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The U.S. yield curve has flattened in the last few months but remains a long way from inversion—an event that’s preceded each of the last eleven recessions.

Thanks to reasonable valuations outside the United States, our work finds global equities only moderately above their long-term valuation norms. 

Read this week's Major Trend Index.

Federal receipts tend to be a reflection of where the economy and stock market have been rather than where they might be headed.

Closed-end funds (CEFs) rarely trade at net asset value (NAV). They either trade at a premium or a discount to share price. When demand for underlying assets is high, the price of a CEF will move above its NAV, trading at a premium. On the contrary, when investors are pessimistic about the underlying assets of a CEF, the price is driven below NAV, trading at a discount. Many studies have looked at CEF discounts and premiums as a means to gauge investor sentiment toward the assets they represent.

Read this week's Major Trend Index.

With U.S. real GDP growing about 2% year-over-year and the rest of the Developed world growing even slower, it’s hard to imagine that economic momentum may be peaking.

The tone of global economic reports in the last four months has turned decisively up, sending Citi’s Global Economic Surprise Index to the highest level since mid-2010

Foreign equities beat the U.S. in the first quarter, but the performance gap that’s opened up since the 2007 market highs remains astounding. While foreign equity valuations (especially within EM) have rebounded from February 2016 lows, the bounce has done little to close the enormous P/E discounts relative to the U.S. market.

Last month we highlighted the extraordinary performance gap that had opened up between crude oil and the relative performance of Energy stocks.

Based on a median of six measures, today’s S&P 500 valuation profile equates to the one prevailing on August 31, 1997. From there, the S&P 500 rallied >60% over the next 2 1/2 years before peaking. However, the same can’t be said of valuation readings for the “typical” or median stock.

While the Russell 2000 loss during the 2015-16 correction was almost double that of the S&P 500, the decline did not fully erase the P/E premium Small Caps have enjoyed since the middle of last decade. The premium might need to be entirely erased before a multi-year Small Cap leadership cycle can begin.

Second-half results showed the U.S. emerging from the 2015-2016 profit recession, and our early read is that the first quarter should show more of the same.

The distinction between reported GAAP earnings and adjusted operating earnings has long been a source of debate among fundamental investors, and the choice of “E” will materially impact each investor’s view of the market’s P/E ratio.

The S&P 500 has gained about 5% on the year, respectable but hardly consistent with the “melt up” scenario we thought might occur.

Not a lot of month-over-month action for the S&P 500. But, on March 21st, the index finished down 1.24% putting an end to a run of 110 trading days without a decline greater than 1%—the longest such stretch in 22 years.

Growth stocks, which took a relative pummeling in 2016, beat Value all three months of the first quarter. Small Cap Value stocks are the only segment still in negative territory YTD.

Our Ratio of Ratios has bounced between premium and discount for Small Cap stocks the last few months. Keep in mind that both the S&P 500 and the S&P 600 made new multi-year LTM P/E ratio highs in March.

The Up/Down Ratio sports a final “three-month” reading of 1.33 for Q4. The steady progress seen throughout 2016 came to a halt with the last two months of Q4 results—a disappointment, indeed.