As I’m writing this, NASDAQ is up by about 0.4% ytd. The S&P is ahead by 1.4%. This compares with Hong Kong’s Hang Seng at +17.21%, EAFE (the commonly used measure of non-US, developed world stock markets) at +17.5% in $US, and gold, normally a safe haven in rocky times (even though I think this is a lunatic idea, except in places where the official financial system is completely untrustworthy), is ahead by 29.3%.

In contrast, the Russell 2000, which I think is the best measure among the big indices for how the domestic US economy is doing, is down by -6.3%.

I’m thinking that the spread between EAFE and the Russell 2000, an opportunity loss to the holder of the latter of almost a quarter of his money in less than a half-year, is probably the right assessment of the damage to the domestic economy that the Trump administration has already set in motion. Is there something in there for the big hole in the budget from his proposed continuation of income tax cuts for the ultra-wealthy? I don’t know. In the days before trading bots ruled the world, I would have said “some, not all; less than half if I were forced to guess.” But now…???

And I don’t see much doom impending in my own active holdings.

So I decided to look a bit more closely at the structure of the US market, to see if there’s any clue as to what’s going through the stock market’s hive mind.

The S&P 500 is a top-heavy index. The biggest ten names (including two classes of GOOG counted separately) make up about 36% of the index. The top four make up about a quarter. Ytd, they have performed as follows:

NVDA 6.4% of the index +5.0%

MSFT 6.4% of the index +9.5%

AAPL 5.7% of the index -19.5%

AMZN 4.4% of the index -5.4%

META 3.4% of the index +14.3%

AVGO 2.3% of the index +9.5%

TSLA 2.2% of the index -14.4%

BRK.B 2.0% of the index +9.7%

GOOGs together 3.9% of the index -11.6%

If you own all the ytd winners, and only them, in equal amounts, you’re up by +8%. If you own all/only the losers in equal amounts, you’re down by about -12%. You’re in a much different stock market and a much different frame of mind.

There’s the same kind of story if we look at market sectors. Ytd, they break out as follows:

Industrials +8.0%

Utilities +7.9%

Staples +7.7%

Financials +5.2%

Communication services +3.8%

Materials +3.3%

Real estate +2.3%

S&P 500 +0.9%

IT -1.0%

Healthcare -3.8%

Energy -4.3%

Consumer discretionary -6.1%

I read the sectoral breakout as follows:

–the market is saying the economy is going to be relatively weak (most of the defensive groups are in the plus column) , and

–consumers are going to shift away from imports to things made in the US (i.e., the strength of Industrials, whose label is a bit deceiving, and whose members by and large compete with importers in making stuff for individual consumers). Not a sign of economic health, though, more one of choice being limited.

Again, if you’re up to your ears in Industrials, you’re probably very happy; if you’ve bet on a robust economy, not so much. Again, though, the spread between the first and last industry groups is very wide. So all of us are more likely than usual, I think, to either be wearing a dunce cap or patting ourselves on the back (although professionals typically regard it as the kiss of death to do the latter).