Latest Research

The stock market performed pretty much as expected in August, although experiencing a somewhat unusual fade at month end. Major Trend remains negative. Some improvement but still a long way from Neutral.

Mutual fund net inflows increase to an estimated $14 billion in August.

Assets under management in Japan's mutual fund industry now at 9% of what they were less than 7 years ago.

“If you are expecting long bond rates to fall as low as 6% later in 1997, how come you are so afraid of the stock market?” This question, or some variation thereof, is frequently heard from clients these days.

Bonds (including zeros) expected to outperform stocks over next 6-12 months...economy should slow by year end, inflation should remain under control, corporate earnings momentum expected to gradually fade.

Establishing a new portfolio holding in “Life Insurance”, a sector ranked as Most Attractive for seven of the last eight months.

Performance rundowns for The Leuthold Group's equity market sectors (and other measures) ranked by July performance.

Since turning negative on July 2, the Major Trend Index has deteriorated very rapidly. Major stock market top now seems to be developing. There are now five stock market positives and seven negatives.

A new weekly chart tracking mutual fund cash flow, along with S&P 500 Index. Flow has been fading, new figures awaited eagerly.

Market volatility may seem quite high, but activity is slightly below normal.

Earnings for the first and second quarter better than most expected, as evident by Andy Engel’s up/down earnings momentum work and Jim Floyd’s 3000 company studies.

A one of a kind prospectus from Buffett, a must read unless you have already seen it.

Bonds rallied in early August on tepid employment and inflation reports, lower deficit news, and (surprise) welfare legislation. This bond market rally looks like it could get legs.

Factors affecting shift in Major Trend: fade in market momentum...decline of cash flow into U.S. focus equity funds...vast new supply of equities. Despite modifications to help adjust for this “new era” environment, it wasn’t enough to offset current negatives.

Comparison between February 2, 1996 Major Trend (when we last went positive) and today’s calculation shows the shift primarily driven by Economic/Monetary/Inflation (higher interest rates), and by the Supply/Demand category.

In recent weeks, the speculative nature of the market has cooled some, and the flow into aggressive or emerging growth funds has subsided.

Leuthold current studies show significant downside potential from current levels. Today’s market valuation now more extreme than 1987’s, and far above historical medians.

“Clean Energy” is being added to the Conventional Equity Portfolio in early July as an 11% holding. After underperforming since 1993, the sector may be poised for a take-off. There is a good relative strength bottom in place.

Performance rundowns for The Leuthold Group's equity market sectors (and other measures) ranked by second quarter performance.

What might change public stock market psychology? A false signal: gold stocks did not serve as a valid lead indicator for the metal in the first five months of1996. Observations from the UK: Investors still very underweighted in U.S. stocks but attitude toward U.S. market fairly positive.