If you have not noticed, it's really a two-tiered or bifurcated market led by, in its rush to the top, so-called safety net stocks: health care, utilities and consumer staples.
Now that energy has done it recent version of a market swan dive, joining basic materials and consumer discretionary goods, these sectors for the most part have failed to bring up the rear in investor minds.
Energy once the most popular kid on the block and representing a big chunk of the S&P 500 suddenly caught a cold and many now are predicting something even worse. What's the magic number the price of a barrel of oil will have to hit before production in American shale fields will start to dry up?
The safest answer is your guess is as good as anyone else's. There's yet another fly buzzing just above the political hydrocarbon ointment bucket here, that of the 1975 law banning U.S. oil exports. This situation reeks with the smell of money and light sweet crude versus the heavy more polluting kind.
As one columnist puts it, in this case the bifurcation is "Hardly a ringing endorsement of a robust economy." Either that or the pallor hanging over much of the globe is preventing them from seeing the forest for the aspens.
This year was supposed to be one of rising interest rates and falling bond yields hardly one in which stodgy utilities are expected to lead. But lead they have for much of the year. Buying what you need rather than what you like is a sentiment indicator. And most of us know about the importance of health care.
Yet recent reports show consumer confidence is running at record highs. Is that just another lagging indicator or what? The party's getting ready to shut down when all of a sudden most of the guests show up.
Generals are noted for fighting last year's war. Could it be that investors will be making the same mistake when 2015 rolls around? With all the gloom and deflation doom hanging in the air, that's a bet we're becoming more willing to take.
No comments:
Post a Comment