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Inside The Stock Market ...trends, cross-currents, and outlook

Apr 05 2019

1999 Redux

  • Apr 5, 2019

As the market rebound has extended, we’ve noted its striking similarities with the rally of 1999—one that might have been the most speculative in U.S. history.

Apr 05 2019

A Confidence Game

  • Apr 5, 2019

Several consumer confidence gauges plunged in the wake of the Q4 market decline (as expected), and then rebounded in a lagged response to the stock market recovery (again, as expected). But March saw the largest one-month drop in consumers’ assessment of their “Present Situation” since 2008.

Apr 05 2019

BAA Yields: The Baaaad And The Good!

  • Apr 5, 2019

Last fall, we repeatedly noted that low grade corporate credits—measured by Moody’s BAA bond yields—were behaving, well, baaadly.

Apr 05 2019

Inveighing Against The Inversion

  • Apr 5, 2019

Some recent headlines are word-for-word regurgitations of those published in response to the early-2006 yield curve inversion. In that case, the naysayers were temporarily correct, as both the U.S. economy and stock market pushed higher for another year and a half before rolling over.

Apr 05 2019

The P/E Decline Has Been Greatly Exaggerated

  • Apr 5, 2019

The S&P 500 has bounced back to levels seen at the January 2018 spike high, yet is valued more cheaply than it was 14 months ago.

Apr 05 2019

The “Breakout” And Its Aftermath

  • Apr 5, 2019

A common criticism of our long-term valuation work is that valuations shifted north into a new trading range during the 1990s, meaning Leuthold’s benchmarks (dating back to 1957 and earlier) are no longer relevant.

Apr 05 2019

The Cyclical Bull In Perspective

  • Apr 5, 2019

This ten-year boom—one that’s taken the S&P 500 to the second-highest valuations in history—has merely lifted the index to the top end of a channel that’s contained the S&P 500’s 6% annualized gain over the last nine decades.

Apr 05 2019

Bottom-Spotting In Foreign Stocks

  • Apr 5, 2019

The tale of two markets has existed for years, but now it’s getting ridiculous.

Apr 05 2019

VLT & Implications For Small Caps

  • Apr 5, 2019

For much of this decade, we had an allocation preference for Large Caps over Small Caps because of the considerable P/E premium commanded by the latter.

Apr 05 2019

Small Cap Biotech Getting Pricey Again

  • Apr 5, 2019

In May 2015, we warned about rich valuations for small cap Biotech stocks and looked at various ways to evaluate those companies, as the majority have no approved drugs on the market, thus no revenue; therefore, valuing these companies using the conventional methodology is problematic.

Mar 07 2019

‘Green Book’ Wins Best Picture!

  • Mar 7, 2019

We’re almost at a loss for words! But we want to thank our parents, siblings, extended family, an eighth grade English teacher who doubted us for an entire year, and our golden retriever, Miley.

Mar 07 2019

Yet Another Anniversary?

  • Mar 7, 2019

We received two media calls in December hoping we would comment for upcoming special features about the tenth anniversary of the bull market. We rolled our eyes.

Mar 07 2019

Once In A Lifetime?

  • Mar 7, 2019

To paraphrase a talking head and the Talking Heads, someday you might find yourself in a beautiful deleveraging, with beautiful valuations, and you may ask yourself, well, how did I get here?  

Mar 07 2019

Same As It Ever Was?

  • Mar 7, 2019

February’s Oscar win validated our efforts to make the ‘Green Book’ suitable for all audiences, like our decision to relegate “bottom-quartile” valuation outcomes to the very back of the publication.

Mar 07 2019

Watch What They Do, Not What They Say

  • Mar 7, 2019

While the celebration over Jerome Powell’s “Christmas Capitulation” lingered throughout February, we’re still awaiting signs the capitulation consisted of anything more than words.

Mar 07 2019

The Correction In Historical Context

  • Mar 7, 2019

While it’s too early to let the ink dry on the accompanying table and chart, we’ve decided to add last year’s decline for comparative purposes.

Mar 07 2019

Time To Jump Back In?

  • Mar 7, 2019

A few pundits have suggested that Jack Bogle’s death in January might prove to be the symbolic capstone to a cycle in which passive investing has completely dominated the full-fee, active money-manager ranks.

Mar 07 2019

The Emerging Markets Dilemma

  • Mar 7, 2019

We’ve been either light on Emerging Market stocks or out of them altogether since early 2011, but have lately been watching for an opportune time to re-enter.

Mar 07 2019

Unemployment And The Point Of No Return

  • Mar 7, 2019

We’ve done extensive work on the yield curve, but until now had entirely overlooked an employment-based recession indicator that’s lately come into focus.

Mar 07 2019

A Scary Chart, Revisited

  • Mar 7, 2019

For a couple years, we’ve labeled the S&P 500 Price/Sales ratio as the scariest chart in the Leuthold database, and last year’s decline did little to improve its intimidating appearance.

Mar 07 2019

Sector Concentration And Effects On Country Performance

  • Mar 7, 2019

Is the performance of certain countries mainly driven by particular sectors? And, does U.S. sector performance drive the performance of other countries? (i.e., when U.S. Financials underperform, do foreign countries with large Financials sector weights underperform?). We did some data crunching to address the second question.

Feb 07 2019

A High-Risk Rally

  • Feb 7, 2019

During the market bounce over the last few weeks, we reminded ourselves and others of the old maxim that “bear market rallies look better than the real thing.” Evidently, the stock market overheard us and took the advice as marching orders.
 

Feb 07 2019

Did The Doves Swoop In And Save The Day?

  • Feb 7, 2019

Just a few months ago, Fed Chairman Jerome Powell boasted a reputation as a straight-talking, sound-money banker.

Feb 07 2019

It Wasn’t Powell Who Panicked

  • Feb 7, 2019

The Fed’s “Christmas capitulation” seems to get most of the credit for the stock market rebound, but we’re not exactly sure how, or even if, the Fed capitulated at all.

Feb 07 2019

Credit Conundrum

  • Feb 7, 2019

The stock market seems to have concluded that a recession will be averted in 2019, but evidence from other asset markets is less convincing.

Feb 07 2019

What Are Bonds Telling Us?

  • Feb 7, 2019

Corporate bonds aren’t the only asset reluctant to embrace the stock market’s latest “all clear” verdict on the 2019 economy.

Feb 07 2019

1998 Parallels

  • Feb 7, 2019

There are enough parallels between the 1998 and 2018 market declines that we decided to flesh out the comparison a bit more.

Feb 07 2019

Trend-Following Travails

  • Feb 7, 2019

To recap our allocation moves over the last year: We established an initial equity hedge in tactical accounts very close to the January 2018 highs.

Feb 07 2019

New Year, Old Leadership

  • Feb 7, 2019

We’ve written at length about a bear market’s tendency to catalyze major leadership changes—across sectors, styles, and even geographies.

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.

Feb 07 2019

Are New Lows The Key To New Highs?

  • Feb 7, 2019

Last year’s market decline was one of the largest to have occurred without a lengthy-preceding period in which breadth narrowed and Small Caps significantly underperformed.

Jan 08 2019

The Line Of Least Resistance Is Lower

  • Jan 8, 2019

At some point in his career, famed stock trader Jesse Livermore ceased using the terms bull and bear,  opting instead to describe trends in terms of “lines of least resistance.”

Jan 08 2019

Is The “Star” Aligned For 2019?

  • Jan 8, 2019

For those who remain skeptical that more stock market troubles lay ahead, we’ve supplemented the MTI and our other market tools with something truly authoritative: Evidence from a gossip column in a 1958 issue The Minneapolis Star!

Jan 08 2019

About That Great Jobs Report...

  • Jan 8, 2019

The December employment report temporarily eased fears of a severe U.S. slowdown. That’s a mystery to us.

Jan 08 2019

The Market Is Off Its Meds!

  • Jan 8, 2019

While investors obsess over the market level at which a hypothetical “Powell Put” might come into play (or whether such a put even exists), they seem to have overlooked the absence of another such put that proved dependable throughout the cyclical bull market.

Jan 08 2019

Yields Might Be Throwing A Curve

  • Jan 8, 2019

While the number of recession forecasts is on the rise, there’s a general reluctance among economists to project a downturn in the absence of a yield curve inversion.

Jan 08 2019

The Fed Was Not The Only One To Tighten Last Month

  • Jan 8, 2019

Wage inflation should accelerate in the months ahead, oil could bounce from its oversold low, and college textbooks might double in price before the fall semester. No problem…

Jan 08 2019

December’s Low Didn’t Have The “Right Look”

  • Jan 8, 2019

As the market sunk to a 3% loss on Christmas Eve, we sensed genuine investor panic—at least among the fraction of investors then paying attention.

Jan 08 2019

Watching For An Internal Washout

  • Jan 8, 2019

Having monitored market internals for warning signs for longer than we care to admit, it’s refreshing to turn around and watch many of the same signals for… wait for it... BUY signals!

Jan 08 2019

You Call That A Panic?

  • Jan 8, 2019

Christmas Eve came not with snowfall but a market freefall which was the worst-ever recorded for that date.