Leaders-Laggards

Despite a significant short-term sentiment shift away from risk last week, tech stocks continue to demonstrate resilience in the face of danger. Disappointing post-Thanksgiving holiday sales numbers dragged down the consumer and retail sectors significantly last week. REITs continue to draw interest as the financial markets grow more volatile.

Long-dated Treasuries continue to outperform. Is omicron the thing that finally breaks this uptrend? A panicked trading reaction in the markets tends to lend itself to dollar strength and that’s exactly what we saw last week.

Tech is becoming the clear leader in the current market cycle. Industrials have struggled to participate in most periods of cyclical strength throughout the year. The rhetoric from several Fed members this past week calling for a more rapid taper was modestly bearish for inflation protection, but the uptrend here is far from broken.