I just completed a two-day roadshow meeting with our institutional investor clients in Boston/ Providence. The good news is that I found multiple instances where my fundamental equity long-only clients widened their YTD relative performance in the month of August (they bought the dip!). But a few issues seemed to keep popping up.

Foremost on their minds, at the moment, is a fundamental explanation for the violent rotations seen in the past few days, meaning significant shifts in (i) small-caps up >1% 3 days in a row after selling off 7% in August; (ii) rotation out of secular growth into cyclical stocks (cloud vs semis); (iii) reversal of high P/E secular growers vs low P/E value within sectors; (iv) surge in graveyard/zombie sectors plus the macro reversals of: (i) interest rate increase and (ii) gold sell-offs. Anecdotes include: “it seems like all sector and factor bets are now just a function of interest rate moves” and another “suddenly, the market changed its mind about secular growth at any price.”

Particularly given there has been little incremental macro developments to justify this. And in fact, many have cited work from other strategists that ISM and LEIs should continue to weaken—the most common data point being the ratio of new orders/inventory is...

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