Latest Research

Two new equity groups added to Select Industries equity portfolio. Inclusion of Paper Products and Independent Power Producers pushes Materials and Utilities to small overweight positions.

A major long term theme developing on a global basis is Clean Technology. The Leuthold Group has built a dedicated portfolio to this theme by doing extensive research on 500 globally traded stocks that could ultimately be big winners in this very long term play.

Eric Bjorgen takes an expanded look at some fundamentals surrounding the Financial sector. While bank failures are rising, prior history shows that good performance can still be produced in this environment.

While U.S. banks are still seeing loan levels declining, China has seen a 24% increase in bank loans since the end of 2008. Assuming these loans are actually employed to build infrastructure, it would seem the recovery may be getting underway.

When clients ask about our country views, we suggest they take a look at our global group work because our Global Group Scores are capable of capturing country alpha!

A month ago we suspected June might see a big institutional rush into the stock market. The stampede never came, though, and the market finished essentially flat for the month.

Looking at alternative ways to play China. See this month’s list of H-shares trading in U.S. markets.

Even after a decline in global earnings of 46%, they could experience another 15% decline before reaching the bottom of the 40 year trend channel. It doesn’t look like last quarter’s stock market bottom means that an earnings bottom is imminent.

Believe it or not, 21 of our equity groups have not yet seen a quarterly decline in revenues. Several early cycle type groups have already experienced four quarters of declining revenues, but the good news is three groups have posted rebounds in revenues as of Q1 2009.

We have maintained that the mere fact that the Financials sector has been successful in raising capital via new equity issuance in the stock market is a good sign that the system is stabilizing. The aftermarket support for these deals indicates a healthy secondary market, and furthermore, points to the presence of ample stock market liquidity.

One might begin to think that if the reports of money supply growth rolling over are true, that the stock market could be facing its own liquidity crisis in short order. While these reports sound pretty bleak for future stock market liquidity, we advise taking these headline “scare” stories with a grain of salt.

During the past several years, it has become fashionable to believe that bond investors are more sophisticated than stock investors. Personally we don’t buy that bond investors have any edge in intelligence or diligence.

Despite strong stock market returns relative to 10-year Treasuries, the “generational anomalies” still exist. Stocks should outperform bonds going forward.

Expectations for broad leadership from inflation-beneficiary sectors of Materials and Energy tell us that investor obsession seems to have shifted too rapidly from deflation to “reflation”.

VLT Momentum measures shifted to buy signals based on May 29^th market close. These are low risk signals, which by definition are confirmation of longer term sustainable bull market moves.

In mid May, 4% of assets were shifted from U.S. stocks to Emerging Market holdings, buying a package of individual Asian stocks. This same package is being used to boost exposure to 70% in early June.

Establishing a new Select Industries equity holding in the Diversified Financial Services group as a 7.7% holding. This is first Financial sector exposure since August 2008, but the portfolio continues to be significantly underweight in this broad sector.

One might have expected gold and gold stocks to stumble as investors abandoned their defensive postures. However, spot gold and gold stocks (on a relative basis) are threatening to break out to new highs.

After an uneventful start in 2009, deal flow for equity financings has jumped to life in recent weeks.

Starting to see some modest inflow into U.S. focus equity mutual funds, which is a stock market positive.