Green Book September 2025
Late Summer Heat Wave
A Fed that’s been incapable of controlling the intensity of the flame will soon be supplying it with more oxygen in an attempt to stimulate real activity. The odds are that any new fuel on the fire will find its way into consumer prices, long before it stimulates “unit growth” in slumping sectors.
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Featured Articles
The Market’s Magnificent Masquerade
The Magnificent 7 constitutes 34% of the S&P 500 and comprises seven of the eight largest companies in the index. We explore a few of the disguises the market has been wearing during this mega-cap growth era, looking behind the mask at the broad swath of equities hidden by the Mag 7’s dazzling veil.
Unintended Consequences?
There are unmistakable parallels between September’s likely Fed rate cut and the initial lowering of rates preceding the GFC. In each case, despite leading inflation gauges still trending up, a housing slump and deteriorating labor market served to justify the move. In 2007, after the Fed cut, measures of real growth failed to respond and inflation, in fact, shot higher.
Abandoning 2%
The Fed has been neither correct nor anticipatory for an extended period of time. Ironically, if a September rate cut were followed by a decline into recession later this year, the Fed may be hailed as both correct and anticipatory—and some semblance of Fed independence could be maintained.
Not All Cash Is Equal—A Tale Of Two Sizes
An examination of how large- and small-cap companies allocate cash across three main uses: investment (Capex and R&D), shareholder returns (dividends and buybacks), and M&A. We further evaluate how, over time, the market rewards or penalizes each.
S&P 500 Earnings Waterfall 2Q 2025
The second quarter of 2025 posted another “all green” earnings waterfall, as each component of our profit breakdown gained ground. Sales growth was a robust 6.9%, paving the way to a 17.6% gain in net income for S&P 500 members
Earnings Momentum Broadens Beyond Mega-Caps
The Up/Down ratio reads 1.52 and is the highest “two-month” tally since the beginning of 2022. Like our “one-month” figure from July’s reports, this observation is just slightly above the study’s 41-year average. Forward earnings for small- and mid-cap indexes are finally coming alive as well.
Table of Contents
Stock Market
- Late Summer Heat Wave
- Old Worries, New Highs
- Abandoning 2%
- Unintended Consequences?
- Checking In On The Bellwethers
- “Wealth-Flation” Can Go Both Ways
- Value: Another Call For A Turn
- A Cross-Check On Valuations
- Fighting The Political Odds
- Bucking The Seasonal Trend
Of Special Interest
Macro Monitor
The Leuthold Refresh
Equity Strategies
Market Internals
- Earnings Momentum Broadens Beyond Mega-Caps
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents
Portfolios
Major Trend
Estimating the Downside
At Random
The Market’s Magnificent Masquerade
The Magnificent 7 constitutes 34% of the S&P 500 and comprises seven of the eight largest companies in the index. We explore a few of the disguises the market has been wearing during this mega-cap growth era, looking behind the mask at the broad swath of equities hidden by the Mag 7’s dazzling veil.
Unintended Consequences?
There are unmistakable parallels between September’s likely Fed rate cut and the initial lowering of rates preceding the GFC. In each case, despite leading inflation gauges still trending up, a housing slump and deteriorating labor market served to justify the move. In 2007, after the Fed cut, measures of real growth failed to respond and inflation, in fact, shot higher.
Abandoning 2%
The Fed has been neither correct nor anticipatory for an extended period of time. Ironically, if a September rate cut were followed by a decline into recession later this year, the Fed may be hailed as both correct and anticipatory—and some semblance of Fed independence could be maintained.
Not All Cash Is Equal—A Tale Of Two Sizes
An examination of how large- and small-cap companies allocate cash across three main uses: investment (Capex and R&D), shareholder returns (dividends and buybacks), and M&A. We further evaluate how, over time, the market rewards or penalizes each.
S&P 500 Earnings Waterfall 2Q 2025
The second quarter of 2025 posted another “all green” earnings waterfall, as each component of our profit breakdown gained ground. Sales growth was a robust 6.9%, paving the way to a 17.6% gain in net income for S&P 500 members
Earnings Momentum Broadens Beyond Mega-Caps
The Up/Down ratio reads 1.52 and is the highest “two-month” tally since the beginning of 2022. Like our “one-month” figure from July’s reports, this observation is just slightly above the study’s 41-year average. Forward earnings for small- and mid-cap indexes are finally coming alive as well.
Stock Market
- Late Summer Heat Wave
- Old Worries, New Highs
- Abandoning 2%
- Unintended Consequences?
- Checking In On The Bellwethers
- “Wealth-Flation” Can Go Both Ways
- Value: Another Call For A Turn
- A Cross-Check On Valuations
- Fighting The Political Odds
- Bucking The Seasonal Trend
Of Special Interest
Macro Monitor
The Leuthold Refresh
Equity Strategies
Market Internals
- Earnings Momentum Broadens Beyond Mega-Caps
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents