Regular readers are familiar with our baskets of stocks based on performance in the average business cycle. For review, Cyclicals generally refer to those stocks in the Consumer Discretionary, Energy, Financials, Industrials, Information Technology, and Materials sectors. These can be further divided into Early Cyclicals (Consumer Discretionary), Hyper Cyclicals (Financials, Information Technology), and Late Cyclicals (Energy, Materials, Industrials). At the opposite end of the spectrum, we have Counter-Cyclicals-- stocks belonging to the Consumer Staples, Health Care, Telecommunications, and Utilities sectors. Consumer Staples and Health Care stocks are further classified as Growth Counter-Cyclicals. Though trends vary by region, performance in the MSCI World Index has been dominated by Counter-Cyclicals and Late Cyclicals so far this year:
Trends in the MSCI Emerging Markets Index are only slightly different, with Energy a notable laggard as we saw
earlier today:
Overall, Cyclicals have been weak in Emerging Markets as well-- even Early Cyclical outperformance seems to be waning somewhat in the last few months:
Counter-cyclicals (and especially those in the Growth Counter-Cyclicals group) have been the strongest for some time now:
