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The two deltas that looked like a turn — November 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

Two moves seemed to announce that the worst had passed. The cyclicals, which October had thrown to a distance from the defensives the archive almost never records, stopped falling and recovered an expressive part of the drop. Financials, lukewarm until then, jumped and crossed into positive ground. Read on their own, they were two gestures of someone betting on the domestic cycle again. But the regime gauges told another story — and theirs was the one that counted. In numbers: Cyclical/Non-Cyclical jumped, but closed still well below its own average; Financials/IBOV crossed from below the average to above it; the Perene Risk Index rose from its absolute floor of 0.0 to just 9.2, still in risk-off; the intermarket grid advanced from 36.67 to 43.06, still defensive. Selic at 7.75%, the dollar at R$5.56, debt at 78.22% of GDP.

What happened next

The capital changed seats, but did not leave the defensive room — and it kept changing seats for a full year. In February 2022, the intermarket grid shot up to 72.48, strong risk-on, but because Brazil became the island taking in the flow the world was shunning, with global risk still at 41.2. In May, the cyclicals returned to the top, crossing from discount to premium, and the defensives gave back the ground they had won — "changing hands almost every month," as the reading recorded. In November 2022, the wheel turned again: commodities rehabilitated from discount to premium, cyclicals plunging from premium to discount, Ânima collapsing from 75.0 to 45.9.

What did not happen

November's recomposition was not the regime turn the two deltas suggested. The Perene Risk Index that left zero did not string together a climb toward appetite — it pulled back, rose again, pulled back once more. Domestic mood, stuck at 39.0 in neutral, did not cross into confidence that month nor find its footing in the ones that followed. Anyone who read the cyclicals' recovery as the bottom of the cycle mistook rearranging the furniture for moving house.

The honest verdict

The month's reading got it right by calling the move a recomposition of weights, not a change of regime — and that honesty held up across the year. What it had no way of knowing is that the back-and-forth would last twelve months: defense and appetite would swap seats without either one settling in. A strong delta in a sector ratio describes where the money went; it rarely proves that the regime has turned.

Continue reading: Ânima vs. Perene Risk — mood against appetite · Cyclicals vs. defensives — who leads each regime · The money that fled inward →

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Characters: Cyclicals × defensives