Both Energy and the Financials are leading gainers in our SP500 Sector analysis today. The XLF and XLE are trading up +5% and +3% respectively, with the SPY +1.5%. Both sectors flashed the same positive divergences yesterday (see chart). Why?
I think it might be as simple as the steepening of the yield curve, which is both inflationary and positive for financial spreads. The one thing that's occurred in the last 48 hours of global market trading is that cost of capital has risen in conjunction with the US$ weakening.
Simplicity is at the core of complexity theory. That's what we use within our multi factor risk management model here at Research Edge LLC. That’s the math, and we’re sticking to it.
KM
I think it might be as simple as the steepening of the yield curve, which is both inflationary and positive for financial spreads. The one thing that's occurred in the last 48 hours of global market trading is that cost of capital has risen in conjunction with the US$ weakening.
Simplicity is at the core of complexity theory. That's what we use within our multi factor risk management model here at Research Edge LLC. That’s the math, and we’re sticking to it.
KM
