Diet Of Staples:
The beginning of 2021, obviously very young, has flipped the switch as opposed to 2020. Energy which was the worst performing major S&P sector, by 30 percentage points, is off to a fast start. The industrials which everyone has been touting, seems to be resting, and the staples have garnered little love thus far being the cellar dweller, with the XLP down 3.5%. The group has been weighed down by soft drinks, non durable household products and personal products so far this year. For those looking to take a contrarian stance, (thanks Will) perhaps the staples may be a place to hide out in. Among the “defensive” spaces of the market the staples are acting well as the XLP is just 5% off its most recent 52 week highs. Compare that to the utilities and real estate, via the XLU and XLRE, which are both 12% off their own recent annual peaks. Learning this week that February, is the worst month in a post election year, and the fact that Biden signed an executive order to boost food benefits, this unloved sector, could get some positive attention going forward.