Green Book November 2013
Markets At Or Near Peaks, We’re Still Bullish, Now What?
How long can Small Caps lead? From a price action perspective, it’s difficult to find cracks in the bull market’s edifice. The severity of the market’s overvaluation depends on one’s historical vantage point. But some of our alternative valuation measures find the market even pricier than P/Es do. There’s no reason to run for cover if the Early Cyclicals have topped out. We look at three groups where we plugged our nose and bought. Technology Distributors purchased. We find hidden opportunities in Emerging Market Equipment & Services Providers, Coal and Natural Gas. Five reasons inflation is still missing. Ten-Year: year-end target still 250 bps, interim volatility expected. No taper until 2014, in our opinion.
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Featured Articles
How Long Can Small Caps Lead?
The Russell 2000 is about five points ahead of Large Caps YTD, and is approaching its April 2011 long-term relative peak. We view this outperformance as their leadership’s last gasp and not a new cycle.
Little To Complain About
From a pure price action perspective, it’s difficult to find cracks in the bull market’s edifice.
Stock Values: Absolutely, Relatively
The severity of the market’s current overvaluation depends on one’s historical vantage point.
Beyond P/E Ratios
Some of our alternative valuation measures find the market even pricier than P/E ratios do.
Cyclical Stocks: Is It Finally Getting “Late?”
There’s no reason to run for cover if the Early Cyclicals have topped out.
Group Models: Finding Opportunity In Controversy
We like Attractive groups that make us cringe at the thought of potentially purchasing them. We take a peek at three groups - Airlines, Education and Managed Care - where we plugged our nose and bought.
Tech Sector Looking Healthy - Technology Distributors Purchased
Our quantitative measures for the group and broad sector continue to improve; we think the recent relative turnaround in these stocks is poised to continue.
Supply/Demand Dynamics Drive Three Emerging Market Energy Themes
We find hidden opportunities in Equipment & Services Providers, Coal and Natural Gas. We consider these themes longer term holdings instead of short-term plays
Five Reasons Inflation Is Still Missing
Overall demand slack, stubbornly low velocity of money, an overall stronger dollar, painfully low labor cost inflation and weakness in commodity prices are strong disinflationary forces.
10-Year: Year-End Target Still 250 BPS, Interim Volatility Expected
We don’t think the numbers between now and the Fed’s December meeting will be strong enough to convince it to start tapering this year. No taper until 2014, in our opinion.
Table of Contents
Stock Market
- No “Pop,” Just A “Hiss”…
- Little To Complain About
- Stock Values: Absolutely, Relatively
- Beyond P/E Ratios
- Cyclical Stocks: Is It Finally Getting “Late?”
- Introducing A New Regional Equity Model…
Of Special Interest
Macro Monitor
- 10-Year: Year-End Target Still 250 BPS, Interim Volatility Expected
- Five Reasons Inflation Is Still Missing
- Risk Aversion Index Falls Further, Stays On Its “Lower Risk” Signal
- US Bond Market - October 2013
Equity Strategies
- Group Models: Finding Opportunity In Controversy
- Highlighted Attractive Domestic Groups - November 2013
- Tech Sector Looking Healthy - Technology Distributors Purchased
- Supply/Demand Dynamics Drive Three Emerging Market Energy Themes
Market Internals
- Up/Down Earnings: Q3 First Month Results Close To Historical Average
- Small Cap Premium Ticks Up To 16%
- Large Cap Growth Bounces Back The Past Two Months
- S&P 500: Cap Weighted Outperforms During October
Portfolios
- Long Only Portfolios See Low Turnover
- Short Portfolios: AdvantHedge Sees Strong Performance
- Core & Global Portfolios Equity Exposure Trimmed Slightly To 60%
Major Trend
Estimating the Downside
At Random
How Long Can Small Caps Lead?
The Russell 2000 is about five points ahead of Large Caps YTD, and is approaching its April 2011 long-term relative peak. We view this outperformance as their leadership’s last gasp and not a new cycle.
Little To Complain About
From a pure price action perspective, it’s difficult to find cracks in the bull market’s edifice.
Stock Values: Absolutely, Relatively
The severity of the market’s current overvaluation depends on one’s historical vantage point.
Beyond P/E Ratios
Some of our alternative valuation measures find the market even pricier than P/E ratios do.
Cyclical Stocks: Is It Finally Getting “Late?”
There’s no reason to run for cover if the Early Cyclicals have topped out.
Group Models: Finding Opportunity In Controversy
We like Attractive groups that make us cringe at the thought of potentially purchasing them. We take a peek at three groups - Airlines, Education and Managed Care - where we plugged our nose and bought.
Tech Sector Looking Healthy - Technology Distributors Purchased
Our quantitative measures for the group and broad sector continue to improve; we think the recent relative turnaround in these stocks is poised to continue.
Supply/Demand Dynamics Drive Three Emerging Market Energy Themes
We find hidden opportunities in Equipment & Services Providers, Coal and Natural Gas. We consider these themes longer term holdings instead of short-term plays
Five Reasons Inflation Is Still Missing
Overall demand slack, stubbornly low velocity of money, an overall stronger dollar, painfully low labor cost inflation and weakness in commodity prices are strong disinflationary forces.
10-Year: Year-End Target Still 250 BPS, Interim Volatility Expected
We don’t think the numbers between now and the Fed’s December meeting will be strong enough to convince it to start tapering this year. No taper until 2014, in our opinion.
Stock Market
- No “Pop,” Just A “Hiss”…
- Little To Complain About
- Stock Values: Absolutely, Relatively
- Beyond P/E Ratios
- Cyclical Stocks: Is It Finally Getting “Late?”
- Introducing A New Regional Equity Model…
Of Special Interest
Macro Monitor
- 10-Year: Year-End Target Still 250 BPS, Interim Volatility Expected
- Five Reasons Inflation Is Still Missing
- Risk Aversion Index Falls Further, Stays On Its “Lower Risk” Signal
- US Bond Market - October 2013
Equity Strategies
- Group Models: Finding Opportunity In Controversy
- Highlighted Attractive Domestic Groups - November 2013
- Tech Sector Looking Healthy - Technology Distributors Purchased
- Supply/Demand Dynamics Drive Three Emerging Market Energy Themes
Market Internals
- Up/Down Earnings: Q3 First Month Results Close To Historical Average
- Small Cap Premium Ticks Up To 16%
- Large Cap Growth Bounces Back The Past Two Months
- S&P 500: Cap Weighted Outperforms During October
Portfolios
- Long Only Portfolios See Low Turnover
- Short Portfolios: AdvantHedge Sees Strong Performance
- Core & Global Portfolios Equity Exposure Trimmed Slightly To 60%