1. Equity bears need a Plan B?
2. Poor risk-reward in credit
3. Bonds vs Commodities: more to give
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.Equity bears need a Plan B?
As high beta & momentum areas of the market wobble, equity investors are once again thinking about allocations to more defensive areas of the market. Consumer Staples versus Consumer Discretionary is an obvious RV pair to consider in that scenario but, relative to macro, Staples have already moved a long way.
In market cap terms, XLP sits 1.1σ (6.3%) rich to XLY. In equal weighted terms, RSPS sits 2.4σ (8.8%) rich to RSPD. That is towards the very richest end of Qi FVG ranges.
Both models show Staples defensive properties. Higher VIX, wider credit, slower economic growth support Staples outperformance. That means macro fair value is inflecting higher for both - macro conditions support XLP / RSPS.
But markets have moved ahead of macro momentum. In short, equity bears should know these aren’t optimal levels to chase & maybe try to find alternative safe havens.
Continue reading our analysis by downloading the PDF above
Related Articles
Identify price dislocations, opportunities, regimes and sensitivities
1. Equity bears need a Plan B?
2. Poor risk-reward in credit
3. Bonds vs Commodities: more to give
Identify price dislocations, opportunities, regimes and sensitivities
1. Cyclicals are at new highs. Macro isn’t there yet.
2. Europe HY Looks the Vulnerable Trade
3. QQEW: The One Still in Regime
Identify price dislocations, opportunities, regimes and sensitivities
1. KWEB looking interesting again, especially vs. FDN
2. USDJPY: Intervention Can Slow It. Not Stop It.
3. TU: Cheap Enough to Matter Again
Identify price dislocations, opportunities, regimes and sensitivities
1. US equities: Rich but not macro-driven
2. SPY vs FXI: price is writing its own story
3. A Cross-Asset Disconnect on Inflation