Leaders-Laggards

Consumer spending figures look good, but they’re increasingly needing to use credit card debt and “buy now, pay later” schemes to make it happen. As housing supply continues to grow, as it has been for a couple months now, expect the demand for lumber to only weaken from here. Latin America has been a mixed bag, but many Asian and African equity markets have delivered double digit gains over the past few months.

The markets continue to recover in anticipation of Fed rate cuts finally starting in September, but tech has so far not been the go-to sector of choice for investors. We’re starting to see a repeat of July, where small-caps benefited from the great rotation. Now that the Fed has acknowledged the labor market as a growing issue, we could soon see investors start to react by moving to Treasuries.

Mega-caps have resumed their position as market drivers, marking a return to the conditions that led to leadership in just a select few stocks. There’s too much going on with other risk-off assets, especially gold and Treasuries, to think that there’s too much strength in this reversal. Treasuries have been on a slow, steady rise over the past several months, but nothing has really stood out decisively as a risk-off moment.