Reflation – The easy path for equities is higher and therefore that’s exactly where they are today. But instead of having the mega tech group provide the punch, it is the more economically sensitive sectors/ indexes leading today. Energy (XOP +6.1%), Semis (SMH +2.57%) and Banks (BKX +1%) are the best performers, while Utilities (XLU -1%) is the worst. Energy is benefitting from Oil’s march higher, and Semi’s from their auto chip shortage, but long-term US yields are moving those last two sectors. The 30-year yield traded above 2% for the first time since last March, giving a boost to the banks, and therefore hurting some of the higher dividend sectors (XLU). As Value is beating Growth today, earnings continue to provide a positive story. So far about 60% of the S&P 500 have reported, and the blended earnings rate is a positive 1.7% (according to FactSet). This compares to estimates of a 9.3% drop at the end of December…. Another tailwind for the markets.
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