|Ranking of Sectors over various horizons|
The table above shows the various sector rankings. It ranks sector growth across sectors by period. While there has been some talking about the financial sector stirring, that sector ranks a consistent dead last except for the current week where it 'climbed' to 8th best. There is no evidence of optimism in play for financials. For the other sectors there is some shifting in relative performance but nothing like a clear trend change.
As energy prices have ratcheted higher Gold futures prices stand only in the lower third of their 52-week range. This hardly looks like a market vote for inflation and a bet on risk. This is despite the fact that 10-Yr T-notes saw their yield rise by 33bp in the current week. That sort of move is looking excessive, unless markets shift more to the view that growth is picking up. Right now that is a bit hard to conclude... Bonds either do, or will soon, offer value.
The major US stock indices are up on balance over three-months but over six months and over the past year they are still lower. The DJIA is doing the relative worst and the NASDAQ is doing the relative best with the S&P 500 and Russell 3000 filling in the middle ground. Tech, a sector that is not as cyclical and is relatively more plugged into foreign growth, fares best.
The dollar has risen for three weeks in a row Vs the euro and the yen. Not bad...
All this suggests markets are less worried about US policy and inflation (quite different from the Fed) . The relatively weaker DJIA suggests more concerns are over growth. It is only in the recent week (really) that consumer discretionary stocks are doing better than consumer staples - hardly a strong bet on growth. Markets still have to sort out how much they believe that May's retail sales have staying power.
Do they? Is it worth the bet?