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The optimism the world never signed — January 2022

Episode

The extreme

For months, the Brazilian market behaved like someone who won't let go of the umbrella even in full sun. Money sought out what pays income and doesn't depend on growth — real estate funds, power distributors, the usual shelters. In January 2022 the arrangement was dismantled all at once: the income shelters lost the throne, and the banks took their seat. Domestic mood, which had been crawling along the floor, doubled in size and crossed over into risk appetite, as if the wait had finally ended. In numbers: the IFIX/IBOV ratio fell from a z of 1.74 to -0.05, and Utilities/IBOV from 1.67 to -0.05, while Financials/IBOV jumped from -0.36 to 1.30. Ânima doubled from 25.1 to 49.0 and the Perene risk axis went from 46.5 to 78.7. Selic at 9.25% a year, the dollar at R$5.53.

What happened next

The turn didn't hold. In April, three months later, the market crawled back to shelter: the IFIX/IBOV ratio retraced its path in reverse, from -1.12 to 0.94, and commodities in reais returned to the top, at a z of 1.64. The cyclicals, which had barely taken the lead, crossed once more into negative ground. The throne changed hands again. And January's bet, when it matured six months later, delivered -8.0% — below everything that similar configurations tended to return, in a central band that ran from +9.3% to +20.5%.

What did not happen

The world never signed below. January's optimism was a domestic bet: mood and relative prices turned toward risk, but the outside refused its endorsement. Global risk held at 41.2, in moderate aversion, and the intermarket grid itself cooled along the way — from 85.28 to 57.72, from strong risk-on to merely moderate. This was not the start of a bull market; it was enthusiasm behind closed doors. And enthusiasm without external confirmation made neither a floor nor a top: it made one more turn of the wheel.

The honest verdict

The reading got the rotation right — capital did indeed swap shelter for banks — but anyone who read it as a cycle turn would have been wrong. The Radar itself hesitated: mood crossed into risk-on while the structural regime stayed classified as defensive, at 43.1. The divergence between the inside, which celebrated, and the outside, which did not endorse, had been in the report from day one. When the two disagree, the month rarely resolves. This one did not.

Continue reading: The single bet on banks · Cyclicals vs. defensives — who leads each regime · December in reverse →

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Characters: Structure (intermarket) · Flow (risk appetite) · Mood · Dollar · Cyclicals × defensives