Via Damien Boey at Credit Suisse:
In our recent note “Style rotation after a panic”, dated 31 October 2018, we highlighted that for this stage of the risk appetite recovery cycle, value has been underperforming badly as a style, while quality has been significantly outperforming.
The performance gap has not really narrowed in November. Overnight, the Fed’s Powell conceded that rates are close to the bottom end of the neutral range. His comments are a stark contrast from those he made a month earlier, suggesting that rates were a long way off neutral, and that the Fed was prepared to hike well through neutral. But they do echo very recent comments from Clarida, suggesting that the Fed is becoming cautious about tightening in a more volatile and weak risk appetite environment.
