Latest Research

With the new ISM figures for March, the Liquidity Index has moved into the maximum negative zone with a reading just below the bearish –20 threshold.

While Low Quality stocks have been beating High Quality, performance was on par in Q1. High Quality cheap relative to Low Quality and the tide may be turning.

Asset allocation portfolios continue to hold big positions in Emerging Markets. Jun Zhu presents an initial study exploring the use of Emerging Market Closed End Funds historical premium/discount levels as a predictor of future Emerging Market performance.

Our calculations show the rise and fall of equity group correlations over time. How does this impact returns both historically and going forward?

Momentum once again has the best performance. This out-of-favor factor has continued to outperform the rest of the factors.

Long term interest rates could continue rising, as inflation expectations increase and investors demand higher yields.

This month’s “Inside The Bond Market” presents our new “Risk Aversion Index,” which was developed by Chun Wang to respond to those factors that the bond market is truly worrying about. The Index examines ten factors on a monthly basis to help best position a bond portfolio.

Japan’s problems are leading many to write about the demise of nuclear power. However, Dave Kurzman not only believes the nuclear industry will survive, but will also prosper. See this month’s “Of Special Interest” for thoughts regarding this energy source from our Clean Tech guru.

Doug Ramsey highlights the “point of recognition” in this month’s “Inside The Stock Market” section. This is the point of maximum market upthrust, the point at which even hardened pessimists become convinced that the economic recovery and bull market are for real.

S&P Normalized valuations are already in the zone that have defined many important bull market tops.

The game is now over for Discretionary, and this opinion is supported by the sector’s decline to the bottom of our GS Score ten-sector composite.

Healthy Tigers is not a new exhibit at the zoo, but rather a new index of stocks that will benefit from expanding health care in emerging Asia countries, especially in China.

Established new Select Industries Portfolio group holding in Technology Distributors, boosting Info Tech sector exposure to 38% of total equity assets.

During February, the only quantitative factor producing positive performance was Momentum. All other factors produced negative returns.

This month’s “Quantitative Strategies” section presents a preliminary look at some long term trends in Valuations and Profit Margins for specific industry groups.

Bond bubble deflating, as investors demand higher yields to compensate for rising inflation and mountain of debt.

In this month’s “Of Special Interest” section, Jim Floyd updates the broad sector profit margins charts. Information Technology now producing 15% margins, the highest levels ever. Energy and Materials sectors still relatively low, but rising commodity prices will support higher margins in 2011.

Fundamental rationales also have strong psychological elements. Normalizing earnings helps minimize the startling impact of declining earnings.

From our perspective as disciples of Normalized EPS, the entire bull market to date has come from P/E expansion. However, that stands to change as global Normalized EPS are again on the rise.

Economic growth is re-accelerating, but that growth is coming at a cost…price pressures are building significantly. Manufacturing prices are up along with commodity prices.