The strongest sectors in the past several months have been those that have shined consistently during weaker economic conditions. Commodities and "cyclical" sectors soar when the economy booms. The rules of the game change when the economy begins to grow at a below average pace. Commodities and "cyclicals" under perform during such times and others take the lead as interest rates decline and money is cheap.
Investors need to recognize the powerful business cycle forces. It is the only way to survive.
Overhanging the forces of the business cycle is the level of real interest rates. Money is cheap. No question about it. The rate on 13-week Treasury bills is less than 1% while inflation is at least 5% (depending on how you measure it). The implications is that the system has an inflationary bias.
More, much more when you subscribe to The Peter Dag Portfolio on https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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