Green Book December 2021
“Peak Insanity” Is Behind Us
We think 2021 has earned its place in the books as the wildest and most speculative year in U.S. stock-market history, eclipsing even 1929 and 1999. That doesn’t mean 2022 will bring a panic or a crash, maybe just a degree of sobriety.
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Featured Articles
“Peak Insanity” Is Behind Us
We think 2021 has earned its place in the books as the wildest and most speculative year in U.S. stock-market history, eclipsing even 1929 and 1999. That doesn’t mean 2022 will bring a panic or a crash, maybe just a degree of sobriety.
Our Annual Lament On Foreign Equities
There should be a name for the syndrome suffered by foreign stock investors over the last decade or so. “Groundhog Day” doesn’t quite cut it, because that event repeats only once a year. It seems like this time of year we always feature a chart showing a healthy YTD double-digit gain in the S&P 500, along with a bond-like gain in EAFE, and a bond-like gain or loss in the MSCI Emerging Markets Index.
Research Preview: Discretionary Durables
While retail spending has boosted staples and durables alike, we believe that discretionary durables have been the prime beneficiary of changing lifestyles and spending patterns, with skyrocketing sales and inventory outages that may not reach equilibrium even in 2022.
The Thirteen-Year Earnings Upcycle
The NBER informs us that the economic expansion is only in its sixth quarter. That’s good to know, but we don’t think investors should be positioned nearly as aggressively as such a statistically-youthful recovery would normally mandate.
China—See The Policy Forest Through The Tree (Diagram)
There has been a torrent of new policies coming out of China recently. The goal of this report is to disentangle these seemingly random or even nonsensical policy moves and present a clearer roadmap of what China is thinking and doing.
Commodities Cooling In 2022?
It’s easy to misread where the true “consensus” stands on any financial forecast. Here’s a disconnect we see in current consensus thought: The “crowd” seems broadly bullish on commodities, yet the same crowd (previously known as Team Transitory) thinks consumer price inflation is near a cycle high.
Table of Contents
Stock Market
- “Peak Insanity” Is Behind Us
- “Memes” Need Money Growth...
- Our Annual Lament On Foreign Equities
- Full Employment Brings Margin Risks
- Is Powell A “Phillips Curve” Guy?
- A 2023 Inflation Peak?
- An Inflationary Wealth Effect
- The Thirteen-Year Earnings Upcycle
- Party Like It’s 2029?
- Commodities Cooling In 2022?
- The Donut: A Not-So-Healthy Snack
Of Special Interest
Macro Monitor
- China—See The Policy Forest Through The Tree (Diagram)
- Risk Aversion Index: New “Higher Risk” Signal
Equity Strategies
Quant
Market Internals
- Earnings Momentum
- Small Cap vs. Mid Cap vs. Large Cap
- Growth vs. Value vs. Cyclicals
- Additional Factors
Portfolios
Major Trend
Estimating the Downside
At Random
“Peak Insanity” Is Behind Us
We think 2021 has earned its place in the books as the wildest and most speculative year in U.S. stock-market history, eclipsing even 1929 and 1999. That doesn’t mean 2022 will bring a panic or a crash, maybe just a degree of sobriety.
Our Annual Lament On Foreign Equities
There should be a name for the syndrome suffered by foreign stock investors over the last decade or so. “Groundhog Day” doesn’t quite cut it, because that event repeats only once a year. It seems like this time of year we always feature a chart showing a healthy YTD double-digit gain in the S&P 500, along with a bond-like gain in EAFE, and a bond-like gain or loss in the MSCI Emerging Markets Index.
Research Preview: Discretionary Durables
While retail spending has boosted staples and durables alike, we believe that discretionary durables have been the prime beneficiary of changing lifestyles and spending patterns, with skyrocketing sales and inventory outages that may not reach equilibrium even in 2022.
The Thirteen-Year Earnings Upcycle
The NBER informs us that the economic expansion is only in its sixth quarter. That’s good to know, but we don’t think investors should be positioned nearly as aggressively as such a statistically-youthful recovery would normally mandate.
China—See The Policy Forest Through The Tree (Diagram)
There has been a torrent of new policies coming out of China recently. The goal of this report is to disentangle these seemingly random or even nonsensical policy moves and present a clearer roadmap of what China is thinking and doing.
Commodities Cooling In 2022?
It’s easy to misread where the true “consensus” stands on any financial forecast. Here’s a disconnect we see in current consensus thought: The “crowd” seems broadly bullish on commodities, yet the same crowd (previously known as Team Transitory) thinks consumer price inflation is near a cycle high.
Stock Market
- “Peak Insanity” Is Behind Us
- “Memes” Need Money Growth...
- Our Annual Lament On Foreign Equities
- Full Employment Brings Margin Risks
- Is Powell A “Phillips Curve” Guy?
- A 2023 Inflation Peak?
- An Inflationary Wealth Effect
- The Thirteen-Year Earnings Upcycle
- Party Like It’s 2029?
- Commodities Cooling In 2022?
- The Donut: A Not-So-Healthy Snack
Of Special Interest
Macro Monitor
- China—See The Policy Forest Through The Tree (Diagram)
- Risk Aversion Index: New “Higher Risk” Signal
Equity Strategies
Quant
Market Internals
- Earnings Momentum
- Small Cap vs. Mid Cap vs. Large Cap
- Growth vs. Value vs. Cyclicals
- Additional Factors