I've been waiting on shorting a major US Equity Sector ETF (Industrials) because I wanted US Equity Beta (SP500) to get closer to the top-end of my @Hedgeye Risk Range. Patience = #process.
Here's how I explained the setup in what I still like (Consumer Discretionary) vs. what I don't like (Industrials) in this morning's Early Look macro strategy note (#subscribe!):
Interestingly, shorting Global Industrials and/or those listed in the USA (ETF = XLI) wasn’t as hotly debated in Beantown yesterday as Long Consumer was. Why? Maybe it’s less debatable? Being long those exposures have certainly sucked some serious wind YTD.
That makes this LONG/SHORT pair one way to summarize all of our Macro Themes into two US Sector exposures:
A) Long Consumer Discretionary (XLY) up +2.9% YTD
B) Short Industrials (XLI) down -2.1% YTD
= +500 basis points of performance YTD
Obviously being long anything that is UP YTD in the US beats anything that’s going on from a trending major Global Equity Index perspective (China, Japan, Germany, etc. all DOWN YTD).
And the goal is for your longs to actually be UP, eh!
But again, I don’t want to be pounding the table on the long side of a US Equity Growth exposure like Consumer Discretionary (XLY) AFTER it rallies on decelerating volume to yet another lower-high like we saw yesterday.
KM
