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The latest CPI numbers were largely in-line. The powerful alignment of fiscal and monetary policies will certainly alter the path of inflation this year, but for now, our discipline still suggests a mostly benign inflation picture.

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With recent extremes, both in underperformance and relative valuation, it feels like Low Vol could be near a turning point. At the very least, the margin for error is wider for this space than it has been in quite some time.

Last year’s Energy results earns an entry in the Cheapskate blooper reel, the sector will tie its personal best for the most consecutive years of underperformance against the S&P 500. However, this year’s delegate, Financials, offers a rare bright spot; it is the only Cheapskate sector to have beaten the S&P 500 during the last decade—pulling off that feat four times.

When we first published this work in 2011, the Bridesmaid’s alpha, both for asset classes and sectors, looked almost too good to be true. Since then, the performance edge for each has narrowed significantly—it’s still meaningful, but no longer magical.

Any hint of an Equal Weighted S&P 500 resurgence ignites a spark of optimism in active managers’ hearts. An EW run similar to the Tech Bubble aftermath doesn’t seem too farfetched. The downside? A bear market would probably be involved.

SPX pulled off a rare three-peat in 2025, returning +15%-plus for three consecutive years. What often follows is much higher volatility. Yet, strong returns alone do not cause major volatility events. Today’s bigger risk is the unprecedented convergence of three long-running themes: AI, Bitcoin, Private Credit.

Sentiment, traditionally a contrary gauge of stock performance, was acutely bullish entering 2025—the 3rd most optimistic level in history, and therefore worthy of concern. Nevertheless, SPX’s 2025 return logged the 3rd best outcome for a year starting with such elevated confidence.

Historically, the momentum plays of our Dreams and Nightmares have worked both ways, and 2025 was a “confirmation” year for this study. The best performing groups from 2024 beat the S&P 500 in 2025, and the worst performers of 2024 trailed both the Dreams and the S&P 500 in 2025.

Read this week's Major Trend.

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Read this week's Major Trend. 

The timeline of American economic development is punctuated by episodes of intense capital spending to build out a new and revolutionary concept that transforms the entire country.  The investment plans of hyperscalers Microsoft, Alphabet, Amazon, and Meta have captured the public’s attention this year as the release of ChatGPT in November 2022 ignited a quantum shift in capex spending, with the third quarter of 2025 coming in at a run rate of $97 billion, or nearly $400 billion annualized.  The astronomical amounts being spent to build AI capacity are almost hard to fathom, and today, we take a closer look at the data center phenomenon.

The latest CPI numbers were softer than expected, but it doesn’t solve the affordability issue. The powerful alignment of fiscal and monetary policy tools will play a major role in shaping the path of inflation next year.

Read this week's Major Trend. 

Read this week's Major Trend. 

It’s been five long years since Small Caps had their last sustained relative-strength rally: From November 2020 through March 2021, the S&P 600 gained an astounding 51% versus the S&P 500’s +22%.

More than halfway through the decade, a lot of things have changed. We revisit several decade-defining charts from the 2010s and consider where these long-running trends stand today.

The index’s monthly win streak looked as dead as Disco as November progressed. Then, SPX rallied to close the month with its best five-day run since mid-May to attain a 7th consecutive monthly win. In the majority of prior cases, the index proceeded to post above average results for the next three- and six-month periods.

We examine several baskets of equities focused on distinctively speculative, high-risk market segments. Such traits are apt to be qualities investors try to avoid—but when animal spirits are running high, they can generate prodigious returns during short but powerful speculative outbursts.

The third quarter of 2025 produced the strongest earnings results in recent memory, paced by revenue gains in all eleven S&P 500 sectors. Sales registered 8.7% growth over 3Q24, leading to improvements in profit margins across the income statement.

The index gained 5% in the last five trading days of November to eke out a minuscule gain—but it was enough to score its seventh-consecutive monthly advance. The S&P 500 is back within spitting distance of its all-time high set in late October.

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With the second month of Q3 reporting complete, S&P 500 estimated bottom-up operating EPS continued to scream higher (Chart 1). At $72.40, it is now 8.2% above the level at the end of September (before Q3 earnings reports began). Percentage-wise, this is double the bounce we saw two months into the still historically very good Q2 earnings period. Q3’s YOY growth stands at 22%—the highest rate since the 2021 surge out of the pandemic.

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Tracking revenue and earnings beats to identify conditions where the Equal Weighted S&P 500 may outperform the Cap Weighted S&P 500 (or vice versa). Original study by Brian Weisenberger, guest contributor, along with Scott Opsal.

Read this week's Major Trend. 

Read this week's Major Trend. 

There is consistent evidence that bank stocks behave like macro proxies. Both domestically and in other major economies across the globe, there is a strong and steady link between lending conditions and subsequent economic activity.

Q3 was characterized by two traits that typically favor a passive investment process while creating a drag for active portfolios: Convincing leadership of growth stocks and high absolute returns.

Halloween’s eerie vibe came early for investors in regional banks, as there were several reports of large and disturbing credit issues on October 16th—a frightful day that drove the group to a cumulative 14.3% shortfall versus the S&P 500.

The return landscape has been good for a passive “own-everything” asset allocation policy. Our hypothetical “All Asset No Authority” (AANA) portfolio has seen a few more cylinders firing this year. In fact, YTD, none of AANA’s asset class constituents have negative performance.

As AI-growth heavyweights keep pushing the S&P 500 to new all-time highs, value investors have been completely left out. Usually, buying high-quality value names is the best defense, but that has been a disaster in the current cycle. Junky value is substantially outpacing quality value.

November ushers in a tropical breeze for risk-seeking investors. The six-month stretch from November through April has proven to be an exceptionally profitable time, particularly for those exposed to factors, such as size, value, and volatility.

S&P 500 performance is being propelled by its disproportionate concentration in the Magnificent Seven stocks, while the Russell 2000’s leadership is powered by unprofitable small caps, thereby resulting in breadth of quantity, not quality.

S&P 500 Q3 estimated bottom-up operating EPS shot 5% higher with results for the first month of reporting (Chart 1). This pop is much more impressive than the 2% gain we saw in July (after the first month of reporting for Q2). The current Q3 estimate of $70.27 is about a percent better than the last reading prior to the “Liberation Day” announcement. The tariff-induced bottom-line reckoning feared this spring has yet to materialize. We’d surmise that the still L-shaped EPS snail-trail for Q4 will bounce higher, too, come January.

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The latest CPI numbers were slightly softer than consensus. The Fed had to pause its easing cycle when the CPI returned to 3% in January this year. But not this time. Our Inflation Scorecard indicates a modest disinflationary reading.