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The Up/Down ratio reads 1.30—below average. This “two-month” print breaks a streak of four successively higher readings, and is even more disappointing given that last year’s look-back comparison for this “two-month” period was very weak (1.18).

Read this week's Major Trend. 

The S&P 500’s estimated bottom-up operating EPS for Q1 lost altitude during the second month of reporting. (Chart 1). That resumes the rounded downslope of estimated EPS erosion for the quarter that seems foreign (though normal) after the resiliency of the 2024 data. The next three quarters of 2025—periods that will be affected by the trade war—continued their post tariff decline. The waning projections still have the index inline for 10% YOY EPS growth. At this point in the game, 5% growth is probably a stretch.

Read this week's MTI

As tactical investors and market historians, we are intrigued by the long cycles of market leadership, always curious to understand what drives these seismic shifts.  One idea that continually pops up in our studies is the notion that bear markets frequently tend to produce changes in asset class superiority.  This study examines the relative performance of three pairs of major asset classes: small vs. large, value vs. growth, and international vs. domestic.  The historical record seems to corroborate our intuitive thesis that bear markets and asset class leadership rotations are connected, either due to changes in fundamentals or market psychology.

Read this week's Major Trend.

Read this week's Major Trend. 

In April, Leuthold’s Core strategy gained 0.7%, benefiting from positive returns across equities and fixed income despite volatile markets, while the Major Trend Index remains in its bearish zone with net equity exposure at 46-48%. The Select Industries strategy rose 0.6%, outperforming broader indexes by shifting toward defensive, tariff-insulated industries like Data Processing and Gas Utilities. AdvantHedge posted a strong 2.4% gain, capitalizing on tariff-sensitive sectors and earnings disappointments, with an overweight to Industrials and Materials.

The outperformance of foreign stocks in 2025 is not a new story, but it’s now been formally “validated” by new signals from a pair of models we use for timing potential allocation changes. 

Despite recent policy back-pedaling, volatility is liable to stay elevated for the time being.

We were overly attuned to the short-term action in February that we missed a monumental event at the end of that month: A close in gold above the previous, inflation-adjusted all-time high recorded in January 1980. It took 45 years, but even those with the worst-imaginable entry point have now seen gold fully realize its promise as an inflation hedge.

In exploring how cross-asset behavior differs between recessionary and non-recessionary market selloffs, a more striking conclusion emerged: The presence of a Fed put—or the absence there of—looks to be the more powerful force in shaping market dynamics across assets.

While the stock market has reversed about half of its February–April decline, the risk of a self-fulfilling confidence collapse remains elevated. In April, the Conference Board’s Consumer Expectations Index dropped to a level that’s been observed only once outside of a recession (mid-2011).

We recently finished a study featuring 30 versions a favorite forecasting “toy”—the Treasury yield curve. In this expanded report we unearthed value in several variants we didn’t test in the original 2023 study. In particular, higher forecast correlations were produced when using yields on 2-yr. and 3-yr. Treasury notes in lieu of the 10-yr. Treasury yield.

To date, hard data points have held up very well in the face of Tariff Tantrum 2.0. Yet, strong retail sales in March could have been due to tariff front-running with added staffing propping up the latest employment numbers. For now, we think “soft” data, especially surveys of purchasing managers better capture the potential economic impact of the tariffs.

A Zweig Breadth Thrust (triggered in late April), has historically been a boost for the seasonal market doldrums common from May through October, with stock gains much higher during that period than in the absence of a ZBT. Maybe that explains why the “Sell In May” phenomenon hasn’t received the usual attention this year.

If the full extent of the market decline, which began in March, bottomed on April 8th, it will stand as the deepest loss in our register of severe corrections (-12% to -19%) dating back to 1959. It is notable that, other than 1999, in all prior cases the SPX bottomed with a Normalized P/E ratio below its median of 19.4x; on April 8th, that figure (25.4x) still ranked in bubble territory.

Out of necessity, bear market rallies and the first leg of a new advance look nearly identical; if they didn’t, the game would be too easy. However, the action (or lack of it) within the most economically sensitive groups would seem to support our bearish take. 

Markets are no longer hanging on every Fed whisper — fiscal policy has muscled into the spotlight. As investors navigate this new landscape, the old game of decoding central bank signals is giving way to something much clearer

Our research shows that weaker equity markets are favorable for active managers, and this quarter’s overall success rate of 57% is consistent with that expectation. Active managers outperformed in six of nine style boxes, led by an excellent 82% win rate for small-blend managers and a 74% success rate in large value.