Market Perspectives

Still In Thrall With "Low Vol"

While we wouldn’t go so far as to tar it with the “bubble” epithet, the ongoing investor obsession with "stability" is concerning. Our Low Volatility Index entry price, with a current P/E of 23.1x, is not attractive.

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Active Versus Passive Return Drivers: A Year-End Update

Our July special report “Active vs. Passive: A Three-Club Headwind” studied the recent performance advantage of passive indexes over actively managed funds. 

We concluded that, just as market conditions cycle, so does the active-passive return spread. Investors are wise not to chase the winning style but to diversify their portfolios using both types of funds.

A Subdued 8th Birthday Celebration

 

The current bull market turned eight years old on March 9, 2017, but the hoopla has fallen short of that which surrounded birthdays #3 through #7. Could it be that complacency has set in—that bull market birthdays have become… well… a birthright? A look at the current bull market's stats versus past ones....

Trump Trade Is Overdone - MNI financial news interviewed Leuthold Group's Chun Wang

 

MONDAY, JANUARY 23, 2017 - 12:50

Portfolios: Leuthold: Trump Trade 'Overdone'; Max 2 Fed Hikes

By Yali N'Diaye

OTTAWA (MNI) - As U.S. President Donald Trump multiplies pro-growth, pro-business and protectionist statements, Leuthold Portfolio Manager Chun Wang told MNI the so-called 'Trump trade' is overdone and the Federal Reserve could potentially hike rates less than twice this year.

The Stock Market Is Non-Partisan

 

We’ve annoyed a few media outlets by admitting to having no clue as to which of the presidential candidates would be “better” for the stock market. There are just too many variables at work, not the least of which relates to initial conditions. Those conditions, for example, were ideal for Barack Obama— who entered his first term with the S&P 500 trading at just 12x 5-Year Normalized EPS. Read more:

 

Emerging Markets: New Leadership Period?

Our Emerging Markets Allocation Model triggered a BUY signal at the end of August after 5 1/2 years in bear mode. The model’s upgrade is consistent with a cyclical leadership run of perhaps one to four years in EM equities relative to their Developed country counterparts.

Active Management Vs. Passive: A Three-Club Headwind

Active Vs. Passive: A Three-Club Headwind

Few active managers are outperforming passive funds in the current market, and investors are wondering if this is a permanent state of affairs (spoiler alert: it isn’t!). Our research suggests relative returns between active and passive are cyclical, depending on the market environment. There are identifiable drivers behind the active/passive return cycle, and the three-club headwind facing active managers today will turn in their favor once again.

Areas of Market Strength Vs. Areas of Weakness Are Troublesome

 

The rally since mid-February has progressed to the point where we see trouble afoot in both the strongest and weakest charts we can find. First, the handful of sectors and themes now at new all-time highs are hardly those usually associated with a full-blown “risk-on” scenario.

Knee Deep In An Earnings Recession

It’s a scary thought, but what does 2015 have in common with the infamous years of 2001, 2008, and 2009? An earnings recession for the S&P 500. The 2015 vintage certainly has some unique traits.

 

DJ Transports: Still Sounding Broad Market Warning

 

In the current cycle, the DJ Transports have underperformed for 12 months, roughly in line with the patterns preceding the market peaks of 1973, 1987, 1990 and 2000. 

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