And Just Like That Everything In The Financial Markets Changed (Stock Sector Money Shifts) – Mike Swanson

I don’t need to know you that there has been a banking crisis going on, because it has been in the news everywhere and sadly on social media there have been many that have tried to create panic with the headlines. There is no reason to fear that you will not be able to get money out of the bank. These social media gurus, with most of them being crypto people, have been completely reckless in their messaging.

Yes, everyone’s attention has been on the performance of regional bank stocks, represented by the IAT ETF, but more is going on now.

However, it is true that the decline in bank stocks has represented a big change in the financial markets. Not only has the US stock market rally, that began towards the end of last year, hit a wall, but the US economy is likely doing so too. Banks are now likely to be much tighter in who they lend money out to and how much and to even look for ways to shore up their balance sheets through foreclosure activities in the coming months. That will have an impact on the economy.

The performance of various stock sectors suggests this is going to be the case.

I use TC2000 to analyze the performance of the sectors inside the stock market and ran a scan this week to rank them by performance through the month of March. To my surprise the regional banks were not the worst performing sector. It turns out that one sector did worse than they did – the oil and gas drilling sector. At the bottom of performance also were shipping stocks, rental and leasing companies, office REIT’s, major energy companies, copper stocks, and agriculture related companies.

Take a look at the XLE ETF, which tracks the big cap energy stocks.

The XLE ETF rolled over this month and declined on a volume spike.

Shipping stocks falling is factoring in a slowing global economy, but declines in copper, agriculture, and energy companies are doing the same thing. In fact drops in those sectors suggest that the rate of inflation is likely to continue to come down in the next few months.

I would see that as a temporary decline in the rate of inflation, because, while I believe the stock market is in a long-term secular bear market, commodities are positioned in a long-term secular bull market. Even if inflation declines a bit this summer, I’d expect it to come roaring back once the coming economic slowdown comes to an end.

All these commodity related sectors will eventually be good buys, but I don’t see them as good buys yet.

As for best performing sectors in March, at the top of that list is silver and gold mining stocks.

Almost everything else is down one way or the other, it’s just a matter of degree to how much.

The price of gold and silver are breaking away from the action in the stock market.

I talked about that in this weekend video update.

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-Mike