Latest Research

We’ve chronicled the ever-expanding gap between commodity prices and commodity-oriented equities.  Don’t expect a rebound in one based on the strength of the other. There’s no clear historical tendency for the weaker asset to catch up.

Fourth quarter earnings were the last ones to be burdened by a 35% top marginal corporate income tax rate, and therefore seem to have been given a pass by the analyst community.

A good rule of thumb for thematic and sector investors is that stock market leadership rarely repeats itself in consecutive cycles.

The first several years of this recovery badly underperformed forecasts, with partial blame going to a pair of deflationary shocks (the European debt crisis and oil price collapse).

As equity investors, we’ll readily admit to an excessive focus on the Federal Funds rate and the 10-year U.S. Treasury yield.

While the January 26th bull market high illustrated none of the hallmarks of a major cyclical top, there are secondary signs that a stealthy distribution process may be underway, such as an overwhelming bias toward opening market strength followed by intraday weakness.

Yields on 10-year Treasuries are up 10 bps since stocks peaked in January, a clear break from the behavior of prior corrections. The last four stock declines of 10%+ were self-medicating—having been accompanied by bond yield declines of 50 to 150 basis points.

Our shortest-term put/call measure has yet to reflect the level of fear usually triggered by a correction of this size. Meanwhile, the market setback has done almost nothing to stymy the optimism of either market newsletter writers or mutual fund timers.

The longest and probably most complex bull market in history is not going to make a clean and decisive exit.

Our overall view toward credit has turned decidedly cautious over the last couple months and that includes our long-term favorite.

While concerns about a trade war might be easing and the credit market has been largely unaffected by the surge in Libor rates, we have to recognize the fact that Trump’s policy focus has become increasingly market-unfriendly while global central banks are in a liquidity-reducing mode.

Isn’t a trade war more bark than bite? We think a full-blown trade war may be eventually negotiated away but the process is not necessarily painless to investors.

Air Freight & Logistics is now Attractive for the first time in two years; Managed Health Care has scored in the top tier dating back to 2009; Trading Companies/Distributors provides an option with oil exposure at a time when the GS Scores remain decidedly anti-oil overall.

The Consumer Discretionary index has also managed to outperform the S&P 500 by about 100 bps since the market’s January 26th peak, and in late March it was just a hair away from surpassing its previous relative strength performance high recorded in late 2015.

The index had a quarterly loss for the first time since Q3 2015. Volatility—which had been pretty much non-existent for all of 2017—returned and even had the nerve to persist. With mega caps teetering in March, the Equal Weighted Average scored its fourth monthly win in the last year.

Growth has outpaced Value in each market cap tier for five quarters in a row. Our Royal Blue High P/E Tier was the strongest performing segment of Q1 and outperformed the Low P/E Tier by a spread of 6.7%.

Small Cap outperformance helped boost the Ratio of Ratios up from a 2% premium at the end of February. This is the first month our Large Cap P/E ratio has been below 20x since the end of April 2016.

Our Up/Down Ratio sports a towering reading of 1.79, which is the highest our “three-month” ratio has been since the exit of the Great Recession.

The Leuthold Core Portfolio and the Leuthold Global Portfolio both handily outperformed their respective benchmarks during the second down month in a row.

After performing amazingly well in the record-setting bull market run since 2009, defensive equities are once again drawing attention for their traditional role as hedges against a continuation of recent market declines.