The rally in equities, credit and commodities from March last year neatly fits the pattern of the market discounting an economic recovery six months ahead of the turn in the (backward-looking) data.
The most beaten up stocks and markets rose furthest and fastest while defensive sectors lagged. Basic materials led the cyclical rally among equities but profits could be made by buying at a market level particularly by pursuing those markets and strategies perceived as high beta, such as the commodity-exposed emerging markets and favouring smaller companies over larger. January brought a reality check as investors started to focus on what happens when stimulus measures are withdrawn, policies normalise and the impending regulatory changes for the financial sector, which had been put on ...
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