Inverse Zone

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Speculative sectors experience big hits as global stock market shows signs of exhaustion


Traders on the floor of the New York Stock Exchange.

Source: NYSE

The market is showing signs of exhaustion, and for good reason. Most of the major market segments have grown significantly over the past month.

But there is a growing refrain that we are on the “top of it all”. In other words, maximum profit growth, leading economic data and maximum reopening.

Michael Batnick, director of research at Ritholtz Wealth Management, embodied some of these concerns in a recent Publish titled, “It Gets More Difficult From Here.”

Noting that the S&P 500 is up 76% from a year ago, Batnick notes that “we’ve had bear markets before, but we’ve never had this type of rally in such a short time.”

Her advice: “Now is probably a good time to do some spring cleaning in your wallet.”

However, there is still no consensus on this notion.

“We’re talking about maximum growth, but the idea here is that this reopening is just beginning,” said Mike Labella, senior portfolio manager at Franklin Templeton on CNBC. “We have just taken an important step with 50% vaccinations in the United States, and that number will only improve in the United States and Europe, a few months behind. rally, but it will likely come more from the value and cyclical sectors than from the tech trade, which is more of last year’s. “

JPMorgan chief strategist Marko Kolanovic also repulsed against the story of “maximum valuation”, insisting that the reopening / reflation trade is not yet over. The reopening “will resume with a movement that will be bigger than what we saw at the start of this year,” he told customers. He says there is an ongoing recovery that starts first in the United States, then continues in Europe, and then in emerging market countries. This mobile recovery trade will extend the turnaround and prevent returns from rising too quickly, he says.

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