Radar Perene / Archive / episode

The money pulls its chips: the pullback that took cyclicals off the table for a year

◦ 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

Everything in the macro picture called for courage. The policy rate sat at the cycle's floor, inflation was well-behaved, the real still looked firm — an environment, in theory, hospitable to risk. And even so, in a single month, domestic money made the opposite move: it pulled its chips off the bets that depend on the economy turning and stashed them where losses hurt least. Three months earlier, in August, the same investor had run toward cyclicals; now it undid everything, in the steepest pullback of the quarter. In numbers: the Perene Risk Index fell from 38.8 to 20.6 and crossed into risk_off, its third straight month of decline. The Selic at 7.25% a year, the dollar at R$ 2.07. And the detail that defines the month: the global risk axis stayed put at 51.1, neutral. The fear had a domestic signature. The cyclical preference retreated nearly two deviations from its average in a single month.

What happened next

The cyclical bet did not come back — pulled in November, it stayed pulled. Before any relief, it worsened: in January the ratio sank further still. When appetite reappeared, in February 2013, it came crooked — the money picked a single winner and poured almost everything into it, with the financials surging in relative strength while cyclicals stayed sunk. In May 2013 mood pulled back again and the Perene Risk Index went to zero (0.0). And in November 2013, a year later, aggregate appetite shot to the top of the archive (94.3) — but the cyclicals were still well below their average. Twelve months, and cyclicals never reclaimed their seat at the table.

What did not happen

November's pullback was not the start of a linear risk_off. Mood did not collapse in a straight line — it swung violently, from 43.0 in February to 0.0 in May and to 94.3 in November of the following year. Nor did the floored policy rate rescue cyclicals: the Selic, which "invited risk" at 7.25%, rose to 8.0% and then 10.0%, and even so the money did not return to the cycle. And the shelter did not stand still — it was a diffuse retreat in 2012, concentration in banks in February, utilities and commodity-in-reais a year later. The chips left the cyclical table; they did not pick a fixed place to rest.

The honest verdict

The November 2012 reading got the gesture right — the money fled cyclicals and did not return for a year. But what looked like a single move of aversion was the opening of a year of indecision: aggregate appetite went from one extreme to the other while cyclicals stayed on the bench. Anyone who read the pullback as "risk_off is here to stay" missed the archive high that would come months later. The Radar itself logged one of those months — May 2013 — as an insufficient reading; the six-month horizon closed at -3.1%, within a shallow band of seven cases. Getting the gesture right is not getting the calendar right.

Continue reading: The defensives lose their tenants · Cyclicals vs. defensives — who leads each regime · The retreat to concrete →

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Characters: Cyclicals × defensives · Statistical anomaly