From the desk of Willie Delwiche.
Key takeaways:
- Previous leaders have been overwhelmed by strength elsewhere
- Market following those who are stepping into the fray
- Market dynamics working against passive investors
Have the generals lost their way? Maybe not in an absolute sense, but definitely relative to where the action on the battlefield is taking place. More importantly, does this doom the army to defeat?
Market discussions of generals and their armies usually focus on whether the army is retreating as the generals advance. A very different situation is playing out currently. The mega-cap leaders that have been pacing the market for years (a trend that intensified this time last year as the shock of COVID overwhelmed the world) have been bogged down even as other areas of the market have heated up. So far, at least, it has been a case of marching in place more than actually sustaining losses. Upward pressure on bond yields and the emergence of better opportunities elsewhere could soon turn a relative weakness into absolute weakness.
