• COTW

    After The Tax Cut, Watch Out For This Hike

    April 20, 2018 BY Doug Ramsey

    Analysts are still coming to terms with the impact of the big corporate tax cut, as shown by the dispersion still existing across S&P 500 EPS estimates in 2018. But they should also be watching the line item that’s contributed the most to the breakout in profit margins above historical levels: interest expense...

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  • Major Trend

    MTI: Monetary And Liquidity Work Deteriorates

    April 17, 2018 BY Doug Ramsey

    While we’ve always emphasized the importance of the “weight of the evidence” over the individual MTI factor categories, it’s worth highlighting some key differences between the 2018 correction (which saw a loss in the S&P 500 of 10.2% at the February 8th closing low) and the 2015-2016 S&P 500 correction of 14.2%.

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  • Betting On An Earnings Beta?

    April 16, 2018 BY James Paulsen

    Many investors are betting robust earnings this year will allow the stock market to regain its mojo. Earnings results should be spectacular, boosted by both a synchronized global recovery and by a sizable tax cut. However, the question for stocks is not whether companies will deliver, but rather, whether the stock market will respond? 

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  • Inflation Watch

    Inflation—No Break-out Yet

    April 12, 2018 BY Chun Wang

    Despite the rare decline in the monthly reading, overall inflation trends are positive and in-line with expectations. A break-out on the upside has not happened yet. Inflation break-even rates are also well within the recent range. The overall picture for inflation is positive but uncertainties are higher.

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  • Stock Market

    A “Drug-Free” Market Decline?

    April 06, 2018 BY Doug Ramsey

    Yields on 10-year Treasuries are up 10 bps since stocks peaked in January, a clear break from the behavior of prior corrections. The last four stock declines of 10%+ were self-medicating—having been accompanied by bond yield declines of 50 to 150 basis points.

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  • Stock Market

    The Commodity Stock Disconnect

    April 06, 2018 BY Doug Ramsey

    We’ve chronicled the ever-expanding gap between commodity prices and commodity-oriented equities.  Don’t expect a rebound in one based on the strength of the other. There’s no clear historical tendency for the weaker asset to catch up.

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  • Bonds

    Trade War & Libor—More Bark Than Bite?

    April 06, 2018 BY Chun Wang

    Isn’t a trade war more bark than bite? We think a full-blown trade war may be eventually negotiated away but the process is not necessarily painless to investors.

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  • Equity Strategies

    Discretionary Reigns: Hotels & Leisure Revisited

    April 05, 2018 BY Kristen Perleberg

    The Consumer Discretionary index has also managed to outperform the S&P 500 by about 100 bps since the market’s January 26th peak, and in late March it was just a hair away from surpassing its previous relative strength performance high recorded in late 2015.

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  • Fund Flow Trends

    2018 Fund Flows Off To A Slow Start

    April 05, 2018 BY Kristen Perleberg

    Volatile markets in 2018 have lent to relatively subdued mutual fund (MF) and ETF inflows.

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  • Markets’ Whispers

    April 02, 2018 BY James Paulsen

    Although struggles within the stock market are capturing most of the attention, stress signals are being whispered across the financial markets.

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  • Major Trend

    MTI: Major Declines In Supply/Demand & Momentum

    March 27, 2018 BY Doug Ramsey

    The Supply/Demand work plummeted last week with three unrelated “smart money” measures all showing an institutional urgency to sell into the market weakness. Such behavior is atypical of this generally “countertrend” crowd, and a decisively bearish sign.

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  • No Panic?

    March 26, 2018 BY James Paulsen

    Throughout most of this bull market, there has been too much panic. In the minds of investors, a return to the 2008 crisis or the second coming of the Great Depression was always just around the corner. In the last couple years, however, the U.S. economy has returned to full employment, the output gap has closed, real GDP growth has moved away from being stuck at slightly above 2% to perhaps trending closer to 3%, and the global economic recovery has synchronized in a positive way.
     

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  • Yield Curve Watching?

    March 26, 2018 BY James Paulsen

    The biggest risk facing investors today is the start of the next recession. In a few months, this recovery will enter its 10th year and challenge the longest ever in U.S. history. Just prior to the next recession, the stock market will likely enter a bear market while credit quality deteriorates significantly. Although volatility and corrections are always present in the financial markets, recession is what is feared most.

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  • Stock Market

    The Correction That Scared No One

    March 07, 2018 BY Doug Ramsey

    The setback from the January 26th market peak represents the ninth correction of 7% or more since 2009, the most ever recorded during a single cyclical bull market.

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  • Stock Market

    An ‘87 Market Parallel?

    March 07, 2018 BY Doug Ramsey

    We’ve repeatedly shown how well-telegraphed the bull market highs of 1990, 2000, and 2007 were from the perspective of breadth and leadership. Surprisingly, though, the historic high of August 1987 was not so well-anticipated by the eight market bellwethers to which we’ve lately referred.

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  • Bonds

    U.S. Rates: Looking For A Dip

    March 07, 2018 BY Chun Wang

    The U.S. 10-year ended the month 15 bps higher but non-U.S. bonds fared much better with bond yields in Europe and Japan 4-5 bps lower.

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  • Bonds

    More On The Dollar Bear Market

    March 07, 2018 BY Chun Wang

    A potential trade war (not quite there yet) is not good for the dollar as it will inevitably invite retaliation and sour sentiment toward dollar assets.

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  • Equity Strategies

    Health Care Services Purchased In Select Industries

    March 07, 2018 BY Kristen Perleberg

    Our Group Selection (GS) Scores ranked Health Care as one of the top two sectors for a majority of 2011-2015; sector relative strength soared over that period.

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  • Of Special Interest

    Factor Mapping: The Final Piece Of The Puzzle

    March 07, 2018 BY Scott Opsal

    This months-long research effort culminates with this commentary as we lay out our thoughts on factor rotation and introduce The Leuthold Group’s recently launched Factor Tilt strategy.

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  • Zone Coverage?

    March 05, 2018 BY James Paulsen

    During the last couple years, cyclical sectors within the stock market have significantly outperformed defensive sectors. Robust economic growth and rising earnings expectations have driven investment flows toward economically-sensitive stocks. Moreover, many defensive stock market sectors have struggled with rising yields. If the stock market keeps rising, cyclical leadership may continue...

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