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Sep 08 2023

Financials Improve; Commodities Tumble

  • Sep 8, 2023

While it was a small jump, from #6 to #5 in the sector composite ranks, Financials might be seeing the start of overall improvement. Conversely, Materials and Energy continued to drop in the latest ratings, as fundamental measures deteriorated.


Jul 08 2022

More Signs Of Peak Inflation

  • Jul 8, 2022

As suggested in our June 24th, Chart of the Week, the peak in consumer inflation (+8.6% in May) has likely either occurred or is imminent. Consumers should thank the stock market, which in 2022 has taken up its occasional role as inflation-fighter after the Fed abdicated throughout 2021.

Jun 24 2022

If Inflation Has Peaked, Thank The Stock Market—Not The Fed

  • Jun 24, 2022

High inflation continues to dominate the headlines, but it is only one piece of the “weight of the evidence” that’s stacked against the stock market. Still, in ironic fashion, stock-market action itself suggests that inflation is set to peak.


Dec 07 2021

Commodities Cooling In 2022?

  • Dec 7, 2021

It’s easy to misread where the true “consensus” stands on any financial forecast. Here’s a disconnect we see in current consensus thought: The “crowd” seems broadly bullish on commodities, yet the same crowd (previously known as Team Transitory) thinks consumer price inflation is near a cycle high.

Oct 07 2021

Gold: Still A Useful Dollar Hedge

  • Oct 7, 2021

A stronger U.S. dollar is “supposed” to be bearish for commodities, but it’s been a banner year for most commodities with gold among the few that are down on the year. However, keep in mind that gold tends to be a harbinger of major moves in industrial commodities, with a lead time of about six months—and its year-over-year change is now negative.

Nov 06 2020

Energy: Still Too Early

  • Nov 6, 2020

Fundamentally, we don’t have much new to say on the disaster that Energy-sector equities have become. Mostly, we want to illustrate the danger of assuming that the stocks of commodity producers will necessarily follow the path of their underlying commodities.

Oct 07 2020

Five Reasons To Expect Higher Yields

  • Oct 7, 2020

Much of what we think “we know” about the bond market says yields should be headed higher.

Jul 08 2020

Commodity Comeback?

  • Jul 8, 2020

Many analysts thought the last cycle would end with a bit of “fire” in the form of higher commodity and consumer prices, and they might well argue they would have been right if not for the eruption of COVID-19.

Aug 07 2019

Assessing The Commodity Free-Fall

  • Aug 7, 2019

For at least two years, the unofficial title of “the scariest chart in the Leuthold database” belonged to the S&P 500 Price/Sales ratio. That chart still rattles us, with the July month-end ratio still in the vicinity of its old Y2K high.

Aug 02 2019

Icing Over?

  • Aug 2, 2019

Will this economic cycle end with “fire” (overheating) or “ice” (a whiff of deflation)? Interestingly, hedges against both outcomes have performed well in recent months, with both gold and Treasury bonds spiking. For many reasons, though, we believe the U.S. expansion is more likely to end in a deflationary bust.

May 10 2019

Non-Energy Commodities Signal A Major Slowdown

  • May 10, 2019

Late in the cycle, blue chip indexes like the DJIA and S&P 500 can fool investors by hiding subtler deterioration in the broad list of stocks. That’s been underway in the last couple of months, but it’s nothing in relation to the divergence that’s opened in the commodity market, where there’s an almost 20% YTD performance gap between the headline S&P/GS Commodity Index and its non-Energy components (Chart 1).

Feb 07 2019

Sifting Through The Commodity Carnage

  • Feb 7, 2019

Commodities were the worst performer among the major asset classes during 2018, with the S&P/Goldman Sachs Commodity Index losing 13.8% on a total return basis.

Oct 05 2018

Time To Get Contrary With Commodities?

  • Oct 5, 2018

After a strong 2016 and a “Bridesmaid” (i.e., sector runner-up) performance in 2017, the Materials sector seemed primed to benefit from the “late cycle” character of the economy in 2018.

Sep 08 2018

The Commodity Bull That Equity Investors Missed...

  • Sep 8, 2018

While the bottom-line impact may ultimately be the same, there’s one thing we find more demoralizing than getting the direction of an asset wrong: getting the direction right and not getting paid for it.

Apr 06 2018

A Troublesome Commodity Pattern...

  • Apr 6, 2018

During each of the last five months, the U.S. economy has shown a broadening array of “late-cycle” characteristics.

Apr 06 2018

The Commodity Stock Disconnect

  • Apr 6, 2018

We’ve chronicled the ever-expanding gap between commodity prices and commodity-oriented equities.  Don’t expect a rebound in one based on the strength of the other. There’s no clear historical tendency for the weaker asset to catch up.

Sep 08 2017

Commodities: How Strong Is Too Strong?

  • Sep 8, 2017

While the bond market doesn’t believe it, the past couple of months leave no doubt that the U.S. industrial economy has recovered from the energy-related slump of 2015-2016.

Feb 07 2017

Stock Market Observations

  • Feb 7, 2017

The Major Trend Index stabilized in a moderately bullish range during the past several weeks, yet the Momentum/Breadth/Divergence category is almost the sole carrier of the bullish torch.

Aug 05 2016

Commodities: More To Come?

  • Aug 5, 2016

Commodities have enjoyed a strong year thus far, and the GS Scores on the Materials sector have followed suit (albeit with a slight lag), as highlighted in June’s “Of Special Interest” section.

May 06 2016

Thoughts On The Commodity Bounce

  • May 6, 2016

The global economic expansion will enter its eighth year later this summer, yet the world’s central bankers continue to fight deflationary demons as if it’s 2008.

Apr 07 2016

Has The Hook Been Set?

  • Apr 7, 2016

Two months ago, we suggested a short-term bounce in oil might prove to be the fundamental “hook” that would rationalize a bear market rally. We thought a bounce to $45 might do the trick—and oil futures essentially cooperated, reaching $41.90 on March 22nd.

Mar 08 2016

Where’s The Profit Leverage?

  • Mar 8, 2016

Industrial commodity prices and the latest ISM figures both point to a stabilization in the manufacturing sector following a two-year deceleration. Expectations for this year’s earnings have turned more optimistic as a result, but are the hopes warranted?

Mar 07 2016

Muddle-Through Still Has The Benefit Of The Doubt

  • Mar 7, 2016

The market’s latest infatuation with bonds was driven by grave concerns that the weakness in energy and manufacturing sectors might be spreading to the U.S. economy as a whole.

Nov 06 2015

Surveying The Commodity Carnage

  • Nov 6, 2015

The wreckage is beginning to look interesting and—with our cautious stance on the stock market—it would be fun to be bullish about something. Both our GS Scores and intuition suggest it’s still too early.

Nov 06 2015

What’s Driving EM Currency Weakness?

  • Nov 6, 2015

A strong dollar and low commodity prices are major forces dragging down EM currencies across the board.

Jul 08 2015

Navigating The First Rate Hike

  • Jul 8, 2015

Our current view is the lift-off will be December or later. Assuming inflation will pick up and the Fed hikes the rate by the end of 2015, stocks will perform relatively well, with international stocks a better bet than U.S. stocks.

Apr 08 2015

Commodity Washout?

  • Apr 8, 2015

Oil’s 60% decline in the last nine months has been the headline-grabber, but the remaining components of the Continuous Commodity Index (CCI) deserve some love, too.

Dec 05 2014

Sector Margin Trends

  • Dec 5, 2014

The S&P 500 record median profit margin of 10.3% is now almost a full percentage point above the last cycle’s peak of 9.4% (second quarter of 2007). Trends across S&P sectors are not as uniform as one might expect, though, with only half of the ten sectors last quarter at profitability levels that exceeded their 2001-2007 expansion highs.

Dec 05 2014

The Surprising Winners In Emerging Markets

  • Dec 5, 2014

While we expect an eventual break in this relationship, today Emerging Market equities are following, fairly tightly, the cycle of industrial commodities—a cycle that rolled over (on a secular basis, we believe) in 2011.

Dec 05 2014

Commodity Sentiment Crushed, Yet Commodity Stock Valuations Above Boom Levels

  • Dec 5, 2014

We’ve been negative on industrial commodities for some time, reflecting the persistently (and unsustainably) high levels of investment evidenced by our Global Group analyses of commodity-oriented industries.

Nov 07 2014

Commodity Bears (i.e., Everyone) Should Read This

  • Nov 7, 2014

The commodity “oversupply” story remains intact, with high levels of capital spending in the Energy and Materials sectors persisting, despite the 3 1/2-year downtrend in commodity prices.

Aug 07 2014

Correlation Breakdowns

  • Aug 7, 2014

We’d rather eat broken glass than have to forecast financial market correlations, but that doesn’t mean we ignore them altogether.

Jun 06 2014

Commodities: Not A New Bull

  • Jun 6, 2014

The year’s second biggest surprise (next to the relentless drop in bond yields) might be the YTD bounce in the major commodity indexes.

Mar 07 2014

The Bull Market Turns Five

  • Mar 7, 2014

The post-2009 stock market upswing now qualifies as only the sixth cyclical bull market since 1900 to last five years or more. But only three of the previous five-year-old bulls lived to see a sixth birthday.

Feb 07 2014

High Correlations And Their Meaning

  • Feb 7, 2014

While our tongue-in-cheek “Correlation Of Everything” measure has retreated from record levels, it remains far above anything seen prior to 2010.

Jan 08 2014

Buy The Bridesmaid, Not The One Looking To Rebound

  • Jan 8, 2014

The investment leadership of a given year has historically had better-than-even odds of outperforming in the following year at both the asset class and equity sector levels.

Jan 08 2014

Commodities In 2014: Supply Remains A Concern

  • Jan 8, 2014

While gold garnered most of the headlines last year (down 27%), commodities performed badly across the board in 2013. We expect more of the same in 2014.

Aug 07 2013

A Comprehensive Look At The Emerging Markets: Diagnosis And Prognosis

  • Aug 7, 2013

We examine Emerging Markets from both the top-down and bottom-up perspectives as we try to identify where to move and what to expect. We check in on two successful EM thematic group ideas as well.

Aug 07 2013

A New Leg In The Commodity Decline?

  • Aug 7, 2013

For more than two years we’ve discussed the supply-side risks to commodity producers stemming from capacity built during the manic “Third Act” of last decade’s Three Act Play in commodities. Commodity-oriented equities have indeed underperformed since 2011, but to date, most pundits have laid blame squarely on the demand side.

Jul 09 2013

Gold’s Implications For Other Commodities

  • Jul 9, 2013

Gold’s recent weakness may be more ominous for industrial commodity investors.