Green Book November 2018
Warning Crack
We wrote in October’s Green Book that “many once reliable seasonal market patterns have been out of sync in recent years.” The market gods punished us for having the audacity to write such a thing (and during October, of all months!), taking the S&P 500 down to within 0.1% of “correction territory” at the October 29th low. But the punishment outside the U.S. commenced long beforehand, and last month’s losses drove several foreign market measures into bear territory. We expect U.S. blue chips to follow.
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Featured Articles
For Asset Allocators, As Bad As It Gets!
During 2018, no major asset class has done well, and in most respects the opportunity-set available this year has been among the worst in the last 50 years.
P/E Crash!!
While this year’s liquidity squeeze has yet to exact the toll we ultimately expect on the U.S. stock mar-ket, it has certainly contributed to a sharp compression in P/E multiples.
Think Halloween Is Behind Us? Beware, Zombie Alert!
“Zombie” companies are being kept alive by low interest rates and generous credit conditions, and the number of them, worldwide, has risen significantly over the past few years.
Measuring The Backup In Bond Yields
A couple of months ago, we (belatedly) observed that, in February the 10-year Treasury yield had bro-ken above its 10-year moving average. That simplistic tool has been a pretty good descriptor of yields’ long-term trend for more than a century, with few “whipsaw” signals along the way.
If Not Large Cap Growth, Then What?
With the valuation of several high-profile Large Growth names well over 100 times earnings, we consid-er alternatives by examining the relative valuations between LG and other equity categories.
Divergence Everywhere—A Cross-Asset View
The 40 bps jump in the 10-year yield, a 2-standard-deviation event, occurred within a five-week win-dow. Interestingly, historical data doesn’t suggest a continued increase in the near term.
Brick & Mortar Retail Evades October Sell-Off
Although Discretionary stocks broadly underperformed during October’s market decline, prominent amongst the very top industry group performers was a rather unexpected genre of industries—brick & mortar retail. Not only did this cohort hold up during October’s tumult, but many of the underlying stocks have been posting strong returns all year.
Table of Contents
Stock Market
- Warning Crack
- The Rate Hike Carnage Is All Around Us
- BAA Acting Baaaadly!
- Measuring The Backup In Bond Yields
- Bond Investors Get It Right Again!
- Too Soon To Expect Economic Weakness?
- For Asset Allocators, As Bad As It Gets!
- P/E Crash!!
- Emerging Markets: Not Persevering, Just “Preserving”
- Think Halloween Is Behind Us? Beware, Zombie Alert!
Of Special Interest
Macro Monitor
Equity Strategies
- Brick & Mortar Retail Evades October Sell-Off
- Leuthold Sector Rankings; Attractive & Unattractive-Rated Industry Groups
Quant
Market Internals
Portfolios
Major Trend
Estimating the Downside
At Random
For Asset Allocators, As Bad As It Gets!
During 2018, no major asset class has done well, and in most respects the opportunity-set available this year has been among the worst in the last 50 years.
P/E Crash!!
While this year’s liquidity squeeze has yet to exact the toll we ultimately expect on the U.S. stock mar-ket, it has certainly contributed to a sharp compression in P/E multiples.
Think Halloween Is Behind Us? Beware, Zombie Alert!
“Zombie” companies are being kept alive by low interest rates and generous credit conditions, and the number of them, worldwide, has risen significantly over the past few years.
Measuring The Backup In Bond Yields
A couple of months ago, we (belatedly) observed that, in February the 10-year Treasury yield had bro-ken above its 10-year moving average. That simplistic tool has been a pretty good descriptor of yields’ long-term trend for more than a century, with few “whipsaw” signals along the way.
If Not Large Cap Growth, Then What?
With the valuation of several high-profile Large Growth names well over 100 times earnings, we consid-er alternatives by examining the relative valuations between LG and other equity categories.
Divergence Everywhere—A Cross-Asset View
The 40 bps jump in the 10-year yield, a 2-standard-deviation event, occurred within a five-week win-dow. Interestingly, historical data doesn’t suggest a continued increase in the near term.
Brick & Mortar Retail Evades October Sell-Off
Although Discretionary stocks broadly underperformed during October’s market decline, prominent amongst the very top industry group performers was a rather unexpected genre of industries—brick & mortar retail. Not only did this cohort hold up during October’s tumult, but many of the underlying stocks have been posting strong returns all year.
Stock Market
- Warning Crack
- The Rate Hike Carnage Is All Around Us
- BAA Acting Baaaadly!
- Measuring The Backup In Bond Yields
- Bond Investors Get It Right Again!
- Too Soon To Expect Economic Weakness?
- For Asset Allocators, As Bad As It Gets!
- P/E Crash!!
- Emerging Markets: Not Persevering, Just “Preserving”
- Think Halloween Is Behind Us? Beware, Zombie Alert!
Of Special Interest
Macro Monitor
Equity Strategies
- Brick & Mortar Retail Evades October Sell-Off
- Leuthold Sector Rankings; Attractive & Unattractive-Rated Industry Groups