JPMORGAN’S TOM LEE: We Are On The Cusp Of A ‘Regime Shift’ In The Stock Market
May 31, 2013
One of the peculiar features that characterized the current rally in the stock market that started back in September – at least for the first few months – was the outperformance of defensive stocks versus cyclical names that tend to do better in times of economic expansion.
Typically, cyclicals are the ones leading the way when the stock market is pushing to new all-time highs, levels it finally overtook early in the second quarter. Yet defensives were the ones outperforming.
At the time, several analysts noted this oddity. One popular explanation was that it was part of investors’ reach for yield (in general, defensives pay higher dividends than cyclicals).