Elevated readings in Citi’s U.S. ESI have lately been regularly accompanied by disappointing market returns. Our study of 27 past instances finds that “good-news-is-bad-news” episodes have tended to be self-correcting. Strong economic surprises eventually become harder to beat, and the ESI rolls over.

Growth’s P/E gap between trailing and forward EPS is over 10 points—historically high and challenging the 1999 peak. One’s opinion about Growth depends heavily on whether they are looking backward or forward in their P/E calculations.

What is the link between these two intellectual giants who essentially pioneered their respective fields? The recent S-1 filing by SpaceX in support of its IPO is our connection between these two world views.

The decision to lever up reflects the convergence of several behavioral finance hot buttons; today’s 54% absolute margin debt growth, and 26% excess margin debt growth over the last 12 months both exceed the historical trigger points.

Several leading AI models were engaged to generate personalized investment advice meant to meet the suitability standards required of professional advisors; their results were underwhelming, and yet, enlightening.

Read this week's Major Trend.

Read this week's Major Trend.

Read this week's Major Trend. 

Read this week's Major Trend. 

The CPI numbers are largely in-line with consensus. Our inflation scorecard suggests higher inflation pressure remains going forward.

Read this week's Major Trend. 

The biggest macro story in May was the sharp rise in G5 10-year bond yields.

A recent paper by Kritzman and Turkington addressed this timely issue and gave a refreshingly simple conclusion: Concentration may look unsettling, but historically it has not been a reliable predictor of poorer returns or higher risk.

In May, “Flight S&P 500” covered an amazing chunk of miles flying on just one engine: Info Tech’s tremendous 16% gain, which overshadowed pervasive losses in eight of the other ten sectors. Semiconductors and tech hardware accounted for three-quarters of the index’s upside in May. YTD, over one-tenth of the SPX gain is attributable solely to Micron (more than any other firm).

If AI is the darling of Wall Street, major packaged food brands may be the most hated theme of the day. Record-low EPS growth, record-low LTG rates, record-low P/E multiples, and record-low relative prices are priming this group for a classic contrarian opportunity.

AI-infrastructure outlays stand like a Giant Sequoia in the dense forest of economic activity; the accelerated buildout is masking softer conditions across the rest of the economy. Figures for S&P 500 capex and GDP growth are being distorted by a narrow group of AI beneficiaries.

Wall Street estimates show first-quarter earnings soaring an amazing 27% over 2025’s opener. Just as striking was the extent to which estimates were revised upward as the quarter unfolded.

Q1 book value changes across most BDCs were modest, implying that the sell-off was driven more by perceived fear than actual erosion in credit quality or loan value. Yet, major BDCs still trade at levels that can be interpreted as genuine discomfort over credit concerns.

The second month’s Up/Down ratio for Q1 is 2.24. The narrative of excellent earnings expansion in the Cap-Weighted S&P 500 is now joined by a near-record ratio of firms posting YOY EPS growth. Obviously, not all “up” firms in this study are matching the index’s +20% EPS growth.

Estimated bottom-up operating EPS for the S&P 500 has rocketed 13% higher since the start of Q1 reporting in April. For the past year-and-a-half, upward revisions are a familiar pattern, but nothing of the current magnitude. Expectations for future quarters, usually in a wait-and-see mode, have also been rising. Collectively, these EPS upgrades have dampened a decent chunk of the multiple expansion with the S&P 500’s recent run-up.

Read this week's Major Trend. 

Read this week's Major Trend.

Read this week's Major Trend. 

The CPI numbers were slightly hotter than consensus. Our inflation scorecard suggests higher inflation pressure ahead.

Read this week's Major Trend. 

April market action delivered two rare events: a 13-day winning streak in the NASDAQ and a +12% month  in the S&P 500 (trough to peak). Both have historically pointed toward strong forward returns. And yet they could not be more different in how they get there.

In a strategic pivot, Allbirds, Inc. withdrew from the footwear trade to redeploy assets into an AI data center rental business. Its stock jumped 582% within three days. The notion of a “582% blip” prompted us to further explore the phenomenon of lottery stocks and the behavioral-finance research into investors’ appetite for lottery-like payoffs.

The greatest investment risk from the trillions of dollars betting on AI is that overbuilding will lead to excess capacity with competition driving pricing toward marginal costs. Many players are tossing their hats into the ring, but new-era spending booms often end with just a few dominant firms.

Capital spending booms are often remembered as periods of IT transformation and optimism. Firms race to expand productive capacity, ushering in a new era of efficiency and growth. The current AI wave fits that description, but there is one underappreciated aspect of the frenzy: The asymmetric impact the capex surge will have on corporate profits today, versus several years from now.

Market-based measures are favorable, and the war-driven confidence shock has partially reversed. Despite recent volatility, the employment picture improved a bit, although full-time employment is a persistent reminder that labor market health remains fragile.

We compiled a list of indicators to watch for potential private-credit contagion, sorted into three tiers. The first tier, with the most direct private credit exposure and sensitivity to liquidity risk, is flashing a red flag; whereas the other two are graded as “cautionary” to “okay”—early signs of contagion, but not yet serious.

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Estimated bottom-up operating EPS for the S&P 500 shot 11% higher following results from the first month of reporting. Upward revisions during earnings season have become the norm for the last several quarters—with projections usually inflating in the high single digits from start to finish. Results for the first quarter seem to be different, with an initial spike standing head and shoulders above previous quarters. Forward quarters have moved higher as well and, in total, have dampened a good chunk of the multiple expansion that would normally follow a double-digit surge in the S&P 500.

Read this week's Major Trend. 

Read this week's Major Trend. 

This month’s Leuthold Refresh provides a quarterly update on our factor regime analysis. Factors or styles have historically performed differently under various economic and market conditions, and we have mapped these relationships to identify which factors are best positioned for today’s environment.

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The CPI numbers were either in-line or slightly better than consensus. Our inflation scorecard edges up slightly but remains neutral. It pays to be patient.

For much of the last year, we’ve noted markets have persistently underpriced geopolitical risk, treating it like background noise versus a real threat. Recent events have forced a correction to that stance. Oil, in turn, has reclaimed its function as a geopolitical risk hedge—a role it had abandoned for a long time.

Stocks in the Energy sector have massively outperformed since the Iran war onset; yet prior to that, the fundamentals in this space had already strengthened and the oil price surge is an extra bonus. Expectations have remained low while positive surprises have been delivered, making for a favorable setup.