U.S. economic growth expectations somehow keep getting more positive and that has fueled the current cyclical rally with few exceptions. Even though tech gets most of the attention and cyclicals are leading the market higher here, defensive sectors and strategies are starting to make some noise again. If China really is ready to implode soon, it’s easy to make the case that the dollar is ready to move much higher here.

Cyclicals have been leading the market over the past month, but the biggest gains have begun moving beyond just industrials and towards previous laggards, financials and energy. With the macro backdrop deteriorating and fundamentals looking fragile, current risk-on conditions could potentially flip quickly. Utilities might have another leg lower as the final obligatory bounce occurs in equities, but I don’t expect it to last indefinitely.

Now that the latest data has kept the momentum going, we’re seeing industrials hand off leadership to other cyclical areas of the market, such as financials and energy. The latest triumvirate of good news - solid growth, low jobless claims and falling inflation - has been good for the economy in general, but it has resulted in the market rally broadening out. Real estate is turning into a tale of two markets.