Markets are preoccupied by current political turmoil. Brexit, China-US trading, expectations of declining trade globally, short-term resolution to shutdown in US, European vows. The list could be easily extended. Markets have often a subtle way to look through the vail of noise and pick the write route despite all the uncertainty. Two, often overlooked developments, appear to be in making. Emerging markets and European cyclical sectors are outperforming. Counterintuitive. Slowing economic growth expectations, China slowdown, monetary policy jitters just to name but a few do not generally inspire cyclical investing. Nonetheless the market wisdom shows an unexpected turn of events.

Advanced cyclical index Europe vs MSCI Emerging Markets Index


Source: Bloomberg, Stoxx Limited, Advanced Dynamic Asset Management