Latest Research

Our Financials Sector Ranking has been strengthening since August—well before the Trump Bump. The addition of Regional Banks to our SI Portfolio boosts our Financials exposure to an overweight 26% versus the S&P 500’s 15% weight. Reinsurance and Developed Diversified Banks are also among the Attractively-rated options for diversification within the sector.

Over the last 70 years, stocks have made no cumulative progress when Producer Price Inflation runs above 4%. Returns have been average when PPI inflation runs between 2% and 4%—where it is today.

One of our disappointments with the Group Selection (GS) Scores in 2016 was their failure to latch on to the rebound in Energy groups.

A look at the potential upside for the median S&P 500 stock, based on the theory that each of four valuation ratios reaches its individual all-time high set during the last phase of the 1990s’ market mania.

Our disciplines remain bullish, but we periodically wonder whether we’re being too cavalier in keeping our tactical portfolios “almost” fully-invested (at 65% equities) in the face of valuations that are higher than those seen in all but perhaps 24 months of stock market history.

Higher quality Corporate bonds should be able to weather the rate hike quite well.

The hoopla falls short of that which surrounded birthdays #3-#7; based on the flood of assets into passive stock funds, it appears complacency has set in. Current bull close to becoming longest in history.

The S&P 500 was up 6.4% YTD through March 3rd, a bit above its average annualized gain of 5.9% since 1926. In other words, 2017 would be a good year if the books were closed today.

While we continue to view spread products favorably within fixed income, the March rate hike has yet to have its impact play out. In the near term, we will respect the “higher risk” signal and exercise caution.

Given the high likelihood of a March rate hike, we can’t help but wonder if the old adage of “three steps and a stumble” really holds.

This multi-factor estimate of stock market risk is based on a regression to median stock market levels.

Profitable investing overseas requires not one, but two, successful decisions: 1) select an outperforming asset class; and, 2) be in a currency that provides a favorable foreign exchange impact.

The Financial sector is up more than 30% from last summer’s Brexit lows and, as of March, ranks atop our Group Selection (GS) Scoring framework for the fourth consecutive month.

Read this week's Major Trend Index.

The stock market looks overbought on virtually every technical measure we can think of, but an overbought condition doesn’t always mean the market is vulnerable. To the contrary, we’ve found that “initial” overbought readings—like the one triggered last week on the S&P 500’s 14-Week Relative Strength Index—are generally followed by above-average gains in the intermediate-term (Chart).

Read this week's Major Trend Index.

While stock market valuations are high, they are still considerably below their Technology bubble peak of March 2000. We’ve therefore conceded that there’s still room for a true market melt-up as long as cyclical conditions remain positive.

Read this week's Major Trend Index.

Growth Is Re-emerging: A recurring theme in recent Leuthold Group research is the apparent turn in corporate profits and a general improvement in business results. To monitor corporate sales/earnings trends, we measure the number of companies reporting higher quarterly sales and earnings than a year ago, versus companies reporting lower sales and earnings.