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

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.

Jan 08 2019

Guess-timating The Downside

  • Jan 8, 2019

While our market disciplines remain negative, we certainly aren’t oblivious to the haircut in equity valuations that’s already occurred.

Jan 08 2019

“De-Worsification” Ruled In 2018!

  • Jan 8, 2019

The market difficulties of 2018 were hardly limited to stocks. Commodities, in fact, were the worst performer among the seven major asset classes.

Jan 08 2019

Read This Before Taking The “Plunge”

  • Jan 8, 2019

After a bad market year like 2018, there’s a natural instinct for allocators to skew portfolios toward assets with poor recent performance. History suggests, though, that one shouldn’t make a habit of buying an asset on the basis of price weakness alone.

Jan 08 2019

Bridesmaid Strategy - Asset Classes

  • Jan 8, 2019

The best we can say about last year’s Bridesmaid asset—the S&P 500—is that it did not underperform “the S&P 500.”

Jan 08 2019

Bridesmaid Strategy - Sectors

  • Jan 8, 2019

Our analysis of the Bridesmaid effect originated in 2006, but was based on S&P 500 sectors rather than asset classes.

Jan 08 2019

Bridesmaid Strategy - Valuations

  • Jan 8, 2019

Momentum strategies aren’t for everyone. Still, contrarians should recognize that buying the prior year’s worst performing sector for a one-year hold has been an underperforming proposition over the long term.

Jan 07 2019

Industry Group Dreams And Nightmares

  • Jan 7, 2019

The “Dreams” portfolio represents a simple industry group trend-following approach, while the “Nightmares” portfolio serves as a bottom-fishing strategy made up of the previous year’s biggest losers.

Jan 08 2019

Corporate Executives Might Be Peeking Into Quants’ Toolkits

  • Jan 8, 2019

In terms of long-term planning, corporate executives are often tasked with choosing between expanding their business or returning cash as a way to reward shareholders. In the quant world, the two decisions have a consequence on future stock returns.

Dec 07 2018

Bull Pause, Or Bear Paws?

  • Dec 7, 2018

The old maxim says that when the bears have Thanksgiving, the bulls have Christmas.

Dec 07 2018

Stock Market Observations

  • Dec 7, 2018

The tops of 1990, 2000, and 2007 were all better “telegraphed” by the action of the market itself, than the September 2018 peak, but secondary measures of market internals suggested all summer that the internal trend was in fact deteriorating—and so did the action in low-grade corporate bonds.