Chart Of The Week – 27th August 2013

Despite the turmoil in global financial markets over the summer, there have been some important divergences and leadership changes that did not occur in previous “risk-off” phases in recent years. Notably, this bout of weakness has mostly been driven by Fed “tapering” concerns, and changes at the BoE, rather than policy indifference in the face of deteriorating economic activity (which was the source of market woes in 2010-2012). One important change, which we expect to persist in the coming year, has been the loss of equity market leadership by defensive equity sectors.

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