While our overall economic assessment continues to not signal looming recession -- this morning's jobless claims number (lowest since 1968) supports that notion -- the action among equity sectors is nevertheless raising a bit of a red flag.
Let's take a look at the majors relative to the S&P 500 (above 100 denotes 30-day outperformance over the index, below denotes underperformance):
Consumer Discretionary 100.8:
So, economically-sensitive industrials, energy, financials and tech (although in some respects it can be argued that tech possesses economically-defensive qualities) have been underperforming the broader market of late. While, per the below, those considered economically-defensive have been outperforming:
Consumer Staples 101.3:
Barring something special occurring in the action today and tomorrow, the sector/spx ratio input to our proprietary index will drop from a neutral to a negative, dragging a bit on our overall score this week.
Asian equities sold off again overnight, with all but 1 of the 16 markets we track closing lower.
Europe's actually green this morning, with 15 of the 19 bourses we follow trading higher as I type.
US stocks are lower to start the session: Dow down 128 points (0.37%), SP500 down 0.07%, SP500 Equal Weight down 0.19%, Nasdaq 100 down 0.01%, Nasdaq Comp down 0.06%, Russell 2000 down 0.12%.
The VIX sits at 22.21, up 0.50%.
Oil futures up 1.60%, gold's up 0.28%, silver's down 0.27%, copper futures are down 0.76% and the ag complex (DBA) is down 0.07%.
The 10-year treasury is down (yield up) and the dollar is down 0.10%.
Among our 37 core positions (excluding cash and short-term bond ETF), 20 -- led by uranium miners, MP Materials, carbon credits, Sweden equities and oil services companies -- are in the green so far this morning. The losers are being led lower by Paramount Global, Verizon, base metals futures, AT&T and emerging market equities.
As I found myself expressing in a conversation with a client yesterday, as we discussed some of what could be viewed as undesirable structural societal shifts, our job as investors is to see (or effort to see) things as they are, not how we'd like them to be, and act accordingly.
In other words:
"So much of what causes heartache is wanting things to be different than they are."
--The Book of Joy
Have a great day!
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