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With the exception of Low Volatility and Profitability, all other factor categories produced positive factor performance in July. The month was eventful, however, as Momentum produced a +4% spread through July 12th, only to give up more than half of that advantage as interest rates rolled back over.

In mid-2013 we developed a multi-factor model to select individual REITs, figuring that we could exploit an area of the market that is uncrowded from a factor and quantitative standpoint. The results have been outstanding, with the buy-rated securities outperforming the sell-rated securities by 45% since the model went live.

Corporate issuance is likely to decelerate due to slower M&A activity in the second half.

With neither inflation nor recession an imminent threat, the “Goldilocks” scenario remains intact. We continue to view high grade credit favorably within the fixed income space.

Most risk markets have tracked their 2017 time cycle patterns well, but what really stands out is the risk of an autumn correction across all these markets. Caution is warranted going forward.

The U.S. 10-year yield has been stuck in a tight range. Without new major catalysts, we expect the 10-year rate to be collared in two ranges, first 215-240 and, if this is broken, the wider range of 200-260, which is more significant and much harder to break.

The broken record of ‘easy market returns and no market volatility’ plays on. In the nine months since the election, we’ve had eight monthly S&P 500 gains, and a price return of +15.5%. Some large “old economy” stocks helped the Cap Weighted measure outperform in July. Thus far in 2017, the Cap Weighted measure has outpaced the Equal Weighted Average in six of the seven months.

After a brief siesta in June, Growth got back to dominating Value in July. Our Tech-heavy Royal Blue High P/E Tier is now up 18.4% YTD, and its median P/E just passed 31x.

Small Caps are now selling at a 2% valuation discount to Large Caps. It should be noted that this is only the tenth Small Cap discount observation since 2005.

For the first month of Q2 2017 earnings, the Up/Down Ratio sports an above average reading of 1.95. But, we’ve seen this movie before—the two previous quarters started with similar results, only to end poorly.

Read this week's Major Trend Index.

Is it too late to tilt a portfolio toward foreign stocks?

Read this week's Major Trend Index.

To use the old cliche' for lack of a better term, the bond market backed and filled in December.

Last July we published a study titled Active vs. Passive: A Three-Club Headwind that examined the recent performance advantage of passive indexes over actively managed funds.

Read this week's Major Trend Index.

The Boom/Bust Indicator, combines a market-based measure (commodity prices) with a weekly government report on the employment situation

Read this week's Major Trend Index.

We are pleased to announce that James Paulsen, PhD, a leading investment strategist whose commentary is widely followed on Wall Street and across the country, has joined The Leuthold Group as our Chief Investment Strategist.

Anticipating prolonged weakness of energy prices, we advise avoiding two segments within the Energy sector: companies with high balance-sheet risk, and special Energy investment vehicles called Energy Royalty Trusts.