Green Book July 2015
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Featured Articles
MTI Opens July With Slide To Neutral
The MTI dropped to Neutral in July and net equity exposure was reduced to 55% in the Leuthold Core and Global Portfolios (this is down from the 61% target of recent months).
Navigating The First Rate Hike
Our current view is the lift-off will be December or later. Assuming inflation will pick up and the Fed hikes the rate by the end of 2015, stocks will perform relatively well, with international stocks a better bet than U.S. stocks.
A Page For The Bulls
One could conceivably argue the market is still “cohesive” enough to hold together for awhile longer. June 23rd saw closing bull market highs in the NASDAQ, Mid Caps, Small Caps (both the S&P 600 and Russell 2000), and the critical KBW Bank and NYSE Arca Broker/Dealer Indexes.
Leadership: Winning Begets Winning
Many assume that stocks and industries exhibiting high price momentum suffer disproportionately during the eventual bear market. Surprisingly, the high momentum stock portfolio has suffered an average bear market loss that’s about a quarter less than that of the low momentum portfolio.
Time Cycle Mid-Year Update: Going Off Script?
Divergences have emerged: countries on a tightening path (e.g. US and UK) were more or less on track until June; while countries on an easing path (e.g. Germany, Japan, & Australia) went off script, as policy trumped historical patterns.
“Index Rebalance Effect” On Stock Performance
Stocks selected for inclusion in the MSCI ACWI have outperformed from the day of the announcement to the day of implementation, while the opposite is true for stocks which are removed. Long-term, however, stocks included in the index do not outperform compared to those that were removed.
Asset Management & Custody Banks: New Purchase
The last time this group held an Attractive rating for an extended period of time was 2000. Based on the group’s extended underperformance, induced by repercussions of the global financial crisis, we think it may finally be poised for a turnaround.
Table of Contents
Stock Market
- Summer Trouble?
- A BUY Signal That Says SELL?
- A Page For The Bulls
- NASDAQ Apathy?
- Beware The New ‘Wall Of Worry’
- A Venerable Monetary Indicator Turned Negative
- Leadership: Winning Begets Winning
- Oil Prices And VLT
- What’s Next For The Dollar?
- A Kind Word For “Forward Earnings”
- “Index Rebalance Effect” On Stock Performance
- High Quality Outperforming, But Valuations A Concern
Of Special Interest
Macro Monitor
- Interest Rates And Credits: At A Crossroads
- Time Cycle Mid-Year Update: Going Off Script?
- Risk Aversion Index—Increased But Stayed On “Lower Risk” Signal
- US Bonds
Equity Strategies
Quant
Market Internals
Portfolios
- Core & Global Asset Allocation Portfolios
- Domestic & Global Long-Only Portfolios
- 100% Short Portfolio: AdvantHedge
Major Trend
Fund Flow Trends
At Random
MTI Opens July With Slide To Neutral
The MTI dropped to Neutral in July and net equity exposure was reduced to 55% in the Leuthold Core and Global Portfolios (this is down from the 61% target of recent months).
Navigating The First Rate Hike
Our current view is the lift-off will be December or later. Assuming inflation will pick up and the Fed hikes the rate by the end of 2015, stocks will perform relatively well, with international stocks a better bet than U.S. stocks.
A Page For The Bulls
One could conceivably argue the market is still “cohesive” enough to hold together for awhile longer. June 23rd saw closing bull market highs in the NASDAQ, Mid Caps, Small Caps (both the S&P 600 and Russell 2000), and the critical KBW Bank and NYSE Arca Broker/Dealer Indexes.
Leadership: Winning Begets Winning
Many assume that stocks and industries exhibiting high price momentum suffer disproportionately during the eventual bear market. Surprisingly, the high momentum stock portfolio has suffered an average bear market loss that’s about a quarter less than that of the low momentum portfolio.
Time Cycle Mid-Year Update: Going Off Script?
Divergences have emerged: countries on a tightening path (e.g. US and UK) were more or less on track until June; while countries on an easing path (e.g. Germany, Japan, & Australia) went off script, as policy trumped historical patterns.
“Index Rebalance Effect” On Stock Performance
Stocks selected for inclusion in the MSCI ACWI have outperformed from the day of the announcement to the day of implementation, while the opposite is true for stocks which are removed. Long-term, however, stocks included in the index do not outperform compared to those that were removed.
Asset Management & Custody Banks: New Purchase
The last time this group held an Attractive rating for an extended period of time was 2000. Based on the group’s extended underperformance, induced by repercussions of the global financial crisis, we think it may finally be poised for a turnaround.
Stock Market
- Summer Trouble?
- A BUY Signal That Says SELL?
- A Page For The Bulls
- NASDAQ Apathy?
- Beware The New ‘Wall Of Worry’
- A Venerable Monetary Indicator Turned Negative
- Leadership: Winning Begets Winning
- Oil Prices And VLT
- What’s Next For The Dollar?
- A Kind Word For “Forward Earnings”
- “Index Rebalance Effect” On Stock Performance
- High Quality Outperforming, But Valuations A Concern
Of Special Interest
Macro Monitor
- Interest Rates And Credits: At A Crossroads
- Time Cycle Mid-Year Update: Going Off Script?
- Risk Aversion Index—Increased But Stayed On “Lower Risk” Signal
- US Bonds
Equity Strategies
Quant
Market Internals
Portfolios
- Core & Global Asset Allocation Portfolios
- Domestic & Global Long-Only Portfolios
- 100% Short Portfolio: AdvantHedge