After failing to keep pace with the manufacturing recovery through much of 2020, the U.S. Services PMI has joined the Manufacturing PMI in hitting a new record high as vaccinations roll on and demand climbs. And during a big week for earnings—approximately a third of the S&P 500® Index report this week—we’ll be keeping a close eye on the ongoing fight for leadership. After a decade of outperformance, could the mega-caps—or large-caps as a whole—soon see a reversal of fortune? And we’ve said it before, but it’s worth a reminder: this market recovery has been unprecedented and there are no guarantees about the path forward. Still, a look at the high-yield spread shows investors feeling confident about the state of credit and default risk.
1. Both the U.S. Manufacturing and Services PMIs are well above the pre-pandemic levels:
![](https://blog.investbcm.com/wp-content/uploads/2021/04/4.26-Both-the-U.S.-Manufacturing.png)
Source: The Daily Shot, from 4/26/21
2. Another week of leadership battles. The Equal Weight S&P 500 Index and 7 of 11 sectors hit new highs last week:
![](https://blog.investbcm.com/wp-content/uploads/2021/04/4.26-Another-week-of-leadership.png)
Source: The Chart Store, from 4/26/21
3. Are the markets getting ahead of themselves? Is U.S. large-cap leadership getting long in the tooth?
![](https://blog.investbcm.com/wp-content/uploads/2021/04/4.26-Are-the-markets-getting.png)
Source: The Chart Store, from 4/26/21
4. While the Boomer prod is fun, this is scary. Don’t confuse speed with magnitude! Every time there is a claim “but this time it is different”, the markets prove otherwise…
![](https://blog.investbcm.com/wp-content/uploads/2021/04/4.26-While-the-Boomer-prod.png)
Source: The Daily Shot, from 4/26/21
5. The spread between junk and Treasuries is now lower than it was during the most tranquil market of 2017/18…
![](https://blog.investbcm.com/wp-content/uploads/2021/04/4.26-The-spread-between-junk.png)
Source: The Chart Store, from 4/26/21
6. European manufacturing is strong like in the U.S., but Services is still struggling due to a new Covid wave:
![](https://blog.investbcm.com/wp-content/uploads/2021/04/4.26-European-manufacturing.png)
Source: The Daily Shot, from 4/26/21
7. If you feel lonely, you are not alone:
![](https://blog.investbcm.com/wp-content/uploads/2021/04/4.26-If-you-feel-lonely.png)
Source: The Daily Shot, from 4/26/21