Green Book October 2018
Remember Your First SELL?
We’ll never forget the first time we read a SELL recommendation for a stock. It was nearly 30 years ago and we were two weeks into our first job with a small equity management firm. The internal memo cited several reasons for the sale that perplexed this rookie analyst—including booming new orders, a record backlog, recent increases in selling prices, and a big dividend hike to boot.
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Featured Articles
Stock Market Observations
Throughout the spring and summer, the market could alternatively be characterized as “divergent” or “disjointed”—but until very recently it could not be considered “distributive.” Now, Mid and Small Caps have hit a short-term air pocket and breadth figures were exceptionally poor at September’s scattered highs in the DJIA and S&P 500.
Narrow Performance Divergence Among EM May Not Last
We’ve previously noted the narrowing performance divergence between top- and bottom-performing Emerging Market (EM) countries in recent years.
Research Preview: Sector-Adjusted Factor Returns
This article summarizes our current research into the interaction between factors and sectors. We find that sector weights have a significant influence on some factor results, while the true factor impact is the key driver for others. Watch for our full report coming next week.
U.S. Rates—Driven Higher By Real Yields
The recent move higher in rates had broader support as other major markets also saw higher rates.
Mid-Term Elections—History Might Not Be A Good Guide
While mid-term elections are rarely big market movers, this year’s election demands more attention as it has the potential to alter the balance of political power in Washington.
Defensive Health Care Outpaces The Market
Recently, Health Care stocks have been making headlines as the sector rallies to new all-time highs. However, when we look at the sector via Leuthold’s proprietarily-built industry group composition—which has a more realistic market-cap weighting approach—the Health Care sector has been outperforming since the end of 2017, and YTD it is the #1 performing sector in our work.
Flows Subdued Across Categories
Through August 2018, total net cash flows into mutual funds and ETFs are positive but remain muted compared to those logged at this time in 2017.
Table of Contents
Stock Market
- Remember Your First SELL?
- Stock Market Observations
- Investor Temperament And The “Tape”
- Odds Of Outperforming?
- Seasonality Set To Favor The Bulls
- Stocks Not Yet Yielding To Yields
- Estimating The Downside: The G-Rated Version
- The Two-Tiered Global Market
- Rates Are Already Clobbering Consumer Stocks
- Time To Get Contrary With Commodities?
- Narrow Performance Divergence Among EM May Not Last
Of Special Interest
Macro Monitor
- U.S. Rates—Driven Higher By Real Yields
- Mid-Term Elections—History Might Not Be A Good Guide
- Risk Aversion Index: New “Lower Risk” Signal
- US Bonds
Equity Strategies
Market Internals
Portfolios
Major Trend
Fund Flow Trends
Estimating the Downside
At Random
Stock Market Observations
Throughout the spring and summer, the market could alternatively be characterized as “divergent” or “disjointed”—but until very recently it could not be considered “distributive.” Now, Mid and Small Caps have hit a short-term air pocket and breadth figures were exceptionally poor at September’s scattered highs in the DJIA and S&P 500.
Narrow Performance Divergence Among EM May Not Last
We’ve previously noted the narrowing performance divergence between top- and bottom-performing Emerging Market (EM) countries in recent years.
Research Preview: Sector-Adjusted Factor Returns
This article summarizes our current research into the interaction between factors and sectors. We find that sector weights have a significant influence on some factor results, while the true factor impact is the key driver for others. Watch for our full report coming next week.
U.S. Rates—Driven Higher By Real Yields
The recent move higher in rates had broader support as other major markets also saw higher rates.
Mid-Term Elections—History Might Not Be A Good Guide
While mid-term elections are rarely big market movers, this year’s election demands more attention as it has the potential to alter the balance of political power in Washington.
Defensive Health Care Outpaces The Market
Recently, Health Care stocks have been making headlines as the sector rallies to new all-time highs. However, when we look at the sector via Leuthold’s proprietarily-built industry group composition—which has a more realistic market-cap weighting approach—the Health Care sector has been outperforming since the end of 2017, and YTD it is the #1 performing sector in our work.
Flows Subdued Across Categories
Through August 2018, total net cash flows into mutual funds and ETFs are positive but remain muted compared to those logged at this time in 2017.
Stock Market
- Remember Your First SELL?
- Stock Market Observations
- Investor Temperament And The “Tape”
- Odds Of Outperforming?
- Seasonality Set To Favor The Bulls
- Stocks Not Yet Yielding To Yields
- Estimating The Downside: The G-Rated Version
- The Two-Tiered Global Market
- Rates Are Already Clobbering Consumer Stocks
- Time To Get Contrary With Commodities?
- Narrow Performance Divergence Among EM May Not Last
Of Special Interest
Macro Monitor
- U.S. Rates—Driven Higher By Real Yields
- Mid-Term Elections—History Might Not Be A Good Guide
- Risk Aversion Index: New “Lower Risk” Signal
- US Bonds