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For central bank policy effectiveness, global economic growth, interest rates, and inflation. While lowered expectations are a good thing in the near term, long term return expectations for most asset classes should be lowered too.

Automotive Retail Group rated Attractive, but consider the fundamental divergence between the two subsets of stocks included. Expect Auto Parts/Service Providers to remain strong; with Auto Dealers outlook less favorable.

With a number of Housing-related stock groups remaining in the Attractive range, various Home Price Index (HPI) methodologies are dissected to better understand the data included.

Insider buying and selling is the only factor that worked during June.

Traditional Fama/French analysis shows an exceptionally large 4% per annum return edge favoring Value. Based on Russell 1000 Growth and Value Indexes, however, the edge in favor of Value has been a fraction of that. Current year’s Growth outperformance is also dissected to determine the likelihood this leadership will persist.

We remain optimistically cautious, as we believe the determination of the policy makers to prop up the market should not be underestimated, especially in an election year.

How do we avoid volatility in a high Uncertainty/low conviction world? We compare a “bi-modal” portfolio of 50% Treasuries/50% High Yields with a “middle-of-the-road” portfolio of 100% Investment Grade Corporate bonds. The latter wins in both good and bad scenarios.

1st half LT rate movements tracked cycle composite well, but we differ on the pattern in the second half. The “muddle through” pattern on the U.S. Composite Leading Indicator is more consistent with our view.

The bull market is increasingly showing signs of advanced age, but that is only to be expected for a move that now measures 40 months off its March 2009 low.

Leuthold Stock Quality Ranking work is currently showing that High Quality stocks outperformed during the last quarter.

The April/May swoon (an S&P 500 loss of -9.9%) has been accompanied by significant deterioration in our Major Trend Index. But the latest reading (data through June 1st) stayed positive, and our best guess is that it will hold firm.

While this is not our forecast, some investors will no doubt be mortified to learn that a “typical” calendar year (again, if there were such a thing) contains a drawdown as large as –13.5%.

Is there an historical precedent for important stock market highs to occur in the same month for three or more consecutive years? YES. In 1938-1942 the S&P 500 registered key highs during the first two weeks of January for five straight years.

What were QE2 and Operation Twist intended for if not to save Europe?

Yes, we consider U.S. Treasury securities a bubble across the entire yield spectrum, and the situation has probably now moved into “extra innings” (think 10th or 11th) thanks to the flight to (perceived) quality triggered by the European debt crisis.

Taking into account the variety of total return contributors, we conclude that no one regional equity market stands out as a slam dunk investment idea.

The Homefurnishing Retail group was purchased in the Select Industries Portfolio in late May.

Should this group once again be a candidate for investors looking to be defensive? Probably not.

The worst performers are the first sell candidates for investors looking to shed assets.

As global capital markets are yet again dominated by extreme macro-economic uncertainty, gold appears to be behaving as a hedge against extreme equity market movements, a store of value and an alternative to fiat currencies.