Approaching the tripwire

Approaching the tripwire. No mean reversion to be seen anywhere at a sector level - the winners over the past year were more pronounced winners over the month; the losers were walloped further. How much further can these trends, now approaching extreme levels, persist and how best to calibrate such judgements? We have endeavoured to address these issues in two ways. Firstly, by reference to historical boundaries for sector weights - that is, since 1980, how low a proportion of the ASX have the losers (currently resources) been, and how high a proportion have the winners (currently financials) been? Secondly, if this sectoral bifurcation is in response to lower bond yields, is this self-reinforcing loop boundless, or is there a tripwire beyond which lower and lower bond yields, signalling disinflationary and even deflationary pressures, ceases to lead to further equity rerating? Read the article: (VIEW LINK)