Jan

4

Sector Watch: The Conflicted Recession Trade

Teresa Lo @ 4:09 PM | | Start a Discussion 

Investment strategist Tony Dwyer told WSJ Marketbeat that “people are putting on the recession trade,” by buying utilities and consumer staples such as Altria and Coke.

But they are also buying (or maybe selling less of) other things, so let’s take a look sector performance since December 26, 2007, the last swing high on the S&P 500. We start with the nine Select Sector SPDRs and their performance netted out against the S&P 500 index.

04-spsectors.gif

Yep, the tech sector has been pounded the most, losing nearly 3% net against the S&P, with consumer discretionary and financials not far behind. Industrials have held their own while money has flowed into utilities, energy, health care, consumer staples and industrials.

But which markets are up 8% net against the S&P? Looking at the macro picture, we find a very conflicted recession trade…

04-macrosectors.gif

It’s not a surprise to find that TIPS and 7-10 Treasuries up, but what’s that up there at the top? DBC, the basket of commodities. Big money has rushed into gold, agri-business and energy stocks. Seeing bonds and commodities both up is unusual. It makes one wonder if the back end cyclicals are blowing off.

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