Wondering how the stock market can remain near its highs, even as the economy sputters?
Here’s part of the mystery. The relative performance of cyclical stocks (stocks that do well when the economy is booming) has collapsed compared to defensive stocks (companies, like drug makers, that can do well at any point in the cycle).
Cyclicals vs. Defensives has now fallen to lows seen last summer, and not surprisingly, the collapse corresponds nicely with the falling MAP — Deutsche Bank’s own index for measuring economic surprises.
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