The Lead Lag Report - September 2007
Market-Cap Performance (S&P Indices)
Source: Bloomberg
*Note: ETFs which may track indices such as those mentioned may be held long or sold short by portfolios managed by the author at time of writing. This list is provided for informational purposes only and is not intended as a recommended buy list.
*Note: ETFs which may track indices such as those mentioned may be held long or sold short by portfolios managed by the author at time of writing. This list is provided for informational purposes only and is not intended as a recommended buy list.
September continued the trend we’ve seen over the past few months in terms of market-cap leadership. The S&P 500 Index outperformed this month as investors appeared to continue favoring the defensive nature of bigger companies. It will be interesting to see if this outperformance trend continues into the end of the year, as we enter into a seasonally more speculative period where Mid and Small Cap stocks have historically done well.
Sector Performance
Sector Performance
Source: Bloomberg
*Note: ETFs which may track indices such as those mentioned may be held long or sold short by portfolios managed by the author at time of writing. This list is provided for informational purposes only and is not intended as a recommended buy list.
*Note: ETFs which may track indices such as those mentioned may be held long or sold short by portfolios managed by the author at time of writing. This list is provided for informational purposes only and is not intended as a recommended buy list.
This month saw continued strength in the “more globally oriented” Energy, Materials, Technology, and Industrials sectors. The Financials and Consumer Discretionary areas, however, continued to drag behind the broader indices. It is worth noting that the Fed’s aggressive interest rate cut decision this month did little to bolster the trend of underperformance we’ve seen in Financial and Consumer related companies year-to-date. This might explain why the Consumer Staples sector, which is traditionally considered a “defensive” group in a declining market, outperformed the broad market in September as investors may have rebalanced their portfolios to have more defensiveness in the face of current economic concerns.
What Does it All Mean?
With the U.S. dollar reaching for new lows against other major currencies, the related prices of oil and other commodities have increased on a dollar-adjusted basis, bolstering the Energy and Materials sectors in particular. If the interest rate cut failed to make Financials and Discretionary outperform, that might signal that the Fed might not be able to ultimately stave off a Consumer Recession.
With the U.S. dollar reaching for new lows against other major currencies, the related prices of oil and other commodities have increased on a dollar-adjusted basis, bolstering the Energy and Materials sectors in particular. If the interest rate cut failed to make Financials and Discretionary outperform, that might signal that the Fed might not be able to ultimately stave off a Consumer Recession.
In addition, the “law of unintended consequences” may be taking hold. It would appear as though on top of the “sub-prime crisis” and higher mortgage payments consumers will have to face, cost-push inflation may force consumers to pay even more for products they buy because of the increase in commodity prices.
Disclosure:
Information presented in this commentary was obtained from sources believed to be reliable, but accuracy, completeness and opinions based on this information are not guaranteed. None of the information in this commentary is intended as investment advice or securities recommendations for any individual or entity. The writer and his or her firm(s) may, at any time, hold a trading position (long or short) in the shares of any company, whether or not discussed in this report, and may engage in securities transactions in a manner inconsistent with this report without notice or modification of this commentary. All data, information, and opinions expressed are subject to change without notice. Past performance is not a guarantee of future results. Neither diversification nor asset allocation ensures a profit or guarantees against loss. The content on this Site is offered for informational purposes only and is not intended to constitute either advice about appropriateness of obtaining advisory services or an offer to sell investment advisory services in any jurisdiction, nor a recommendation regarding any particular security, portfolio of securities, transaction, or investment strategy. All information and opinions expressed are made by the author and not by AmeriCap Advisers, LLC or any other related entity.
Disclosure:
Information presented in this commentary was obtained from sources believed to be reliable, but accuracy, completeness and opinions based on this information are not guaranteed. None of the information in this commentary is intended as investment advice or securities recommendations for any individual or entity. The writer and his or her firm(s) may, at any time, hold a trading position (long or short) in the shares of any company, whether or not discussed in this report, and may engage in securities transactions in a manner inconsistent with this report without notice or modification of this commentary. All data, information, and opinions expressed are subject to change without notice. Past performance is not a guarantee of future results. Neither diversification nor asset allocation ensures a profit or guarantees against loss. The content on this Site is offered for informational purposes only and is not intended to constitute either advice about appropriateness of obtaining advisory services or an offer to sell investment advisory services in any jurisdiction, nor a recommendation regarding any particular security, portfolio of securities, transaction, or investment strategy. All information and opinions expressed are made by the author and not by AmeriCap Advisers, LLC or any other related entity.
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