"Analysis Without An Agenda"
Pentonomics

Inflation's Real Cause

According to Pimco's new Chief Economist, Paul McCulley, the Fed's war against inflation has been won! But, before we get out our party hats and plan the tickertape parade, we have to ask ourselves - for the past 27 years have we really been at war with inflation?

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Focused Sector Performance

Here is a quick scan of the market sectors we follow. A few observations stick out to us.

  • Basic Resources had a tough time keeping up with the major indices in Q1 Unsurprisingly, a strong dollar is a difficult backdrop for resource sectors.
  • Chemicals topped the list, and these were the broad category of chemicals, not solely the Agricultural chemical widely used in fertilizers.
  • Utilities did rather poorly, although the index figures to do include dividends, which provide a substantial part of their total return…..particularly in pipelines. We feel this wide underperformance could be chalked up to natural gas prices being at multi year lows and to the wide swings in oil prices, as these trade in sympathy to energy unit pricing. Rising U.S. Treasury yields during the quarter also put pressure on dividend paying securities.

Focused Sector Performance
01/01/2012 - 03/31/2012

The returns for Indices, ETF’s and Stocks do not reflect dividends and are based on the last sale for the date requested. Data courtesy of Dorsey Wright.

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