Minor Rotation Back into Low Beta

We have moderate levels of derisking today, as low beta and commodity related stocks trend whilst the high beta garbage pulls back by 65bps. The spread is large enough to warrant attention, especially with the overall markets up for the session. We are looking at a 100bps spread between low and high beta, suggestive of a rotation back to safety.

This is odd, especially since bond yields are lower. Perhaps this has something to do with $DIS horrible numbers, sending its shares wildly lower by nearly 10%.

I had many longs in the premarket and sold all of them before 10am and have been nibbling back for the past hour. Instead of risk, I have been allocating into lower beta names first, in order to see how this develops.

Breadth is good at 61% and there isn’t anything of note that would hold me back from further allocations to the long side. Simply put, after last week’s debacle I am careful not to drawdown and trying to calibrate my moves to maximize returns whilst also minimizing the downside.

I’m +19bps early going, 65% cash.