Green Book March 2025
Getting More Defensive
Early this month we trimmed net equity exposure to 50% across tactical allocation strategies. Breadth, leadership, and momentum into the SPX high on February 19th all showed divergences that could have been pulled from an “analyst’s handbook” of bull market tops.
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Featured Articles
Dot-Com 25th Anniversary Series, Part 1: Internet Insanity
It was 25 years ago this month when the legendary dot-com mania reached its crescendo, entering market lore as one of the greatest bubbles in history. This silver anniversary prompted us to create a month-long series of articles under the banner of “Manias, Bubbles, Panics, And Crashes.” Here we look back at the sheer scale and intensity of the internet craze.
A Job Market On The Brink
For months, the euphemism to describe the weakening labor market has been “normalization.” Our preferred terminology has been “pre-recessionary,” and the numbers continue to trend in that direction.
Germany—Sick Man Of Europe No More?
Despite volatile headlines, the German DAX index has staged a stellar double-digit rally since the start of the year—outpacing even the most “exceptional” S&P 500. In fact, over the last year or so, the DAX has now pulled ahead of the S&P 500.
S&P 500 Earnings Waterfall 4Q24
The index’s income statement turned in one of its best showings of recent years. Year-over-year sales growth for S&P 500 companies landed at 5.6%, exceeding the 5.0% rate in nominal GDP and mimicking the sales growth posted earlier in the year.
Small Caps: Yin And Yang
The median normalized P/E ratio for the S&P SmallCap 600 fell to 21.0x in February, the bottom quintile of all monthly observations since 1994. Historically, a normalized P/E multiple near the current level has been associated with a five-year-forward annualized return for small caps in the double digits.
Tariff Timing Couldn’t Be Worse
Flip-flopping about tariffs has damaged confidence and at a time when the economic expansion already looks fragile. Back in 2017 and 2018, Trump Tariffs 1.0 occurred with an economy much better positioned to absorb the tariffs themselves, as well as the confusion surrounding them.
Table of Contents
Stock Market
- Getting More Defensive
- A Textbook Top?
- More Warning Signals
- Tariff Timing Couldn’t Be Worse
- No End To The Red Ink
- A Job Market On The Brink
- “Happy” 25th?
- Value Taking Charge
- Confidence Is Cracking
- A Too-Early Bull Market Retrospective
- Small Caps: Yin And Yang
Of Special Interest
Macro Monitor
The Leuthold Refresh
Equity Strategies
Quant
Market Internals
- Earnings Momentum: Broader But Slower Growth
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents
Portfolios
Major Trend
Estimating the Downside
At Random
Dot-Com 25th Anniversary Series, Part 1: Internet Insanity
It was 25 years ago this month when the legendary dot-com mania reached its crescendo, entering market lore as one of the greatest bubbles in history. This silver anniversary prompted us to create a month-long series of articles under the banner of “Manias, Bubbles, Panics, And Crashes.” Here we look back at the sheer scale and intensity of the internet craze.
A Job Market On The Brink
For months, the euphemism to describe the weakening labor market has been “normalization.” Our preferred terminology has been “pre-recessionary,” and the numbers continue to trend in that direction.
Germany—Sick Man Of Europe No More?
Despite volatile headlines, the German DAX index has staged a stellar double-digit rally since the start of the year—outpacing even the most “exceptional” S&P 500. In fact, over the last year or so, the DAX has now pulled ahead of the S&P 500.
S&P 500 Earnings Waterfall 4Q24
The index’s income statement turned in one of its best showings of recent years. Year-over-year sales growth for S&P 500 companies landed at 5.6%, exceeding the 5.0% rate in nominal GDP and mimicking the sales growth posted earlier in the year.
Small Caps: Yin And Yang
The median normalized P/E ratio for the S&P SmallCap 600 fell to 21.0x in February, the bottom quintile of all monthly observations since 1994. Historically, a normalized P/E multiple near the current level has been associated with a five-year-forward annualized return for small caps in the double digits.
Tariff Timing Couldn’t Be Worse
Flip-flopping about tariffs has damaged confidence and at a time when the economic expansion already looks fragile. Back in 2017 and 2018, Trump Tariffs 1.0 occurred with an economy much better positioned to absorb the tariffs themselves, as well as the confusion surrounding them.
Stock Market
- Getting More Defensive
- A Textbook Top?
- More Warning Signals
- Tariff Timing Couldn’t Be Worse
- No End To The Red Ink
- A Job Market On The Brink
- “Happy” 25th?
- Value Taking Charge
- Confidence Is Cracking
- A Too-Early Bull Market Retrospective
- Small Caps: Yin And Yang
Of Special Interest
Macro Monitor
The Leuthold Refresh
Equity Strategies
Quant
Market Internals
- Earnings Momentum: Broader But Slower Growth
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents