1. When De-escalation meets Recession
2. The Walmart Indicator
3. NOKSEK – From Momentum to Mean Reversion
Heading 1
Heading 2
Heading 3
Heading 4
Heading 5
Heading 6
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur.
Block quote
Ordered list
- Item 1
- Item 2
- Item 3
Unordered list
- Item A
- Item B
- Item C
Bold text
Emphasis
Superscript
Subscript
1.When De-escalation meets Recession
This week has seen equities follow the post Liberation Day playbook. But at some point, the risk is this relief rally bumps up against other narratives - high energy/food prices, a Fed “policy error”, a recession.
Investors are left trying to navigate the fear of being caught short in any de-escalation rally, versus longer term fundamental concerns for the economy.
At the sector level, Materials are the second-best performing sector in the S&P500 YtD, up 9.3%. The long-term prognosis is positive but, for the tactically minded, the sector could be vulnerable to profit-taking in a de-escalation scenario. Staples have also fared well, but increased recession fears would probably add extra momentum.
Qi shows Materials outperform on higher energy, a stronger Dollar, a hawkish Fed that bear flattens the yield curve. All that has transpired but Materials have overshot & now screen as 1.5 sigma (4.6%) rich to Consumer Staples. That’s towards the top end of recent FVG ranges, & recent correlations point to the “right” kind of mean reversion.
Continue reading our analysis by downloading the PDF above
Related Articles
1. Bullish Divergence Patterns in US Equities
2. XKL Bad News Is Getting Priced In
3. Looking to Fade the Yen? AUDJPY
1. Gold Miners: Macro Re-engagesValue
2. Rotation: Too Far, Too Fast?European
3. Credit: Value Building?
1. US Utilities Mean-Reversion
2. USDCAD The One Dollar Long
3. Stocks Over Bonds
1. Rich Insurance
2. A Cheap Fed Hedge
3. Copper Over Gold