It has been a baffling few weeks. Bizarrely a succession of weak macro news and a pretty mixed earnings season has generated a market sense that “bad news is good news” and that Buzz and Super Mario will go Japanese. We wrote earlier about the high expectations priced into defensive quality names in the consumer staples sector and produced the chart of the sector ETF (XLP) to demonstrate those lofty expectations.
Interestingly, the chart is beginning to look fatigued and one wonders which sector might benefit if there is further central banking methadone introduced? See the chart below(Source: Yahoo Finance) which compares the performance of the two sector exchange-traded-funds(ETFs) for consumer staples(XLP) and industrials(XLI) over the last 3 months. Anybody spot a change in relative trajectories in recent days?
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