Green Book August 2025
Debauchery & Debasement
Whether or not the label "bubble" fits this market, U.S. economic risks continue to rise, while Mega Cap valuations home-in on levels seen only in 1999 and early 2000.
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Featured Articles
The Bull Market In Context
Given the prevailing conditions at the beginning of this bull market, the S&P 500 has been an overachiever, though the same can’t be said of the broader market. This translates to an opportunity for active equity managers that nearly matches conditions in Y2K—and at a time when the active manager pool is now dwindling.
Yet Another Milestone
As a testament to the severity of the 2000-2002 Tech Wreck, performance of recent years’ laggards, like the Equal-Weighted S&P 500, S&P MidCap 400, and S&P SmallCap 600 are still well ahead of large-cap Growth on a 25-year basis.
Super-Stretched Cyclicals
The Cyclical/Defensive Relative Valuation Ratio jumped to yet another record in July, with Cyclicals commanding a valuation premium of 23%. Put differently, investors have a very strong implicit bet that the economic expansion will continue.
Active/Passive Update Q2-2025
Our hypothesis is that true active managers are more diversified than their style box indices and when one style has a prodigious quarter, active portfolios of that variety will surely lag. Q2’s low success rate for actively-managed growth portfolios is exactly what we expect in such a stylistically lopsided period.
U.S. Dollar—Buy The Dip
The U.S. dollar has seen some interesting dynamics this year, so we’ve updated our U.S. Dollar Monitor. Currently, the model implies a higher likelihood of dollar strength, or at least a decent rebound over the next few months.
Keeping Up With Inflation
These days, the rate of inflation is a much-discussed topic, as it hovers near the threshold that would allow the Fed to begin cutting interest rates. The CPI’s latest reading of 2.9% is down significantly from pandemic levels, but not quite low enough to claim victory in achieving the Fed’s 2% target.
Table of Contents
Stock Market
- Debauchery & Debasement
- Bellwethers Look Better, But…
- Yet Another Milestone
- Inoculation Looks Up-To-Date
- The Bull Market In Context
- The Confidence Gap Persists
- More On The LEI Misfire
- Stag-Flating Away
- Super-Stretched Cyclicals
- Sentiment-al Reflections
Of Special Interest
Macro Monitor
The Leuthold Refresh
Equity Strategies
Market Internals
- Above Average!
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents
Portfolios
Major Trend
Estimating the Downside
At Random
The Bull Market In Context
Given the prevailing conditions at the beginning of this bull market, the S&P 500 has been an overachiever, though the same can’t be said of the broader market. This translates to an opportunity for active equity managers that nearly matches conditions in Y2K—and at a time when the active manager pool is now dwindling.
Yet Another Milestone
As a testament to the severity of the 2000-2002 Tech Wreck, performance of recent years’ laggards, like the Equal-Weighted S&P 500, S&P MidCap 400, and S&P SmallCap 600 are still well ahead of large-cap Growth on a 25-year basis.
Super-Stretched Cyclicals
The Cyclical/Defensive Relative Valuation Ratio jumped to yet another record in July, with Cyclicals commanding a valuation premium of 23%. Put differently, investors have a very strong implicit bet that the economic expansion will continue.
Active/Passive Update Q2-2025
Our hypothesis is that true active managers are more diversified than their style box indices and when one style has a prodigious quarter, active portfolios of that variety will surely lag. Q2’s low success rate for actively-managed growth portfolios is exactly what we expect in such a stylistically lopsided period.
U.S. Dollar—Buy The Dip
The U.S. dollar has seen some interesting dynamics this year, so we’ve updated our U.S. Dollar Monitor. Currently, the model implies a higher likelihood of dollar strength, or at least a decent rebound over the next few months.
Keeping Up With Inflation
These days, the rate of inflation is a much-discussed topic, as it hovers near the threshold that would allow the Fed to begin cutting interest rates. The CPI’s latest reading of 2.9% is down significantly from pandemic levels, but not quite low enough to claim victory in achieving the Fed’s 2% target.
Stock Market
- Debauchery & Debasement
- Bellwethers Look Better, But…
- Yet Another Milestone
- Inoculation Looks Up-To-Date
- The Bull Market In Context
- The Confidence Gap Persists
- More On The LEI Misfire
- Stag-Flating Away
- Super-Stretched Cyclicals
- Sentiment-al Reflections
Of Special Interest
Macro Monitor
The Leuthold Refresh
Equity Strategies
Market Internals
- Above Average!
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents