24Mar11:08 amEST

That's the Story of Bifurcation

bi·​fur·​ca·​tion ˌbī-(ˌ)fər-ˈkā-shən
1 the point or area at which something divides into two branches or parts : the point at which bifurcating occurs

2 the state of being divided into two branches or parts : the act of bifurcating

Stocks continue to operate in a bifurcating world, with the likes of NFLX green again this morning in the face of another potential weekend of drama for various banks. This time around, European icon Deutsche Bank is in the crosshairs, down 7-8% as I write this and its CDS blowing out. We also have commercial real estate and insurance stocks under pressure, beyond just the banks. 

But, again, Nasdaq bulls continue to want to pay up for expensive growth and the prospect of a Fed which eventually pivots and cuts rates this year. 
The net result is a classically bifurcated market. We have seen this last decade, like in 2013, but the difference back then in hindsight was that we still had an ultra easy Fed and a dearth of inflation, let along a banking crisis.

Hence, bifurcated markets are normally extremely unhealthy and resolve lower, as the crowded, expensive tech mega caps eventually become too one-sided and fall under their own weight, while the problem sectors IYR KRE KIE XLF continue to weaken or at least stay weak. 

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