Radar Perene / Archive / episode

The cyclical bet at the bottom of the series — August 2021

◦ Written under index methodology v1 (in effect until 15 Jul 2026). The current series is v2 — readings quoted here may differ from those shown today. See the methodology.

Episode

The extreme

There are repositionings that change everything without changing sides. Brazilian capital did not leave the stock market that month — it simply switched seats inside it, and did so with the quiet of someone who would rather not sound the alarm. The cyclical bet, which had carried the index since the commodities spring, drained down to the lowest point in its entire measured history. In numbers: in thirty days, the Cyclical/Non-Cyclical ratio fell to the most depressed reading the archive holds, while utilities recovered ground. The two gauges, however, disagreed: the Perene Risk Index climbed off absolute zero to 21.8, and the intermarket grid took the opposite path, slipping from 52.94 to 44.8.

What happened next

The bottom was not the bottom. In the following months the cyclical bet sank even further: in October the ratio broke through August's floor. November 2021 brought a patch — a partial recovery —, but the Perene Risk Index stayed in defensive territory, at 9.2. It was a reweighting, not a regime turn. When aggregate appetite finally crossed into strong risk-on, in February 2022 (the grid jumped to 72.48), it was not the cyclicals that led: utilities, banks and commodities paid a premium together, and the ratio barely made it back to its own mean. The clear return of the cycle only came in August 2022, when it finally settled on the positive side.

What did not happen

The August extreme did not mark the floor of the cyclical capitulation — October was worse. Nor did the defensive rotation unwind the following month; it dragged on for almost a year. And the risk-on regime that the domestic score still registered (62.7) did not guarantee the outcome: when the August 2021 reading matured six months later, the realized return was −6.1% — among the worst outcomes of the comparable episodes in the archive.

The honest verdict

The reading got the phenomenon right — the orderly flight from cycle to defense, and the discord among the gauges — but not the timing or the size. The most depressed reading in the archive is not the end of the fall; it is, almost always, the middle of a process. The engine itself classified the episode as ambiguous: the outcomes the archive held were too scattered to call one.

Continue reading: The money that fled inward · Cyclicals vs. defensives — who leads each regime · The middle of 2021, inflation returns →

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Characters: Cyclicals × defensives