Sweep Elections and Sector Mean Reversion

The best performing sectors before sweep elections tend to underperform afterwards, and vice versa We dig through the historical data on previous sweep elections and come to two conclusions: 1) sweep elections do mark changes in relative sector performance; and 2) the...

Lockdown Threat = A Two-Speed Economy and Market

Inequalities that existed before this crisis have been amplified by it. One place where this is prominent is in markets. Interest-rate sensitive sectors are seeing a marked outperformance due to their heightened sensitivity to liquidity. Technology has also benefited...

No Irrational Exuberance Outside of Tech and the FAANGs

Outside of technology and the FAANGs, US equity markets are pricing in a stalling of the economic recovery. The ratio of cyclical to defensive sectors has been trending sideways since the early June peak, as has the ratio of small-cap vs large-cap equities (top-left...