1. XLB – Valuation Fatigue?
2. Run It Hot — But Pick the Right Cyclical
3. Aussie fx Upside. Right story, Wrong price.
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1. XLB – Valuation Fatigue?
Materials have led US sectors over the past month. Tailwinds are plentiful: defence spend, AI build-out, gold, critical minerals.
But it’s stretched:
XLB sits +1.9σ rich vs Qi fair value — near cycle extremes
Gold RSI at 94 says positioning is crowded
Valuation at 20.5x forward PE, close to prior peaks (22–23x)
The momentum is strong, but history says mean reversion still matters. Over the last year, XLB spot has tracked its Fair Value Gap closely. Extremes have marked turning points and therefore need to be respected.
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