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The Equal Weighted index also outperforming YTD.

20 Year T-Bond: 5 3/8’s, Maturity: 2/15/2031, YTM 2.88% (vs. April 30th YTM at 2.39%)

High yield bonds are not immune to the tapering of QE.

Inflows into Muni bond funds turned negative; higher interest rates currently the biggest risk.

Consistent with our overall cautious view on credits, we still like “safe spreads”.

The RAI rose in May and stays on a “High Risk” signal. We remain cautious and recommend higher quality within fixed income.

April inflation numbers were generally lower than expected. We are shifting out our inflation outlook by six months. We believe inflation will be a non-factor for the next six months but will increase moderately in the following six months.

The global yield curve is in a sideways range bound pattern, indicating anemic demand for credit. An examination of developed and emerging countries confirms our “muddle through” view.

We think the 10-year yield will likely consolidate around 200-215 before taking a shot at 245. The 245 level looks like a strong barrier and will likely hold in the foreseeable future.

Property & Casualty Insurance, Life & Health Insurance, Restaurants, and Apparel, Accessories & Textiles all moved into the top quintile.

Info Tech remains the largest sector short position, while Energy is second.

With two months of Q1 earnings reports in, results are very weak with a reading of 1.16, well below the historical average of 1.57. This is the lowest two-month reading we’ve seen since Q4 2009.

Q1 earnings reports look weak at a reading of 1.38, the lowest one-month reading since Q4 2009.

Consumer Staples are top-ranked in the domestic model but appear particularly Unattractive in the global model, which continues to be dominated by the Financials.

Firms with high debt to equity ratios have been outperforming both the market and firms that rarely utilize debt. When we control for both sector and market cap, the trend is still taking place.

In the medium term (1-2 years), weaker currency actually leads to lower net exports because export prices go up, instead of down, when currency depreciates.

We weren’t prepared to find industry price trend persistence so much more predominant at the global level than it was domestically.