The great divide between health care and energy in US equities rolls on. Health care shares continue to dominate the recent rally in the US stock market while energy firms remain conspicuous laggards, based on one-year returns. In fact, energy is the only sector currently posting a loss for the trailing 252-trading-day period, according to a representative set of ETFs through Friday (Dec. 5). Positive momentum certainly favors the health sector lately, and it wouldn’t be surprising to see it persist in the near term. But it’s also reasonable to wonder if recent events are laying the foundation for a profitable reversion-to-the-mean trade in the energy patch at some point.
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The US economic trend remains positive and stable after recovering from October’s sharp but brief stumble, according to a markets-based estimate of macro conditions. The Macro-Markets Risk Index (MMRI) closed at +8.5% on Friday (Dec. 5). The index is near the level that prevailed just ahead of its mid-October tumble. The benchmark’s persistence above zero lately suggests that business cycle risk remains low. A decline below 0% in MMRI would indicate that recession risk is elevated; readings above 0% imply that the economy will expand in the near-term future.
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● German Industrial Output Rises In Oct as Economy Recovers | Bloomberg
● Eurozone Sentix Investor Confidence Improves In December | RTT
● Japan’s Q3 GDP shrinks more than initially reported | MarketWatch
● US Gasoline Prices Have Hit a 4-Year Low | Time
● Emerging Currencies Decline to Decade-Low as China Shares Rally | BusinessWeek
● China’s November imports fall unexpectedly, export growth eases | Reuters
● Bank of France Keeps Q4 French GDP Growth Forecast at 0.1% | MNI