you’re running net short, Financials and Small Cap (and High Beta) go down more!