Leaders-Laggards

If the enthusiasm around the Chinese tech sector is justified and the country is preparing to invest in infrastructure and private sector growth, there could be a real positive story developing here. Junk bonds are beginning to show a little vulnerability here as Treasury yields fall and high yield spreads tick modestly higher. If we get another month or so of negative data, I think we need to acknowledge that the current expansion might be coming to an end.

Even though the S&P 500 and Nasdaq 100 are still at all-time highs, the broadening of the market is still allowing defensive issues an opportunity. TIPS appear to be breaking out here and we could be getting the strong sense yet that investors have begun taking inflation more seriously. We may be finally seeing the re-emergence of emerging markets stocks.

Financials are proving to be one of the biggest beneficiaries of Trump 2.0. For the first time in two years, international stocks are finally building some momentum. We may be seeing a broader shift away from big tech leadership. The rally in gold seems almost unstoppable at this point. Tariffs are the one thing that has fairly consistently been supportive of the dollar, but there's been a relatively muted response from equities.