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.

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.

The index had its worst month since the tariff tantrum one year ago. Yet, a sharp rally on the last trading day took some of the sting out of the March loss; downside estimates narrowed by a similar amount.

There’s been a major return benefit for selling AAPL when it hits a 7% SPX weight and repurchasing after reverting back to a 6% weight. We tracked three options to switch into after a 7% “sell” trigger, holding till a new buy is flagged, and each crushed the approach of holding AAPL through the rotation.

Walmart’s performance and expanding P/E ratio contradicts the Staples sector’s less dynamic results, so either Walmart is commanding a growth premium, or investors are applying different valuation standards across the sector. Either way, count us as skeptical.

The evolution of BDC asset values may shed new light on how much of the bear market in alternative asset management stocks is due to genuine economic risk and how much is fueled by an over-reaction to the software and redemption scare.

Private credit has dominated headlines for all the wrong reasons, devastating alternative asset managers linked to that space. When we see a group of stocks with 30%+ losses in a matter of months, our contrarian “Spidey-Sense” starts to tingle, and we begin to wonder if a bargain is in the making.

Sentiment is generally a contrarian indicator, i.e., extreme optimism foretells lower future returns and vice versa. Yet, there are backdrops in which enthusiastic sentiment coexists with ongoing equity gains.

Read this week's Major Trend

Read this week's Major Trend. 

The launch of Operation Epic Fury on February 28th triggered a 51% surge in WTI crude in just three weeks, reigniting investor fears of economic disruption reminiscent of the 1973 OPEC embargo. As tactical investors, we were curious to see what the historical impact of sharp oil price spikes has been on the stock market and on important macro indicators. This analysis evaluates 15 distinct oil price shock episodes since 1985, each characterized by a greater than 20% price increase within 30 days, to assess the historical impact on equity markets, GDP, inflation, and interest rates.

Read this week's Major Trend. 

Read this week's Major Trend. 

The latest CPI numbers are in-line, but the war complicates the outlook. Our scorecard shifts close to neutral and we recommend a more cautious stance toward inflation.