The two clocks after the 2018 election: appetite at the top, structure at the floor (Dec 2018)

Derivative

The extreme

December 2018 arrived with the election already decided and tempers, in theory, clarified. The Radar recorded the opposite of a truce: two clocks on the same wall marking different hours. Domestic capital crossed the month with confidence at the maximum — the Perene Risk Index never left 100.0. But the structure of relative prices took the opposite path: the intermarket collapsed from 69.59 to 3.41, crossing into risk-off in its firmest form. Appetite at the top of the scale; structure at the floor of it.

What happened next

The disagreement had a texture of its own. Utilities — the classic shelter for those who distrust the cycle — gained ground against the broad market. And yet the cyclical/non-cyclical ratio did not follow the defensive retreat: it stretched again, from 2.11 to 3.02, among the most extreme readings the series holds. The market was buying defense and cycle at the same time, as if it couldn't decide which story to tell. Mood landed in the middle: Ânima pulled back from 57.1 to 39.9, giving back the ground gained in September.

What didn't happen

The election result did not synchronize the gauges. The intuitive reading — "with the ballot behind us, uncertainty eases and the indicators converge" — does not survive the archive. Instead of closing the divergence open since the strike, December opened another: local appetite held at the top of the scale while the intermarket read, on a higher plane, the tension of the external environment. The vote resolved one doubt and bequeathed another to the following year.

Honest verdict

The election did not bring the calm the headline promised. December 2018 closed with a question the numbers do not resolve — which of the two clocks is running fast. When the disagreement is of that amplitude, it is the record of the month, not a detail to smooth over.

Continue the story: The 2018 truckers' strike · Capital before confidence · What intermarket is →

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