Last month
Solid performance for the model and the human being. Financials were decoupled from materials and industrials in a big way. Utilities continued to fall despite bond yields retreating which has to be a concern for future market performance. Financials were oversold and have rallied somewhat.
Next month
Macro factors
Bond yields have fallen for 'safe' coutries and the US is no exception.
Inflation expectations are now falling after a couple of softer core CPI reports.
Low import price inflation data could push expectations further down2011 GDP growth expectations have not risen since January now.
Overall, macro factors favour defensives for the third month in a row.
Sectors
Energy
Sector has suffered from the BP story, especially the oil services. N
Materials
US peers have disappointed and the euro peers are similar. Steel subsector vulnerable.
UW
Industrials
Still seeing healthy increase in activity indicators. Could suffer if China slows down. N
HealthCare
Major dollar earnings sensitivity. Should continue to do well. OW
Consumer discretionary
There could be some pause in the momentum as auto sales struggle to power ahead and residential construction is not recovering. N
Consumer staples
Very expensive now but cash-flow growth remains superior. N
Financials
Flow of bad news and suspicion as stress tests are announced globally. UW
IT
Nokia warning to put pressure on the sector which remains a dollar earner but it's been falling enough for now. OW
Telecoms
July often a bad month. N tactically before going OW in August.
Utilities
Commodity prices have rallied but not share prices. Gap is being opened with other major dividend payers so close UW this month and go N.
CHOICE
I am trying to be clever by hoping that utilities recover somewhat this month.
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