When we compare the relative performance of these two cyclical baskets versus the Fed's tapering, we come away thinking the recent relative performance of early cyclicals is a bit out of step. In the chart below, we overlay the relative performance of early vs. late cyclicals against the three month increase in Fed assets. As the Fed was accumulating assets at an accelerating rate, early cyclicals outperformed late cyclicals, and as the Fed has been decelerating its asset purchases, early cyclicals have underperformed. We think that, despite a small recent detour, late cyclicals will probably outperform early cyclicals over the course of this year.