•Will Europe and the US mirror China’s post lock-down recovery? Markets increasingly support that thesis, helped by some recent indicators.
•Expectations of such a significant, and speedy recovery, has now almost closed the performance gap between cyclical and defensive equity sectors.
• Will this trend continue? Aside from misgivings about the speed and strength of the post lock-down scenario, we find little support in our models for further outperformance of cyclicals.
• By contrast, defensives still exhibit good model scores on both earnings and valuation metrics.