For about six weeks, between the middle of January and the first week of March, inflation expectations embedded in the US Treasury market bounced after declining for the second half of 2014....
This year, especially in February, there has been something of a cyclical bounce in the developed country stock markets. Since the beginning of the year, counter-cyclical stocks have underperformed cyclical stocks by 75 basis points in the MSCI World Index....
The story of 2014, and so far in 2015, is that yields have continued to fall contrary to most economists’ expectations. This matters to equity investors because the appropriate asset allocation in a falling yield environment is much different than the best allocation in a...
Two weeks ago we mentioned that over the past several years the last six weeks of each year has tended to either strongly favor cyclical stocks or counter-cyclical stocks. Today, we wanted to update that chart....
As we have noted before, this market has been somewhat unique in that counter-cyclicals have outperformed cyclicals since the market top in October 2007. As you can see in the first chart below, counter-cyclicals have outperformed by nearly 18% over the past seven years....
Despite the powerful rally over the last several weeks that brought the US equity markets back to their all-time highs, treasury yields are up only slightly and are well below mid-September levels....
Counter-cyclical stocks have been the leadership group all year in pretty much every region of the developed and emerging worlds. As the selloff that took place in early October unfolded counter-cyclical stocks gained even more ground on their cyclical peers, which is not surprising since...
Counter-cyclical stocks (utilities, telecom, consumer staples, and health care stocks) are near the top of the leader board so far this year while the more cyclical sectors have generally lagged....
We divide all stocks into two baskets: 1) cyclicals, which includes consumer discretionary, industrials, materials, technology and financials; 2) counter cyclicals, which includes health care, consumer staples, telecom and utilities. Generally the cyclical basket performs best when economic data comes in on the strong side...
Normally cyclical sectors outperform counter-cyclical sectors when the Citigroup Economic Surprise Index is rising and underperform when it is falling. The Citi Econ Surprise Index is now down since 9/12/13, having fallen over 25 points....
We divide the MSCI World index into cyclical (including materials, industrials, technology and consumer discretionary, financials and energy) and counter-cyclical baskets (including consumer staples, health care, telecom, utilities). The relative performance of cyclicals vs. counter-cyclicals generally improves when the economic news is improving and contracts...
