A HEALTHY ROTATION?

A review of the notable percentage gainers in the equity market year-to-date shows many of the current “leaders” are last year’s laggards, while many of the 2020 beneficiaries of the shutdown have lagged this year – so far………

A few examples of their year-to-date performance:

  • Apple: down 2.13%
  • Visa: down 6.4%
  • Walmart: down 4%
  • Google (Alphabet): down ¾%
  • Netflix: break-even
  • Zoom: up this year, but off 30% from its 2020 high
  • Most Health care shares are notably lower

Amongst the big double-digit winners so far in 2021: Energy, Base metals, Airlines and even cruise ships.

So the question: Is this a healthy (as the pundits are oft to call it) rotation into lagging sectors? Are new leaders driven by an improving economy, or is this the start of a more protracted consolidation, as in, time the new leaders also stagnate, because, as always, different pundits worry about the lofty price levels and rapid gains of many shares.

Overall, it was a smallish losing week for North American markets, with the standout “up sector” being energy, as ice storms in Texas shut down oil production. Asian markets were also notable for being on the winner's side. Regular readers know I believe non-US markets, especially Asian, could be the big winners in 2021 and they are off to an encouraging start. Also notable, the benchmark 10-year Treasury yields climbed above 1.35% Friday to the highest in nearly a year, as input prices for the Purchasing Managers Manufacturing Index reached the highest level since April 2011.

I must keep repeating, that barring a devastating third or fourth wave of Covid-19, consumer inflation over the next year or two is going to be much higher than economists expect. The so-called “Revenge Spending” is going to be huge and that will bring on corresponding price increases.

And talking of inflation: Treasury Secretary Janet Yellen told CNBC, "I think the price of doing too little is much higher than the price of doing something big. We think that the benefits will far outweigh the costs in the longer run.”

Asked whether the surge of federal spending could prompt a sustained rise in inflation, Yellen responded that it was a risk, but added that inflation has been very low for many years and the Fed could always mitigate that risk by raising rates. And I say, ‘much easier said than done; rapid rate increases could, of course, derail an epidemic ravaged economy.

Also worth remembering, she went on to state, the White House will likely propose a second economic recovery package later this year and the proposal would also include tax increases on corporations and wealthy Americans that would "phase in slowly over time.”

February 16, 2021 - The Debt of Reckoning

February 8, 2021 - For The Graduate - It's Batteries!

February 1, 2021 - Stop The World

January 25, 2021 - SPACS - Zoom or Swoon??

January 18, 2021 - Switcheroo?

January 11, 2021 - Breakthrough

December 21, 2020 - Didn't!!

December 14, 2020 - A Pause Before Christmas

December 7, 2020 - Main ST. & Wall ST. Diverge

November 30,2020-AAS Revisted

November 23, 2020- Ground Hog Day

November 16, 2020 - Vaccine Pop

November 9, 2020- The American Way

November 2, 2020- PPE

October 26, 2020- Crunch Time

October 19, 2020 - Counting

October 13, 2020 - Shake It Off!!!

October 5, 2020 - The Line Holds For Now - However!!

September 28, 2020 - It's All About 3 Key Words

September 21, 2020 - A Second Wave?

September 14, 2020 - Not A Lot To Cheer About

September 9, 2020 - Hump Day then Thump Day

August 31, 2020 - ASA Coming To The Fore

August 24, 2020 - The Debate Intensifies!

August 17,2020 -Potpourri

August 10, 2020- When Bad News is Good News

August 4,2020 - Three Records of Note

July 27, 2020 - Vaccine Vs Virus - Round 2

July 20, 2020 - Vaccine Vs Virus-Fight On!

July 13, 2020- A Week of Highs & Lows

July 6, 2020 - Economy VS Covid Cases

June 29, 2020 - A Bridge Too Far

June 22, 2020 - What Me Worry?

June 15, 2020-Reality Check??

June 8, 2020- It's All About The Workers

June 1, 2020 - Can We Bank on The Banks??

May 25, 2020- A Very Good Week For Stocks

May 19, 2020- Hedgehoppers Anonymous

May 11, 2020 - Was Monty Python Right?

May 4,2020 - Balancing the Teeter-Totter

April 27, 2020 - Oil - Another reason...

April 20, 2020- The Curate's Egg

April 13, 2020- Governor Cuomo Knows Best

April 6, 2020-  Stock Markets - It's a Teeter-Totter

March 30, 2020 - Stuck Like Glue

March 23, 2020-As Always, Bob Dylan Has The Answer

March 16, 2020 - Show Me The Money

March 9, 2020 - Interest Rates-The Race to Zero

March 2, 2020 - The Unknown Unknowns

February 24, 2020 - It's Always The Unexpected

February 18, 2020 - Oh (Dear!) Canada

February 10, 2020 - Sick Or Not I'm Going To Work

February 3, 2020 - A Turn For The Worse

January 27, 2020- Run For The Exits!!

January 20, 2020 - All Aboard!!!

January 13,2020 -  The Year That Was - A Wall of Worry

December 16, 2019 - Dear Santa

December 9,2019 - Those Who Live by The Tweet...

December 2,2019 - Taylor Swift

November 18, 2019 - Like The Duck in the Pond

November 11, 2019 - A "RISK ON" WEEK

November 4, 2019 - What About The Workers?

October 28, 2019 - Trick or Treat

October 21, 2019- The Gains Continue

October 15, 2019 - All We Are Saying.....

October 7, 2019 - Saved By The Workers!!

September 30, 2019 - Second Verse Same As The First!!

September 23, 2019 - About Face!

September 16, 2019-UP In Smoke

September 3, 2019 - The Sleeping Giant is Awake

August  26, 2019 -WOW!

August 19, 2019- "Do I Feel Lucky? Well,do ya, punk?"

August 12, 2019- Recession Rumblings

August 6, 2019-Coin Toss Part 2 - It came up HEADS!! = Bonds

July 29,  2019 - THe US Economy and Stocks (still) Lead The Way

Coin Toss- HEADS = Bonds  TAILS = Stocks

A Short USA Holiday

July 2,2019 - A Friday Rally Helped Cap An Impressive Month of Gains

June 24 - The Only Missiles Launched last Week were Financial Ones!! Whew!!!

June 17 - The Calm Before The Storm

June 10, 2019 - The Powell Put #2

May 29, 2019 - What To Do For An Encore

May 27,2019 - Let's Make A Deal

May 13, 2019 - When Elephants Fight