Latest Research

One of the great contrary trades in recent memory may well have been the Consumer Discretionary stocks during the last recession and early in the recovery. The consumer had been written off, but these stocks have been the clear market leader. It looks, however, like the move may be running out of steam.

A mountain of new debt, a balloon of short term borrowing due near term, and the likelihood of higher interest rates are big hurdles. Moody’s says U.S. debt could test its AAA rating.

It is sobering to consider that an historic, 13-month market stampede (one now exceeding 75%) has done nothing more than restore the market to levels first seen twelve years ago.

Doug Ramsey utilizes several bear market arguments to build a bullish case. Rising Interest Rates, Overbought Market, Low Volatility, and Low Trading Volumes, can all be looked upon in a BULLISH light.

This month Chung Wang examines historical performance of companies that increase or initiate dividends, as well as companies that are buying back stock. These stocks tend to significantly outperform.

Select Industries Equity portfolio is taking a nearly 10% position in Tech...Big Ten (the ten biggest tech stocks). This is the only group from the Tech sector now rated Attractive according to the GS Scores.

At times it is indeed possible to have interest rates rise and stocks also move higher, and it is also possible to have rates decline and stocks fall.

A mountain of new debt, a balloon of short term borrowing due near term, and the likelihood of higher interest rates are big hurdles. Moody’s says U.S. debt could test its AAA rating.

This month’s “Of Special Interest” examines the characteristics of past bull market recoveries. Using a variety of historical comparisons, the current recovery is put into some perspective. The majority of these comparisons seem to indicate the current recovery still has a ways to go.

This month’s “Of Special Interest” takes a look at Q4 profit margins across the 10 broad economic sectors. Best looking is Information Technology, while Consumer groups have also seen impressive gains by becoming lean and mean.

Global bull market is now one year old. U.S. stocks are probably in fair value territory, but should move to moderately overvalued territory as both the economy and investor sentiment improve.

At the end of November, The Leuthold Group established a 7% short position in long-term Treasury bonds across all tactical asset allocation funds (Core, Asset Allocation and Global). We view this as a longer-term position.

 A loss in leadership by commodity-oriented stocks could be the big surprise for 2010. Commodity sentiment is elevated, and the sector should feel the after-effects of a capacity building binge from late last decade. Rising inflation—if it’s the monetary debasement variety—won’t lift the sector.

Within Select Industries Portfolio, Diversified Financial Services equity group has been de-activated, and is being replaced by a screen-based quantitative theme called Deep Value. This is essentially a GARP type screen.

 Expect stock prices and interest rates to move higher together for a while. There are plenty of examples of this historically...although some of them go waaayyyy back.

Jun Zhu makes a compelling case for focusing China equity exposure on consumer stocks. Increases in bank “Required Reserves” mandated by China government will have greater impact on Infrastructure stocks, while consumerism is still being supported and encouraged.

Analysts are playing an increasingly important role in today’s market. In this section, we focus on the market’s interpretation of three characteristics related to analysts estimates: Popularity, Agreement, and Trust.

We continue to have longer term concerns about U.S. debt and deficit. The mountain of debt is building and interest expense rising.

In this month’s “Of Special Interest”, Eric Bjorgen looks at the cyclical nature of P/E ratios. The normalized P/E ratio follows an expansion/contraction cycle that has been repeated five times since 1926, but the interesting thing is that the cycles have lengthened significantly over time.

Don’t think we’ve seen a cyclical top, because that would mean everything essentially topped at the same time. Breadth has yet to peak in this cycle and that is one reason we expect the market to move higher over the near term.