The US equity market is very different than before Election Day 2016, and that’s not just because we are at fresh all-time highs. There were plenty of new highs from 2013-2016, after all. What’s different is the lack of sector and asset class correlation now versus 2009 – 2016.
Simply put, they are finally back to normal. The drop in correlations among the 11 sectors of the S&P 500 has been profound, from 75-80% pre-Election to 57-62% afterwards. This month’s reading of 57% points to the lasting nature of the change; this is a not blip.
This post was published at Zero Hedge on Feb 12, 2017.
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