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Green Book September 2013

We're Still Bullish As The Major Trend Stays Positive

Leadership isn’t warning of impending weakness but market breadth is highlighting risks not evident when inspecting leadership alone. We use Implied Equity Duration to measure the sensitivity of stocks to interest rate changes. Is The Dividend Mania Ending? Not all of the high yielders have been trashed.  The Small Cap P/E premium of 15% could go higher. Today’s record profit margins are due primarily to declines in “below the line” items. Are there Emerging Market opportunities given the momentum reversals and currency vulnerabilities? Aerospace & Defense has compelling stories of future profitability and growth. We still believe the upside for the U.S. 10-year is limited.


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