Green Book July 2023
Pretty Darn Neutral
Last month’s title, “Echoes of 2021,” didn’t fully capture the speculative fervor that’s gripped big Technology stocks—and the NYSE FANG+® Index immediately set out to rectify that shortfall by tacking on another 5% to bring its YTD return to +74%.
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Featured Articles
Another Chance To “Buy High”
Despite this year’s massive underperformance by the Equal Weighted S&P 500, the median stock doesn’t appear substantially more attractive than the cap-weighted index. Three of five valuation measures are now back in the top decile of readings, which we’d consider pricey in any monetary or economic backdrop.
Not All Fed Pauses Are Equal
The latest pause is widely expected to be short-lived, but many things can happen to extend the pause or even completely end the tightening cycle. While some markets show little distinction between a final pause and an interim one, most behave in a way that’s consistent with the economic backdrop.
Job Market Deja Vu
With leading economic measures still trending down, optimists who advocated against fighting the Fed during the free-money era have ditched their own advice. Their focus is now on lagging indicators, like the employment numbers—but that last bastion of strength seems ready to buckle.
Research Preview: What’s Up? Japan!
After being ignored for a generation, Japanese stocks are roaring in 2023. The Nikkei puts the S&P 500’s 16.9% YTD gain to shame with its +28.7% return. With developed international equities (ex-Japan) up a paltry 9.5%, diversification from expensive U.S. stocks cannot fully explain Japan’s surge.
Factor Tilt Update—June 2023
This Leuthold Refresh updates our Factor Tilt analysis, an ongoing process to evaluate the attractiveness of commonly accepted investment styles. Factors are investment characteristics that have historically produced excess risk-adjusted returns, but relative results fluctuate over time.
Table of Contents
Stock Market
- Pretty Darn Neutral
- Neutral (But Leaning Negative)
- Job Market Deja Vu
- Don’t Let Economists Work From Home…
- Maximum Inversion?
- Another Chance To “Buy High”
- If It’s A Bull, How Does It Stack Up?
- A Small-Cap Conundrum
- A NASDAQ Conundrum
Of Special Interest
Macro Monitor
- Not All Fed Pauses Are Equal
- 2023 Time Cycle—Mid-Year Update
- Risk Aversion Index: New “Lower-Risk” Signal
The Leuthold Refresh
Equity Strategies
Market Internals
- Running Out Of Excuses
- Small Cap vs. Mid Cap vs. Large Cap
- Growth vs. Value vs. Cyclicals
- Additional Factors
Portfolios
Major Trend
Estimating the Downside
At Random
Another Chance To “Buy High”
Despite this year’s massive underperformance by the Equal Weighted S&P 500, the median stock doesn’t appear substantially more attractive than the cap-weighted index. Three of five valuation measures are now back in the top decile of readings, which we’d consider pricey in any monetary or economic backdrop.
Not All Fed Pauses Are Equal
The latest pause is widely expected to be short-lived, but many things can happen to extend the pause or even completely end the tightening cycle. While some markets show little distinction between a final pause and an interim one, most behave in a way that’s consistent with the economic backdrop.
Job Market Deja Vu
With leading economic measures still trending down, optimists who advocated against fighting the Fed during the free-money era have ditched their own advice. Their focus is now on lagging indicators, like the employment numbers—but that last bastion of strength seems ready to buckle.
Research Preview: What’s Up? Japan!
After being ignored for a generation, Japanese stocks are roaring in 2023. The Nikkei puts the S&P 500’s 16.9% YTD gain to shame with its +28.7% return. With developed international equities (ex-Japan) up a paltry 9.5%, diversification from expensive U.S. stocks cannot fully explain Japan’s surge.
Factor Tilt Update—June 2023
This Leuthold Refresh updates our Factor Tilt analysis, an ongoing process to evaluate the attractiveness of commonly accepted investment styles. Factors are investment characteristics that have historically produced excess risk-adjusted returns, but relative results fluctuate over time.
Stock Market
- Pretty Darn Neutral
- Neutral (But Leaning Negative)
- Job Market Deja Vu
- Don’t Let Economists Work From Home…
- Maximum Inversion?
- Another Chance To “Buy High”
- If It’s A Bull, How Does It Stack Up?
- A Small-Cap Conundrum
- A NASDAQ Conundrum
Of Special Interest
Macro Monitor
- Not All Fed Pauses Are Equal
- 2023 Time Cycle—Mid-Year Update
- Risk Aversion Index: New “Lower-Risk” Signal
The Leuthold Refresh
Equity Strategies
Market Internals
- Running Out Of Excuses
- Small Cap vs. Mid Cap vs. Large Cap
- Growth vs. Value vs. Cyclicals
- Additional Factors