Green Book June 2012
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Featured Articles
Down Ten Percent...In A "Better Than Average" Year?
While this is not our forecast, some investors will no doubt be mortified to learn that a “typical” calendar year (again, if there were such a thing) contains a drawdown as large as –13.5%.
Education Services: Regulation Risk Overhang Too Big
Should this group once again be a candidate for investors looking to be defensive? Probably not.
Housing-Related Groups Flock To The Top
The Homefurnishing Retail group was purchased in the Select Industries Portfolio in late May.
How Low Can It Go? Watch The Bund Yields
Going forward, at least in the near term, we think a good guide for the potential downside on U.S. interest rates might be the German bund yields.
Major Trend Bending, But Not Breaking...
The April/May swoon (an S&P 500 loss of -9.9%) has been accompanied by significant deterioration in our Major Trend Index. But the latest reading (data through June 1st) stayed positive, and our best guess is that it will hold firm.
Momentum Drive Returns; Correlations Increase
The worst performers are the first sell candidates for investors looking to shed assets.
Near Term Inflation Presures Receding
Most inflation measures matched expectations in April.
New Higher Risk Signal Generated But Optimistically Cautious
This new “Higher Risk” signal closed out the previous “Lower Risk” signal generated last December, and this measure is telling us it’s time to play a little defense.
The Bubble In Bonds...
Yes, we consider U.S. Treasury securities a bubble across the entire yield spectrum, and the situation has probably now moved into “extra innings” (think 10th or 11th) thanks to the flight to (perceived) quality triggered by the European debt crisis.
The Changing Role of Gold In An Investment Portfolio
As global capital markets are yet again dominated by extreme macro-economic uncertainty, gold appears to be behaving as a hedge against extreme equity market movements, a store of value and an alternative to fiat currencies.
Three In A Row And Counting...
Is there an historical precedent for important stock market highs to occur in the same month for three or more consecutive years? YES. In 1938-1942 the S&P 500 registered key highs during the first two weeks of January for five straight years.
Tuning Up The Printing Presses?
What were QE2 and Operation Twist intended for if not to save Europe?
Where To Invest? A Graphical View of Global Equity Markets
Taking into account the variety of total return contributors, we conclude that no one regional equity market stands out as a slam dunk investment idea.
Table of Contents
Stock Market
- Major Trend Bending, But Not Breaking...
- Down Ten Percent...In A "Better Than Average" Year?
- Three In A Row And Counting...
- Tuning Up The Printing Presses?
- The Bubble In Bonds...
- Where To Invest? A Graphical View of Global Equity Markets
Of Special Interest
Macro Monitor
- New Higher Risk Signal Generated But Optimistically Cautious
- How Low Can It Go? Watch The Bund Yields
Equity Strategies
Quant
Inflation Watch
Down Ten Percent...In A "Better Than Average" Year?
While this is not our forecast, some investors will no doubt be mortified to learn that a “typical” calendar year (again, if there were such a thing) contains a drawdown as large as –13.5%.
Education Services: Regulation Risk Overhang Too Big
Should this group once again be a candidate for investors looking to be defensive? Probably not.
Housing-Related Groups Flock To The Top
The Homefurnishing Retail group was purchased in the Select Industries Portfolio in late May.
How Low Can It Go? Watch The Bund Yields
Going forward, at least in the near term, we think a good guide for the potential downside on U.S. interest rates might be the German bund yields.
Major Trend Bending, But Not Breaking...
The April/May swoon (an S&P 500 loss of -9.9%) has been accompanied by significant deterioration in our Major Trend Index. But the latest reading (data through June 1st) stayed positive, and our best guess is that it will hold firm.
Momentum Drive Returns; Correlations Increase
The worst performers are the first sell candidates for investors looking to shed assets.
Near Term Inflation Presures Receding
Most inflation measures matched expectations in April.
New Higher Risk Signal Generated But Optimistically Cautious
This new “Higher Risk” signal closed out the previous “Lower Risk” signal generated last December, and this measure is telling us it’s time to play a little defense.
The Bubble In Bonds...
Yes, we consider U.S. Treasury securities a bubble across the entire yield spectrum, and the situation has probably now moved into “extra innings” (think 10th or 11th) thanks to the flight to (perceived) quality triggered by the European debt crisis.
The Changing Role of Gold In An Investment Portfolio
As global capital markets are yet again dominated by extreme macro-economic uncertainty, gold appears to be behaving as a hedge against extreme equity market movements, a store of value and an alternative to fiat currencies.
Three In A Row And Counting...
Is there an historical precedent for important stock market highs to occur in the same month for three or more consecutive years? YES. In 1938-1942 the S&P 500 registered key highs during the first two weeks of January for five straight years.
Tuning Up The Printing Presses?
What were QE2 and Operation Twist intended for if not to save Europe?
Where To Invest? A Graphical View of Global Equity Markets
Taking into account the variety of total return contributors, we conclude that no one regional equity market stands out as a slam dunk investment idea.
Stock Market
- Major Trend Bending, But Not Breaking...
- Down Ten Percent...In A "Better Than Average" Year?
- Three In A Row And Counting...
- Tuning Up The Printing Presses?
- The Bubble In Bonds...
- Where To Invest? A Graphical View of Global Equity Markets
Of Special Interest
Macro Monitor
- New Higher Risk Signal Generated But Optimistically Cautious
- How Low Can It Go? Watch The Bund Yields