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We are getting increasingly optimistic about the prospects for Industrial Technology stocks and increasingly cautious about the outlook for Office & Information Technology stocks.

The tool has functioned as a good lead indicator of changes in inflation momentum. When the reading is moving up it is an inflation acceleration alert and a move above 70% is usually cause for a general alarm. On the other hand, readings below 50% are a comfort zone.

Historically, small cap stocks have outperformed big cap stocks in about two out of three years. But this has not been the case since mid-1983. What is going on? Has the investment world changed? Will small stocks ever again lead the parade?

Mid-course corrections to our annual economic and market projections for 1987. Also, some low down dirty pirates from “out east” made a pass at Minnesota’s beloved Dayton Hudson...our Legislature's response and the Greenmail Solution.

Our broad-based measure of the stock market’s wellbeing improved in June, gaining some 500+ points. However, this work still remains decidedly negative on balance.

For most of us, essentially all of the positive 1987 performance has come in the first three months of the year, with most of that in January and February. Still, our equity model was up 5.2% in the second quarter.

Almost any way you cut it, the U.S. stock market is historically very overvalued. Only by comparisons with Japan and perhaps Singapore, can U.S. stocks be viewed as relatively attractive.

The bond market entered June with a sharp one day sell off and then spent the best part of the month edging higher. However, in the last week or so, bond prices drifted lower in a relatively dull market.

If you haven’t done so already, I highly recommend you spend some time with the June 1987 20th Anniversary issue of Institutional Investor. Here, we are reproducing one of those remembrances, as Don Weeden recalls his earlier battles with the New York Stock Exchange.

Doing the MTA and FAF conferences in May....The polite nods and smiles are waning as the Japanese come to increasingly believe they are scapegoats for America’s economic woes...Even though we think the currency play in the Australian dollar may be played out for a while, the high yields in themselves are very attractive. All in all, we find Aussie bonds to be a comfortable investment area these days.

Our composite Major Trend Index has continued to deteriorate and is decidedly negative. It is no longer just the Intrinsic Value measures that are warning us of trouble ahead.

In terms of sectors and groups, May was an interesting month, even though the popular averages ended the month unchanged.

Most of last month’s questions have been addressed in other sections of this month’s publication, but here are some ‘‘leftovers”.

For those who have survived, things are looking up down on the farm. Land prices are down through most of the Midwest, close to matching the previous great farmland bear market, 1920 to 1932. We think farmland is bottoming out. If you want to invest in farmland we give you some advice.

For the time being, negative pressures seem to have subsided for the bond market. We don’t think the decline in bond prices is over, but June should allow for a little rest and rehabilitation on the part of the players.

Sound like a tall order? This is what the DJIA must achieve to match the total return from a 20-year zero T-bond over the next 20 years.

Thoughts from the airplane…Two pictures of gold…Is finding values in this market “Mission Impossible?”

April couldn’t have been much crueler. Even with the rally from near panic lows, long T-bonds lost 6-7 points for the month, as did long municipals. Corporates held up a little better, dropping only three or four points.

When the closing bell sounded on April 30, the market averages were down very little from the month before. To the casual observer, it might appear to have been a dull quiet month. But to those on the floor, in front of a quotron, or even reading the daily financial pages, it was anything but.

It was a wild and wooly, hairy and scary market in April, even though the popular averages ended the month only about 1% below where they began. However, the NASDAQ and Value Line measures each declined about 3% over the month.