• Same Ponds, Different Fish?

    September 08, 2016 BY Scott Opsal

    The impact of atypically-high current valuations has become a challenge for style-box investing. High quality, mature dividend payers have habitually resided in the Value and Blend boxes, but investors have bid up those valuations as they look for alternatives to low bond yields.

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  • Major Trend

    Major Trend Index Down 0.04 To 1.25

    September 27, 2016 BY Doug Ramsey

    Small losses in four of its five categories drove the Major Trend Index down 0.04 to a ratio of 1.25 in the week ended September 23rd. Overall, the weight of the stock market evidence continues to tilt bullish and our tactical portfolios remain fairly aggressive positioned with net equity exposure of 63%.

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  • Inflation Watch

    Inflation-No Impact On Policy Decisions

    September 20, 2016 BY Chun Wang

    Inflation is slightly stronger than expected but has no impact on policy decisions. Right now, both the market and the data are telling the Fed to put the rate hike on hold. If the Fed decides to pass in September, there is a very good chance that the Fed might not be able to hike at all this year.

     

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  • Stock Market

    Rotation Away From Low Vol?

    September 08, 2016 BY Doug Ramsey

    An encouraging break from a 15-month leadership pattern: Low Vol stocks have rolled over since mid-July, while the High Beta cohort has finally eclipsed its late-April highs.

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  • Bonds

    Rate Hike In Limbo—Positive For Risk Assets

    September 08, 2016 BY Chun Wang

    Whether rates hike in September or December, we know the Fed will be very supportive of the market and the biggest beneficiaries will likely be EM and higher-yielding assets.

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  • Stock Market

    EM Leadership: Just The Beginning?

    September 08, 2016 BY Doug Ramsey

    Our EM Allocation Model triggered a BUY at the end of August after 5 1/2-years in bear mode. This upgrade is consistent with a cyclical leadership run of one to four years relative to Developed Markets.

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  • Stock Market

    Puzzling Trend Of Earnings Release Price Impact

    September 08, 2016 BY Jun Zhu

    The ER price impact has shifted higher post 2008-2009 financial crisis, and the movement has been more pronounced in the Small Cap universe. A look at analyst coverage and accuracy of estimates.

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  • Equity Strategies

    Housing Theme Framed Among Top GS Scores

    September 08, 2016 BY Kristen Hendrickson

    Attractive-rated groups include Building Products, Homebuilding, and Household Durables—these three groups possess similar industry drivers and thus exhibit highly-correlated stock returns.

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  • Inflation Watch

    Inflation-Keeping The Fed On Hold

    August 24, 2016 BY Chun Wang

    Inflation is weak in July but the rebound in oil prices, the renewed weakness in the dollar and the strength in Chinese Yuan are all positive for inflation expectations in the near term. The disinflationary headwinds from outside of the U.S. are only getting stronger, not weaker. It’s hard to disagree with the market’s low rate hike expectations.

     

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  • Stock Market

    Bubble Or Not?

    August 05, 2016 BY Doug Ramsey

    To revisit the all-time valuation peak of March 2000, the S&P 500 would have to reach 3455 (not a forecast!). A reversion to 1957-to-date median valuations implies an S&P 500 loss of 22%. That’s a serious loss, but hardly on the order of a “busted bubble.”

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  • Of Special Interest

    REITs: “We Are #11” - A Fresh Look At The Newest GICS Sector

    August 05, 2016 BY Scott Opsal

    On August 31st, Real Estate will become the newest GICS sector and the first Level 1 addition since the framework was unveiled in 1999—REITs had been classified as an industry under the Financials sector.

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  • Stock Market

    More Upside For Small Caps?

    August 05, 2016 BY Doug Ramsey

    There was a major cyclical BUY signal (VLT Momentum) for the S&P 500 in late-May, and as of July’s close, that bullish development was reinforced by a new VLT BUY signal on the Russell 2000.

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  • Stock Market

    Divergence Among Quality Factors

    August 05, 2016 BY Jun Zhu

    Performance and valuation of the three Quality factors are diverging. From a valuation standpoint, we might see a reversal in performance, with the Stability factor weakening and the Leverage factor strengthening.

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  • Quant

    July Factor Performance

    August 05, 2016 BY Greg Swenson

    Value was the only factor category that worked during July. Being the one factor that currently offers rising interest rate exposure, Value has performed inversely to every other category for most of 2016.

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  • Bonds

    Policies Trump Politics

    August 04, 2016 BY Chun Wang

    We find ourselves in the twilight period where the impact of a rate hike might be waning, while the potential election-year impact might be gaining more influence.

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  • Stock Market

    Active vs. Passive: A Three-Club Headwind

    July 26, 2016 BY Scott Opsal

    Actively managed funds have recently underperformed passive indexes. As a result, fund inflows and deposits have favored passive funds.

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  • Inflation Watch

    Inflation-A Slow Burning Fuse

    July 18, 2016 BY Chun Wang

    The latest CPI reading is positive for the overall risk rally. We continue to recommend a more patient approach towards inflation. The key market-based drivers of inflation have turned negative. But the recent key economic numbers have mostly exceeded expectations.

     

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  • Stock Market

    Stock Market Observations

    July 08, 2016 BY Doug Ramsey

    With the S&P 500 levitating near its all-time high, stock market leadership is peculiar—characterized by a flight to quality. And, despite the market’s violent bounce off February lows, there have been only four new market highs set by key indexes on our “Bull Market Top Timeline” table.

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  • Stock Market

    Low Vol Divergence, Episode 3

    July 08, 2016 BY Doug Ramsey

    The divergence between S&P 500 Low Volatility and High Beta Indexes has emerged for the 3rd time in a year. The 3-month performance spread is even more extreme than it had been on the eve of either the August or December stock market air pockets.

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  • Stock Market

    “Index Rebalance Effect” Once Again Proven

    July 08, 2016 BY Jun Zhu

    Validating results of a prior study, a look at the last four MSCI index rebalances shows that stocks soon to be added outperform from Announce Date to Effective Date, while deleted stocks underperform.

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  • Bonds

    A Tale Of Two Exits—How Different Is This Time?

    July 07, 2016 BY Chun Wang

    We think the best guide for Brexit is still the 1992 U.K. exit from the ERM. However, most U.K. assets are more expensive than they were back in 1992, and thus more vulnerable to shocks. 

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