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Bob Palmerton
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Mr. Palmerton has over 25 years experience in Corporate Finance, holding positions as CFO, Director of Finance, Financial Management and Analysis roles for Fortune 500 and multi-national firms (ADP, Honeywell, BOC Group) as well as early-stage growth companies. Mr. Palmerton has raised equity... More
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Baseline Analytics
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Baseline Analytics
  • Staples Outperforming Discretionaries 0 comments
    Jul 5, 2012 9:48 PM | about stocks: XLP, XLY

    At the start of 2012, Discretionary stocks, as measured by the S&P500 Consumer Discretionary Index (SPCC) outperformed Staples, as measured by the S&P500 Consumer Staples Index (SPST). Curiously, since May, this relationship has reversed, with Staples outperforming Discretionaries. See the chart below.

    (click to enlarge)

    The solid red line is the ratio of SPCC to SPST. Note the decline since May. It is interesting that this decline was accompanied by a decline in the price of crude (see the bottom of the chart), somewhat contrary to what one might expect.

    This could signify an aging of the business cycle where more conservative equities tend to outperform. Although the "risk-on" trade seems to be the prevalent trade since early June, one might call this the "risk partially on" trade, noting the shift toward more defensive (and dividend-paying) equities.

    Stocks: XLP, XLY
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