Green Book July 2025
Back To The Brink?
With the S&P 500 snapping back to new highs, our team revisits the bubble debate. While valuations flash warning signs, speculation and momentum tell a more measured story.
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Featured Articles
“Blessed” By Breadth?
“Sell In May” has been better advice historically than random chance suggests. Still, that seasonal pattern has so far been “Trumped” this year, with SPX +12% since late-Apr. Technicians tend to view new market highs as bullish, but that’s not always the case. The NYSE Daily A/D Line provides a clue as to whether the mid-year strength is apt to persist.
The Fed Pause Playbook—2025 In Historical Context
Economic resilience that prompted the Fed’s pause is consistent with past cases. Equities and bonds have largely followed historical patterns. The exceptions—gold’s outsized return and the dollar’s weakness—highlight the unique risks introduced by the current political environment.
The Housing Deep Freeze
Housing activity remains at very depressed levels, with 30-year mortgage rates near 7% keeping those with low-rate mortgages frozen in place, and those wishing to get into a home are frozen out. Qualifying income to buy a median-priced home is almost $105,000—up 122% from Feb-2020.
The Same, But Different
Those who follow an investment approach embracing thematic groups, sectors, or industries will enjoy superior results if they construct a universe using narrower baskets. Our GSS process assigns stocks into well over 100 themes, offering the advantages of wider opportunity sets and greater diversification.
Recession Dashboard Update—Lower Recession Risk
On the whole, the probability of an imminent recession has declined since our last update in April and now stands below 50%. Only two signals changed in this update, the most significant being the S&P 500, which improved from yellow to green.
Factor Tilt Update
The risk-on rally since April produced a complete flip in factor performance vs. Q1. The year began with Low Volatility and Dividend factors leading the pack, posting positive returns even as the S&P 500 lost 4%. Q2 performance has High Beta, Momentum, and Growth far outpacing SPX’s nearly 11% gain.
Table of Contents
Stock Market
- Back To The Brink?
- Into The Record Books
- LEI: The “Fade” Of The Decade!
- Bubble Bemusement
- Buy High—Then Hope For Another Buyer
- The Housing Deep Freeze
- Cyclicals: Confidence Borders On Cockiness
- More Praise For The “Median Stock”
- The Tale Of The Tape
- “Blessed” By Breadth?
Of Special Interest
Macro Monitor
- The Fed Pause Playbook—2025 In Historical Context
- Recession Dashboard Update—Lower Recession Risk
- Risk Aversion Index: A New “Lower-Risk” Signal
The Leuthold Refresh
Equity Strategies
Market Internals
- A Step Back
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents
Portfolios
Major Trend
Estimating the Downside
At Random
“Blessed” By Breadth?
“Sell In May” has been better advice historically than random chance suggests. Still, that seasonal pattern has so far been “Trumped” this year, with SPX +12% since late-Apr. Technicians tend to view new market highs as bullish, but that’s not always the case. The NYSE Daily A/D Line provides a clue as to whether the mid-year strength is apt to persist.
The Fed Pause Playbook—2025 In Historical Context
Economic resilience that prompted the Fed’s pause is consistent with past cases. Equities and bonds have largely followed historical patterns. The exceptions—gold’s outsized return and the dollar’s weakness—highlight the unique risks introduced by the current political environment.
The Housing Deep Freeze
Housing activity remains at very depressed levels, with 30-year mortgage rates near 7% keeping those with low-rate mortgages frozen in place, and those wishing to get into a home are frozen out. Qualifying income to buy a median-priced home is almost $105,000—up 122% from Feb-2020.
The Same, But Different
Those who follow an investment approach embracing thematic groups, sectors, or industries will enjoy superior results if they construct a universe using narrower baskets. Our GSS process assigns stocks into well over 100 themes, offering the advantages of wider opportunity sets and greater diversification.
Recession Dashboard Update—Lower Recession Risk
On the whole, the probability of an imminent recession has declined since our last update in April and now stands below 50%. Only two signals changed in this update, the most significant being the S&P 500, which improved from yellow to green.
Factor Tilt Update
The risk-on rally since April produced a complete flip in factor performance vs. Q1. The year began with Low Volatility and Dividend factors leading the pack, posting positive returns even as the S&P 500 lost 4%. Q2 performance has High Beta, Momentum, and Growth far outpacing SPX’s nearly 11% gain.
Stock Market
- Back To The Brink?
- Into The Record Books
- LEI: The “Fade” Of The Decade!
- Bubble Bemusement
- Buy High—Then Hope For Another Buyer
- The Housing Deep Freeze
- Cyclicals: Confidence Borders On Cockiness
- More Praise For The “Median Stock”
- The Tale Of The Tape
- “Blessed” By Breadth?
Of Special Interest
Macro Monitor
- The Fed Pause Playbook—2025 In Historical Context
- Recession Dashboard Update—Lower Recession Risk
- Risk Aversion Index: A New “Lower-Risk” Signal
The Leuthold Refresh
Equity Strategies
Market Internals
- A Step Back
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents