Technology’s New Rival?
Technology has seen some very robust gains, but todays best performing sectors were more “defensive” in nature with healthcare, utilities and staples leading the way (the XLU is higher by nearly 11% this week so far, not a typo, and the ETF is the best looking example of a V shaped recovery that I have seen). With the ten year now hovering near the very round 1 number, market participants are starving for yield. AAPL’s dividend now pays about the same as the ten year yield, and if one was looking for growth for years to come, which one would you choose? Markets are continuing their move higher, as it seems many are stockpiling their cash waiting for a pullback, which at the moment looks like the wrong move. Below is the ratio chart showing the utilities compared to technology, and notice the latter is lagging, even though the XLK is higher by more than 6% this week still with 2 sessions to go. With depressed yields most likely for longer, perhaps these two will battle it out for supremacy in 2020.