Even as markets are skittish YTD, leadership is clearly cyclical = resolves to upside

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STRATEGY: Even as markets are skittish YTD, leadership is clearly cyclical = resolves to upside

Equities have been punishing YTD, but sector leadership is clearly cyclical
The best way to describe the first 25 trading days of 2022 is treacherous. On many fronts, we are facing inflection points on monetary policy, COVID-19, inflation, geopolitics, elections (mid-terms) and even general mood. So it is not surprising to see investors apply a "hair trigger" to stocks and markets. And naturally, conviction remains low. Of course, our base case for 2022 (from early Dec) was the 1H of 2022 would be treacherous, but this has been worse than we expected.

We will see 2022 being a double-digit gain year, and if historical precedents are to be respected, the 2022 gains might even by +13% to +15%, so above our S&P 5,100 target. But we just need to get through 1H2022.

- sector leadership YTD is clearly cyclical
- Energy outperforms by 2,804bp YTD, exceeding the 2021 outperformance already
- Financials is second best, outperforming by 940bp

- if a stagflation or even a recession were looming, this is not the sector leadership ...

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