Sector Rotation - The Fundamentals of Business Cycles and Hot Stocks

Through the life cycle of the various sectors to perform better than others. The different phases of the economic benefit various sectors here's an overview:

RECESSION

Hot Stocks

- Consumer goods (food, forestry, etc.)

- Utilities (gas, electricity, energy)

- The large company stocks outperform Monetary Indicators

- Short-term interest rates fall

- The long-term interest rates fall

- Reserve Bank Biasto loosening

Economic Indicators

- GDP contracting

- Inflation flat or down

- Manufacturing low and falling sentiment

- Deflation worries

- Banking & Insurance Ads emphasize safety

- Headlines emphasize layoffs

- Falling consumer confidence

Early Recovery

Hot Stocks

- Autos consumer cyclical (, Retail)

- Technology (software, computers)

- Industrials(Factory equipment)

- Small companies outperform Monetary Indicators

- Short-term interest rates flat

- Long-term interest rates flat

- Reserve Bank stops easing

- The difference between short-term interest rates declined

Economic Indicators

- GDP shows modest gains

- Inflation flat

- Production is increasing sentiment

- Earnings worries still common

- Banking & Insurance Ads emphasizeSecurity

- Headlines emphasize layoffs

- Profit and Investment Trend

- Increasing expectations of consumers

MID-CYCLE

Hot Stocks

- Technology

- Consumer cyclical

- The shares of large companies begin to outperform Monetary Indicators

- Short-term interest rates flat

- Long-term rates to rise

- Reserve Bank Neutral

- The difference between long and short-term interestExtension

Economic Indicators

- To increase factory capacity

- Increase hourly wages

- Manufacturing strong

Sentiment

- Rising inflation worries

- Banking & Insurance Ads emphasize profits

- Sector Funds popular

- Consumer confidence rises

LATE-CYCLE

Hot Stocks

- Energy & Technology

- Commodities

- The large company stocks outperform Monetary Indicators

- Shortlong-term interest rates rise

- Long-term rates to rise

- Reserve Bank tightening bias

- Short-term rates higher than long-term rates

Economic Indicators

- Factory capacity of over 90%

- Increase hourly wages

- Slows Manufacturing Sentiment

- Momentum (high growth) stocks popular

- Banking & Insurance Ads emphasize profits

- Headlines emphasize the word "Boom"

- Consumer expectationsfall