Market X-ray - find out what's working and what's not.

Global Stock Market Indices 

Global Private Equity is in the lead, up 19.7% after its 2020 gain of 12.5%. Emerging Markets are the laggard with a YTD gain of just 1.5%.

The major US equity indices moved in concert, but the big disappointment so far this year is the tech-heavy NASDAQ, up just 13.3% YTD after being up 44.9% last year. Tech appears to be making a comeback recently, but it will be hard to get traction in a rising rate environment.

All of the return data in this article is from Morningstar.

Global Asset Classes

Commodities have come on strong this year. after losing -7.8% last year. US REITs have rebounded strongly from last year's -4.7% decline. 

As expected, bonds - foreign and domestic - are struggling to stay above water. When adjusted for inflation, real yields are negative almost everywhere you look.

Stock Market Sectors

In 2021, energy is where the action is. The rebound from last year's decline of -33% is eye-catching. The same can be said for financials, up 31.2% after losing 2% last year. 

Consumer Discretionary stocks led the pack last year, up 48.4%. This year they're struggling to keep up with the S&P 500 index. Consumer Staples and Utilities are lagging as investors rotate into "reopening" sectors.

Stock Market Factors

High-Beta stocks are the place to be this year, up 32.7%. And they were up 25.6% last year, second only to Momentum stocks, which were up 29.2% in 2020. But money is flowing out of Momentum stocks this year, and much of it is going into Value names.

Commodities

After many years in the doldrums, commodities are finally having their day in the sun. Natural Gas, Gasoline, and Crude Oil lead the pack. Gold and Silver are last place YTD after big gains last year. Barron's has an article that posits a rotation out of gold and into crypto. We'll see if that comes to pass as the year progresses.

Foreign Markets

Russia leads the pack, after a flat 2020 performance. They are selling more oil, at higher prices this year. 

Of the three countries with a negative YTD return, China is the worst performer. Last year their market was up 28.3%. It appears that tensions between China's leadership and the Chinese business community are increasing, and their massive property sector is in serious trouble.

Momentum stocks

These stocks are showing strong momentum for 1 month, 3 months, and year-to-date periods. This is a small sample of where the money is going now. 

Final thoughts

Global markets will continue to rise until the free flow of cheap money starts to wind down. I believe that gains in the 4th quarter will be harder to come by. There are others who believe that we will see a final blowoff top that takes the S&P 500 to 4900 by the end of December. 

Keep a close eye on what the FED does. They control the money flow, along with our recalcitrant Congress who can't seem to agree on much of anything. The passage of a watered-down infrastructure bill, if it happens, will help keep the expansion going for a while.

To spot trouble, watch for a series of lower lows in the markets, followed by failed attempts to make new highs. The notorious dip-buyers have been aggressively supporting this market ever since the pandemic low point last year. If they become fully invested, the flow of new money into the market could stop.