Quick chart-flash. The path of global cyclicals vs defensives has been something I have been very focused on, as both a leading indicator of a potential correction, and as a way to ride out the upcoming market volatility (disproportionately allocating to defensives, or long defensives + short cyclicals). Anyway, this here chart I find particularly interesting, I had previously showed this chart around, but that was before US cyclicals vs defensives had started to move. The risk here is that we see more “catch down” by the US, as it appears EM weakness may finally be catching up to America… of course another interpretation is that it’s simply delayed reaction to Fed tightening – which has had an earlier and deeper negative impact on emerging markets.
Definitely one to keep an eye on – and probably a good idea for me to cover global cyclicals vs defensives in the next weekly report!
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