I’ll keep pounding the table that the bears are in control here. Staples have been relatively slow to respond to the rally in utilities stocks, but it looks like it’s finally starting to happen. While Japan gets most of the attention in the non-U.S. developed market world, it’d be easy to overlook what’s happening in Europe.

Even though the major averages posted gains last week, it’s the utilities sector that led the market higher (and by a wide margin). We’re finally seeing an extended run of outperformance for all global stocks, both developed and emerging, for the first time in a year. The Bank of Japan finally made a major intervention into the forex market and it looks like 160 on the yen was the breaking point.

The risk-off conditions signaled by utilities outperformance appear to still be intact. Investors realize that a new inflationary trend may be restarting and they’re beginning to position their portfolios accordingly. The only big thing that may be setting up to halt the dollar rally is central bank intervention. Invest in Japan at your own peril!