Barclays strategists said on Friday that equity investors are bracing for a mid- to late-term economic expansion cycle, but recession fears are reignited after a spike in volatility in April. said.
“For the first time this year, the performance of the cyclical basket during recessions has significantly improved,” the strategists wrote in a note.
According to the strategists, these baskets are part of Barclays' cyclically optimized long/short (L/S) strategy, which includes a , which includes stocks selected based on past performance and risk-adjusted. and two recessionary stages.
Essentially, they serve as indicators of investor positioning and sentiment.
Barclays highlighted that while the 'recessionary' basket has been the weakest since hitting its low in October 2023, the 'recessionary' basket has been the most outstanding performer.
However, since the end of March, we have seen a noticeable change, with the difference in the performance of both recession stage baskets starting to narrow, with the 'early recession' basket showing the most significant progress.
“This suggests that recession fears are creeping into the stock market after Fed rate cut expectations are reset, especially in our 'early expansion' and 'medium expansion' baskets,” the Barclays team said. “Considering that it has gotten worse,” he said.
The 'early recession' basket particularly benefits from negative exposure to cyclical stocks such as general and industrial sectors, with these sectors alone generating more than half of the overall return,” it added. .
