Quad 4 Is Here. Where Can You Still Get Long?

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Includes: HOML, ITB, NAIL, PKB, XHB
by: Hedgeye
Summary

Our Macro team's economic outlook for the U.S. economy for GDP growth and inflation to slow (on a year-over-year rate of change basis).

This market environment is called Quad 4 in our four quadrant Growth, Inflation, Policy model (GIP).

Financial market history suggests Housing stocks outperform in this market environment.

It was another ugly week in U.S. equity markets.

Our call for Quad4 (i.e. Growth and Inflation slowing) in Q4 is taking hold of markets… fast. (Month-to-date the S&P 500 is already down -5%.)

So what’s the next move? In the video above, Hedgeye CEO Keith McCullough goes over some probable scenarios backed up by data, not politics or some other agenda.

While Quad 4 is a difficult environment to find long ideas, there are still sectors that outperform others.

What’s one of the sectors McCullough says he could start liking very soon? Housing.

“Housing is one of the top three places you would go as you start to see bond yields stop going up and start to fall,” McCullough explains in the video above. “While bonds yields are falling, being long housing is almost a no-brainer.”

Watch the full video above for more.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.