Equity Strategies Group-Level Analysis Of The Equity Markets
Energy Strength Is Intact; GS Scores Continue To Produce Positive Results
Energy has solidified its spot atop the GS Scores; it’s by far the highest-rated sector and counts three underlying groups among the top-ten industries out of all the sectors. Valuations have only improved amid steady outperformance, and renewed capital discipline looks to remain for the foreseeable future.
Sector Rankings
See this month's sector rankings.
Energy Attains #1 Ranking For First Time Since 2009
The Energy sector has improved across a variety of factor subsets, with particularly large jumps in growth and macro/economic categories. For investors weighing investment ideas in the Energy space, we highlight the three Attractive groups for consideration.
S&P/MSCI GICS Changes
It’s that time again when S&P and MSCI reevaluate the Global Industry Classification Standard (GICS) to determine if any changes are warranted. We have a more vested interest in these changes than most, as GICS is the backbone for our industry structure that feeds into the Group Selection (GS) Scores.
Sector Rankings
Energy, Financials, and Information Technology remain at the top of our sector scores. Real Estate made the largest advance as it moved from the 11th ranking to 8th. Communication Services has now dropped to sit among the bottom three (9th spot), joining Consumer Discretionary and Industrials at 10th and 11th, respectively.
Discretionary And Industrials Decline Rapidly In Rankings
Not much has changed at the top of our sector rankings in recent months, with Financials, Energy, and Info Tech in the top three positions. But, we have seen a very rapid decline with two sectors, Consumer Discretionary and Industrials. Over the past several months, these cyclical sectors have sunk to the bottom of our ratings. Here we take a look at what has caused this dramatic drop.
Sector Rankings
See this month's sector rankings.
Leuthold’s Industry Group “Dreams” And “Nightmares”— Annual Update
We take a look at our historical analysis of industry-group portfolios to see how the “Dreams” and “Nightmares” from 2020 fared in 2021. The industry composition of the 2021 Dream and Nightmare portfolios is also presented.
Sector Rankings
Financials, Information Technology, and Energy continue to round out the top of our sector scores. Communication Services advanced from 10th to 7th. Real Estate made the largest drop as it moved from the 6th ranking to the worst-rated sector at 11th. Holding steady in the 4th and 8th spots are Health Care and Consumer Discretionary, respectively. Joining Real Estate among the bottom-three ranks are Industrials and Utilities.
Financials Strength Endures At Top Of GS Scores
Financials has occupied the #1 overall ranking for all of 2021, thus far, but its absolute score has increased throughout the year due to well-rounded strength across the factor spectrum, reaching levels not seen in more than twenty years.
Sector Rankings
Financials, Energy, and Information Technology remain at the top of our sector scores. Materials advanced up to 5th from 8th. Consumer Discretionary made the largest drop as it moved from 4th down to 8th. Communication Services joins Industrials and Utilities to round out the bottom three worst-rated sectors.
Energy Makes Its Move
After years of languishing in the rock bottom of Group Selection Scores and sector rankings, Energy exploded higher this month, jumping from 10th lowest (out of eleven broad sectors) to 3rd highest in our composite rankings.
Sector Rankings
Three groups bumped up to Attractive this month, Insurance Brokers, Thrifts & Mortgage Finance, and Oil & Gas Exploration & Production.
GS Scores Successfully Navigate Choppy 2021
Industries propelling performance have been diverse; the top-five groups are from five different sectors. Commodity-oriented, retail, and financial groups have been the primary drivers. The Leuthold Select Industries equity strategy, which chooses its thematic investments from the GS Score’s Attractive range, is up 20.2% YTD through September.
Sector Rankings
Financials, Information Technology, Health Care, and Consumer Discretionary occupy 19 of the 24 seats in the Attractive range at present. Cyclical groups have ranked well since last fall and continue to do so, while Growth-oriented themes have also recently made a comeback—with Health Care returning to the top five of our sector ranks back in August.
Digging Into Materials
If there are shortages, bottlenecks, and commodity inflation everywhere, why is the rating for the Materials sector so uninspiring? Although valuations are compelling for Materials groups, the overall decline in the rankings can be traced to EPS revisions and macro influences, like the U.S. dollar and low rates.
Sector Rankings
Financials, Information Technology, and Consumer Discretionary remain at the top of our sector scores. Health Care advanced up to 4th from 6th. Communication Services and Materials both dropped one spot moving to 5th and 6th, respectively. Real Estate, Energy, and Utilities are the three-worst rated, which has been the case for over a year.
Big Time
Market environments are driven not just by industry preferences, but also by a bias toward the very largest companies. We have developed a new set of groups composed of the 10 largest companies from each sector. With several of these baskets sporting positive rankings, we felt a closer look was in order.
Sector Rankings
Financials and Consumer Discretionary remain at the top of our sector rankings. Materials dropped out of the top three to 5th, along with Industrials moving from 4th to 7th. Information Technology and Communication Services moved in tandem to the 3rd and 4th spots, from 5th and 6th, respectively. Energy, Real Estate, and Utilities are the three-worst rated, which has been the case for over a year.
Automotive Retail: Attractive Amidst Industry Recovery
Automotive Retail currently ranks Attractive per our Group Selection Scores. This group offers a range of exposure to a bumpy—but recovering—U.S.-auto industry made up of car dealerships and auto parts & service retailers.