Research.LeutholdGroup

Everyone is struggling with allocations to a fixed-income market that seems exceptionally over-priced. Cash rates remain near zero, and the 10-year Treasury yield—at 1.65%—sells at a 61x P/E multiple for a coupon without any growth! Moreover, junk-yield spreads are near record lows, and investment-grade credit spreads are at their tightest levels in at least 20 years. Finally, it’s a pretty good bet that yields are headed higher in the next few years.

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After significantly decreasing in the previous decade, employee compensation of U.S. corporations, as a percent of nominal GDP, has risen slowly but steadily since 2010. That is, rising labor costs have proved to be a modest but growing challenge for labor-intensive industries.

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Most bull markets of the last 40 years commenced when company fundamentals and earnings were still declining from a recession. Because of that, valuations often worsen considerably during a fresh bull run as the stock market surges despite continued earnings weakness.

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We launched a revamped version of our Major Trend Index. The objective of the new methodology is to increase the flexibility, and even the subjectivity of the MTI. This approach recognizes the “subjective reality,” without forcing us into the tedium of re-weighting sub-factors if they become more or less critical as market dynamics evolve.

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A replay of a Zoom Call with Chief Investment Officer, Doug Ramsey where he shared his thoughts and observations on today's market and what he sees looking ahead. The slides are available through the PDF Download.

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Top decile valuations are often the result of unduly positive investor sentiment that leads to inflated multiples. Bullishness comes in varying strengths: optimism, enthusiasm, exuberance, and, at the extreme, the mania of crowds. 

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Replay of a Zoom Call with Chief Investment Strategist, Jim Paulsen where he shared his thoughts and observations on today's market and what he sees looking ahead. The slides are available through the PDF Download.

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Durables have bounced back much stronger than non-durables while services have lagged. Inflation's reaction has been muted to these moves.

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The Redditors came for the hedge funds, and chaos ensued. We think that when the dust settles, the Reddit crowd will be the spark that allowed more powerful market players to inflect the real pain. Our thoughts, from experience, on why this happened and how we try to avoid it.

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With new leadership in Washington and--with large-cap growth’s decade-long stranglehold on outperformance looking shakier than ever--a potential leadership change in equity markets as well, Leuthold Group CIO Doug Ramsey will share his current views and what he will be looking out for in 2021.

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As we turn the page on 2020, a peek ahead to the S&P 500’s 2021 operating earnings is probably in order. You never know, earnings and valuations might be important again one day.

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Driven by massive government stimulus, an imminent vaccine rollout, and the expectation of record earnings in 2021, investors seem to be on the verge of embracing a move away from Large Cap Growth stocks in earnest. The leading candidates offered as broad-based alternatives to Large Growth (LG) include Value, Small Caps, and Emerging Markets.

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Balanced portfolio investors face a difficult challenge finding equity alternatives that modify risk without overly reducing reward. The problem is acute because traditional choices have lost much of their historic appeal. Cash certainly lessens volatility, but, with a zero yield, its reward penalty is excessive.

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Perusing current equity-investment possibilities highlights a diverse set of choices. Focusing on only two primary attributes—relative price and relative earnings—illustrates considerable diversity among the major investment styles.

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Although COVID-19 has significantly impacted everyone, its economic wake has been unusually bifurcated compared to past crises. Since the pandemic requires social distancing, the recession and its aftermath have been concentrated disproportionately among “social and lower-earning” industries. This odd, if not unique, divergence in the economic fortunes of low and high-earning industries perhaps explains how overall real GDP, the unemployment rate, the housing industry, manufacturing activities, and other economic segments have managed to recover quickly and powerfully.

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FAANG has dramatically outperformed Large Cap Growth the past ten years, but is has become cheaper and slightly less growth-oriented in the process. We examine the extent FAANG performance has carried through to the rest of the Large Cap Growth universe and how to get growth without them.

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Replay of a ZOOM Call with Chief Investment Officer, Doug Ramsey. He shares his thoughts and observations on today's market and what he sees looking ahead and answers questions.

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Scott Opsal looks at S&P 500 forward earnings for 2021 and how they stack up against pre-pandemic economic healthy year of 2019.

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We examine a variety of industry groups with noteworthy relative price action on both “reopening” and “closed economy” days. Our objective is to shed more light on the industry groups that are consistently moving together on these days.

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Look, quick! Before it reverses! The Top-5 firms in the S&P 500 have underperformed in September! I’m sorry, you’ll have to forgive my sense of urgency, but the astounding speed and consistency in which these firms have outperformed may have burned the notion into my brain that they can only “go up” (or at the very least beat the index).

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