The Market Remains Defensive as the Fed Keeps Buying

Hey... It's not QE you guys... It's just "Strategic reallocation of invented money..."

Good morning:

I assume you're somewhat frustrated with the market in 2025.

We've experienced a significant decline in domestic liquidity at the start of the year, which contributed to the February selloff.

Then, in March, we've had a market that has detached from fundamentals, circles social media messages, and provides non-stop jawboning from investment banks that know as little as we do about the White House's next move on trade.

Amid this uncertainty, defensive sectors continue to lead the US stock market. Utilities (XLU) have emerged as the top performer year-to-date with a 6.6% gain, while consumer staples (XLP) are up 4.1%. Yes, this market is very defensive.

It’s fair to suggest that we are in the third stage of this liquidity cycle.

The broader market (SPY) remains down 3.3% - a significant improvement from the 15% plunge in early April, but still far from regaining the momentum seen in January.

Most telling is the Consumer Discretionary sector (XLY), which is languishing with a 10% …