In this video we look at the astounding relative performance seen between cyclical stocks vs defensive stocks and why it matters so much for the overall market outlook. Specifically, the video walks you through a couple of slides of a recent edition of the Weekly Macro Themes report. In the video we talk through 4 key charts: i. How it’s really been cyclicals driving the new bull market over the last 12-18 months; ii. How the surge in cyclicals relative performance maps to the improvement in the ISM manufacturing PMI; iii. How relative valuation signals have become stretched along with the stretched relative price movement; and iv. How cyclical sector absolute valuations have gone parabolic and look in many ways very similar to that seen during previous major market tops. While there are opportunities in taking positions around cyclicals, defensives, or long-short trades, the other key takeaway is that what happens next in cyclicals could be key for the market outlook, in this respect the risk level looks elevated.
Follow us on: