Leaders-Laggards

Utilities took a minor breather last week amid the return of tech & growth stocks, but the momentum is far from broken. Small-cap outperformance looks like it’s stalled out amid the return of the major large-cap averages to new record highs. Treasury bonds are starting to signal risk-off behavior again, confirming what we’re seeing in utilities and lumber/gold.

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.