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The New Reality is reflected in both today’s sector level performance, and that which we have seen emerge in the last 3 weeks of trading. The Financials (XLF) continue to underperform, while the Consumer Discretionary stocks continue to outperform. Today the XLF is down -0.40%; the XLY is up +0.45%, providing balance for an SP500 that is +0.25% on the day.

The liquid long American Capitalist is “re-taking” control of his/her country from the levered long bankers. Check out the relative performance chart that is embedded within the story of the XLF underperforming the SP500. The “supermarket” or “money center” banks have been getting hammered.

The New Reality is that the bankers will get paid to service the client before they service their own agenda. Not only will they do this on the client’s terms… but the US government’s! After all, these banks are “money-less” without becoming government supported organizations.

This stock market is no longer trading day to day on a “liquidity crisis.” That has passed, and so has the volatility associated with it. The credibility crisis will remain a structural problem that will rinse itself clean of all that was conflicted about it in the beginning. This Christmas, we should all be thankful for that.
KM