U.S. vs. Global Sectors

I have frequently mentioned the US economy and markets have been under-performing global counterparts. Let’s have a quick look at this chart from Michael Panzner: He has broken down that same data, by sectors.

As with the overall market, most U.S. sectors have underperformed their global counterparts over the past year, although the energy and health care groups have been notable exceptions.


SECTOR  vs  U.S. Relative to Global (12-Month Change in %)
Energy  5.60
Health Care  1.71
Info Technology  0.10
Utilities  (3.42)
Industrials  (3.69)
Financials  (3.70)
Consumer Discretion  (4.27)
Consumer Staples  (5.44)
Telecom Services  (7.71)
Materials  (12.55)

Good stuff, thanks Mike!

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  1. BDG123 commented on Sep 19

    A friend of mine just handed me Panzer’s book last week. I thought I was bearish. He’s just plain depressing. I will say that most international markets are going to take it much worse than we are. Think we have a credit bubble……….

    This rally is a very, very thinly traded one both in volume and participation. To be this close to another top with so little participation means we are open to a swift move down.

  2. BDG123 commented on Sep 19

    A friend of mine just handed me Panzer’s book last week. I thought I was bearish. He’s just plain depressing. I will say that most international markets are going to take it much worse than we are. Think we have a credit bubble……….

    This rally is a very, very thinly traded one both in volume and participation. To be this close to another top with so little participation means we are open to a swift move down.

  3. erik commented on Sep 19

    does anyone notice that this move is the mirror opposite of the capituation low in august. i think we’ll see a blowoff towards 3 then tomorrow the floor falls out.

  4. Fred commented on Sep 19

    Yesterday we traded the most volume since Aug 17th. I agree it was not record breaking volume, but the breadth WAS.

    ~96% of the volume was UP volume. THAT is very bullish (and rare).

    At the same time non commercial speculators have a record short position, while the commercials are long a record amount of equity futures.

    These are not facts that support the bears.

  5. michael Schumacher commented on Sep 19

    The market is not going to go down when you have the two biggest brokers reporting.

    LEH: when you tank estimates and then meet them what does that really say
    MS: wrote down how much??? $1.2 b and that’s just what they report

    I can only imagine what GS and BSC will say

    The Fed has caved to the brokers but that did not stop the auctioning off of excess tax receipts today (treasurey) and yet another repo by Ben.

    Did’nt they get enough yesterday


  6. TexasHippie commented on Sep 19

    Fred, do you still see a rotation into Tech despite this much breadth?

  7. Fred commented on Sep 19

    Absolutely. I see large cap tech outperforming for the next year or so (especially those with a good size export business).

  8. TexasHippie commented on Sep 19

    Fred – What do you consider “good sized”? Exports that account for >50% of total revenue?

  9. michael Schumacher commented on Sep 19

    Anyone still in denial about inflation needs to read the headline at Kroger’s today:

    DJ Kroger’s Profits Help Ease worries about Food Inflation

    Classic denial and indicative of where we are headed as a country……

    “it’s all ok as long as corp. profits are up”

    Kroger’s Profits Help Ease Worries About Food Inflation
    Last update: 9/19/2007 2:05:59 PM

    By James Covert

    NEW YORK (Dow Jones)–Pumped-up fears about food inflation just got deflated.
    That’s how some investors are interpreting better-than-expected second-quarter earnings at Kroger Co. (KR), the nation’s largest supermarket chain.
    Earlier in the summer, disappointing quarterly reports from Kroger and other big grocers had stoked fears that surging food costs might squeeze profits for the rest of the year. But in the just-ended fiscal second quarter, “market conditions allowed for a general pass-through of cost increases,” Kroger Vice Chairman Rodney McMullen said on a Tuesday conference call.
    Kroger said profit jumped 28% on a better-than-expected sales gain of 6.6%. Gross margins widened for the first time in more than five years, and executives said price increases at competitors were a help. That settled concerns among many investors about how quickly grocers will be able to raise prices amid soaring wholesale costs for everything from meat to dairy products to cereal. While some analysts still caution that consumer spending this fall is vulnerable to higher energy prices and a downturn in the jobs market, most breathed easier following Kroger’s news.
    “Kroger effectively put to bed the concern over food inflation being a long-term margin issue,” Bear Stearns analyst Robert Summers said in a research note. He expects the supermarket industry will “regain some of its defensive investment characteristics on the heels of this report.”
    Indeed, Kroger shares on Tuesday rose 7.7% to close at $29.09. Shares of Safeway Inc. (SWY) rose 4.6% to $33.76, while Supervalu Inc. (SVU), which owns the Albertson’s chain, rose 1.3% to $40.22.
    Summers notes that a government index tracking food manufacturers’ prices has been moderating through August. He said that’s a signal that “we are further working through the inflation cycle.” But there are still reasons to believe that this year’s unusually steep gains in wholesale food prices – driven by harsh weather that has damaged produce as well as soaring demand for corn-based ethanol for use as a gasoline additive – might be too much for shoppers to absorb amid the recent economic slowdown.
    Andrew Wolf, an analyst at BB&T Capital Markets, notes that Kroger’s sales slowed by some measures from this spring’s pace, and he blames rising prices on the shelves. “Consumers en masse will stretch their food dollars in various ways, including buying and wasting less and/or trading down,” Wolf said.
    Stephanie Intagliata, a 32-year-old mother of two in Wichita, Kan., said prices during the past few months have risen for milk, eggs, bread, fruit and just about everything else at her corner supermarket, Dillon’s, part of a regional chain operated by Kroger. While green peppers had been four for a dollar this spring, they’re 79 cents each now. “God help you if you want to buy anything organic,” she adds.
    Intagliata notes that while she sometimes shops for groceries at Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT), the food prices there aren’t always lower. In response, she’s shopping less frequently at the big chains and making more weekend trips to farmer’s markets and butcher shops, where quality can be found at lower prices.
    If food and energy prices continue to climb this fall, “we’ll start having to cut back in other areas like entertainment,” Intagliata said.
    Grocers’ margins are typically squeezed at the start of an inflationary period, as grocers absorb spikes in commodity items to protect shoppers from “sticker shock” that might cause them to cut spending or defect to cheaper venues. And when wholesale prices begin to ease, grocers typically delay lowering their retail prices, thus recovering from earlier margin losses.
    The delays at the tail end of the cycles can actually help supermarkets boost long-term profits, as margin hits taken early are outweighed by benefits later on. Still, some fret that the severity of the current cycle could make that more difficult to achieve.
    Earlier in the summer, Kroger was among the most non-committal in its outlook for passing on prices, and some analysts still note that margins could suffer if Wal-Mart decides to mount a big fall blitz on groceries. But other chains have sounded more upbeat notes. Earlier this month at a conference hosted by Goldman Sachs, Safeway Chief Executive Steven Burd told investors that the current inflation cycle is “a pretty manageable event” and that, contrary to investor sentiment, it wasn’t a long-term negative for the business.
    “And I don’t expect this rate of inflation to continue; I expect it to plateau and then maybe soften a little bit,” Burd added. “But again, I’m basing that on 14 years of almost none and then six months of some.”

  10. techy2468 commented on Sep 19


    please refer to the below post by mish, he refutes your claim that FED is printing and flooding the system with cheap money.


    even JDH from econobrowser agrees with him.


    does that mean we were all wrong in thinking that FED is making the dollar cheap by its printing press….

    if that is the case……i am beginning to wonder if those dollars flooding the global system were not created in the past 1-2 years but maybe in the last 15 years…

  11. donna commented on Sep 19

    Oh, come on, who prints money anymore?

    90% of our transactions are electronic – we don’t “print” money – but M3 shows the massive inflation of the credit market.

  12. Justin commented on Sep 19

    OK, things have gotten a little skewed to the bullish side with the fed cut, but doesn’t 50 basis points mean, “oh shit?”

  13. michael Schumacher commented on Sep 19

    I emailed Mish about that article and, more importantly the chart he refers to.

    I have to laugh since he claims that it’s about at 2% when the chart he displays clearly shows alot more.

    His response was to drop a name of someone inflation person that agrees with him and that I need an economics course…….

    It’s his chart that shows it is MUCH higher however I see how he neglected to mention the action in it before his reconstruction….

    I’m sure I’m not the only person who saw that.


  14. michael Schumacher commented on Sep 19

    “OK, things have gotten a little skewed to the bullish side with the fed cut, but doesn’t 50 basis points mean, “oh shit?”

    Yes it does mean that however in the context of the broker who was’nt going to get the big bonus now sees that he will.

    Sort of like: “Oh shit I can get a bigger Mercedes this year”

    But yes you are correct in the mechanics of that type of cut……


  15. techy2468 commented on Sep 19


    printing money is just a way of saying…increasing supply.

    i dont know much about monetory systems….does below statement means you disagree with mish?

    **money – but M3 shows the massive inflation of the credit market.**

  16. Justin commented on Sep 19

    MS, you say that but I was reading today that the deals are not getting done. As far as “who’s printing money?” The Russians, The Indians, the Chinese…ours are not the only printing presses.

  17. michael Schumacher commented on Sep 19

    Deals will get done….it’s just that those deals were in danger of costing the participants quite a bit more in borrowing costs. Go figure…..that they have to subjected to the same rules that we do

    LEH said it best yesterday before the Fed supplied it’s juice:

    “We see no further writedowns unless spreads widen”

    Which means we will be losing more of your money if we don’t get a rate cut.

    Yesterday was all about protecting the profit margins on those deals……

    Too bad the perma bulls can’t or won’t see that.


  18. Fred commented on Sep 19

    TexasHip…that sounds reasonable. Yet I own many that have less exposure than that.

    (OT…go ALVR)

  19. Greg0658 commented on Sep 19

    Donna – who needs the fed printing press when you have derivatives ontopof derivatives ontopof derivatives Fictitious Capital

    it helps to have great buying rates to put FC to work tho

    like what is it? free money after 3 transfers?

  20. Winston Munn commented on Sep 19

    You can track monetary growth with the growth of the System Open Market Account – since the first of this year it has been growing at 3.25% – not a big deal.

    Donna is correct that the big deal has been in credit expansion. If M3 were truly representative of money stock growth, we would be looking like Zimbabwe. But we are not.

    What we are looking like is 1927-1929 and its credit bubble.

  21. whipsaw commented on Sep 19

    Fred said:
    “I see large cap tech outperforming for the next year or so (especially those with a good size export business).”

    I would expect spending to decline globally during that time, but I think that you are right about that nonetheless. The NDX was quite resilient during the meltdown and is not directly burdened by the bankers. I also like large cap offshore.

    I was fairly astounded by the half point cut, but that’s what it was and it is suicidal to bet against this dealer. I was going to sit on the sidelines until mid-October but I am hearing more chatter about fund manager performance anxiety and I know what that means. So I went ahead and bought a few QQQQ calls today, mainly because all of the indicators that I use have rolled over to buy now. I would like to see somewhat more absolute volume, but that’s where the performance anxiety comment comes in- it will appear in due course.

    I’ll keep nibbling on calls as events warrant, but am not going to join the crowd in exploring ways to short the dollar at this point- that is affected by too many things besides interest rates and I don’t have the time to trade it directly in a forex account any more. My general outlook is that stocks are good until January and at that point a rotation into some species of long dollar vehicle will be preferred.


  22. Mark Reed commented on Sep 20

    Greg, please don’t repeat Winter’s misuse of Fictitious Capital – it is Karl Marx’s term for our fractional reserve banking system.

    Derivatives and stock markets do not “create” money. The shanghai market going up 500% in a few years is not fake money. Its money moving from one place (banks) to another place (stocks) and price increases are a reflection of a shortage of supply.

    Which makes me wonder –

    With a steady monetary supply and an increased demand for commodities say from China can we even call commodity price increases inflation?

    I think this point is what is confusing many of the people who say the fed and every other government is “printing” money.

  23. Greg0658 commented on Sep 20

    I wish not to pick a fight but I guess thats what I’m doing

    imh naive opinion

    1> #s in accounts provide buying power
    2> banks hold real assets as collateral
    3> derivative accounts in a space like wall street hold psychological $s
    4> #s in accounts provide buying power

    my fight as a naive is I must balance daily

    are you telling me to play the game and accept that $250K offer I got on the phone last week? give its use a try? grease this wheel? Only thing – I’ve kinda gotta put up a 50×150 foot primary plot up as collateral.

  24. Greg0658 commented on Sep 20

    ps to salesman – dont call me, I’ll call you

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