JP Morgan says conditions for cyclicals to reassert versus defensives are
emerging. Hedge funds are buying energy, and excluding TMT and financials the
relative net position of cyclicals versus defensives remains near neutral,
indicating cyclicals are not crowded. Retail sentiment toward cyclicals versus
defensives is also low. If economic growth stays firm, cyclicals could
outperform defensives. JP Morgan’s view carries a key caveat: bond yields must
not rise too quickly, as a sharp increase could trigger a clear shift to
risk‑off and weigh on cyclicals. Source: JP Morgan report dated Sept 9.
