Green Book September 2007
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Featured Articles
2007 Outlook: CPI Accelerating In Q4, Economy Creeping Along, But Recession In 2008?
Expect economy to slow the remainder of 2007, as a result of slower consumer spending as well as housing and auto woes. A 2008 recession is now a strong possibility.
August Market Action
Not even the stock market gymnastics of late-February and March of this year could rival the kind of volatility we saw in August.
Correlation In All The Wrong Places
Many quantitative factors, which had previously shown little correlation, suddenly all moved together.
Demise Of The Inverted Yield Curve...Greatly Exaggerated?
Recession risks don’t disappear the day the yield curve rights itself....the “window of vulnerability” extends for quite some time.
Foreign Investors Bullish On U.S. Stocks...The New Contrarian Sell Signal
Because Main Street investors have ignored the U.S. stock market during the recent bull market, they are not a useful contrarian gauge. However, in looking at foreigners investing in the U.S. stock market, we may have identified a new source of contrary behavior.
Getting A Fix On The VIX
August was an incredibly volatile month, and a month which saw the VIX Index explode to the highest level since 2003.
Housing: Still Too Early To Invest (Or To Build)
It’s still too early, but at some point in the next 6 to 18 months, going long the homebuilders will probably become the single most contrarian—and potentially highly profitable—thing to do. But before that happens, we expect to see more blood in the streets.
Inflation Outlook: Worrisome
We expect most broad inflation measures to accelerate over the remainder of the year.
Info Tech As The New Leadership Sector?
There has been a lot of talk recently by PMs and market commentators citing Technology as the place to be. However, when the performance is disaggregated, it becomes clear that this broad sector does not in fact look so good. There are pockets of strength (like the Tech…Big Ten), but our message to readers is be careful.
Mutual Fund Flow…..U.S. Stock Fund Defections Beginning To Mount
The YTD net redemptions of $11 billion further substantiate the idea that individuals’ lukewarm aversion toward the U.S. stock market is now turning into full-fledged revulsion.
The Double Edged Sword Of Confidence & Liquidity
Cash takeovers (including private equity buyouts) provided a very conducive environment for the stock market to rise, but there are now signs that this era of endless cheap money available to corporate and private equity buyers could be coming to an end.
View From The North Country
August was comparable to flying through a category five hurricane, a violent storm with gut wrenching updrafts and downdrafts. The relatively low volume recovery from the August lows has the characteristics of a bear market rally, not the beginning of another major move to the upside.
What Lies Beneath....Derivative Exposure In The Banking System
Transparency into the world of the financial derivatives market is notoriously opaque, and the statistics that are available can only offer hints about the level of risk looming over the financial system.
Table of Contents
Stock Market
- View From The North Country
- August Market Action
- Getting A Fix On The VIX
- Info Tech As The New Leadership Sector?
- Demise Of The Inverted Yield Curve...Greatly Exaggerated?
- What Lies Beneath....Derivative Exposure In The Banking System
- The Double Edged Sword Of Confidence & Liquidity
- Foreign Investors Bullish On U.S. Stocks...The New Contrarian Sell Signal
- Correlation In All The Wrong Places
- Mutual Fund Flow…..U.S. Stock Fund Defections Beginning To Mount
Of Special Interest
Macro Monitor
Inflation Watch
2007 Outlook: CPI Accelerating In Q4, Economy Creeping Along, But Recession In 2008?
Expect economy to slow the remainder of 2007, as a result of slower consumer spending as well as housing and auto woes. A 2008 recession is now a strong possibility.
August Market Action
Not even the stock market gymnastics of late-February and March of this year could rival the kind of volatility we saw in August.
Correlation In All The Wrong Places
Many quantitative factors, which had previously shown little correlation, suddenly all moved together.
Demise Of The Inverted Yield Curve...Greatly Exaggerated?
Recession risks don’t disappear the day the yield curve rights itself....the “window of vulnerability” extends for quite some time.
Foreign Investors Bullish On U.S. Stocks...The New Contrarian Sell Signal
Because Main Street investors have ignored the U.S. stock market during the recent bull market, they are not a useful contrarian gauge. However, in looking at foreigners investing in the U.S. stock market, we may have identified a new source of contrary behavior.
Getting A Fix On The VIX
August was an incredibly volatile month, and a month which saw the VIX Index explode to the highest level since 2003.
Housing: Still Too Early To Invest (Or To Build)
It’s still too early, but at some point in the next 6 to 18 months, going long the homebuilders will probably become the single most contrarian—and potentially highly profitable—thing to do. But before that happens, we expect to see more blood in the streets.
Inflation Outlook: Worrisome
We expect most broad inflation measures to accelerate over the remainder of the year.
Info Tech As The New Leadership Sector?
There has been a lot of talk recently by PMs and market commentators citing Technology as the place to be. However, when the performance is disaggregated, it becomes clear that this broad sector does not in fact look so good. There are pockets of strength (like the Tech…Big Ten), but our message to readers is be careful.
Mutual Fund Flow…..U.S. Stock Fund Defections Beginning To Mount
The YTD net redemptions of $11 billion further substantiate the idea that individuals’ lukewarm aversion toward the U.S. stock market is now turning into full-fledged revulsion.
The Double Edged Sword Of Confidence & Liquidity
Cash takeovers (including private equity buyouts) provided a very conducive environment for the stock market to rise, but there are now signs that this era of endless cheap money available to corporate and private equity buyers could be coming to an end.
View From The North Country
August was comparable to flying through a category five hurricane, a violent storm with gut wrenching updrafts and downdrafts. The relatively low volume recovery from the August lows has the characteristics of a bear market rally, not the beginning of another major move to the upside.
What Lies Beneath....Derivative Exposure In The Banking System
Transparency into the world of the financial derivatives market is notoriously opaque, and the statistics that are available can only offer hints about the level of risk looming over the financial system.
Stock Market
- View From The North Country
- August Market Action
- Getting A Fix On The VIX
- Info Tech As The New Leadership Sector?
- Demise Of The Inverted Yield Curve...Greatly Exaggerated?
- What Lies Beneath....Derivative Exposure In The Banking System
- The Double Edged Sword Of Confidence & Liquidity
- Foreign Investors Bullish On U.S. Stocks...The New Contrarian Sell Signal
- Correlation In All The Wrong Places
- Mutual Fund Flow…..U.S. Stock Fund Defections Beginning To Mount