• The Many Faces Of Mo

    December 07, 2017 BY Scott Opsal

    Momentum is one of the most widely accepted alpha-generating factors, used by quantitative and fundamental managers alike. Its biggest drawback, however, is high turnover. Herein we explore momentum from the perspective of sector weights.

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  • COTW

    Is The Market Too Strong To Top Out?

    December 14, 2017 BY Doug Ramsey

    We observed in July that at an age when most bull markets are prepared to see the mortician, this one still seems to need a pediatrician. And five months later, the bull is acting as immature as ever!

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  • Inflation Watch

    Inflation-As Flat As The Yield Curve

    December 14, 2017 BY Chun Wang

    The latest Core CPI number disappointed again. The divergence between inflation break-evens and the yield curve is puzzling. Given the lack of inflationary pressure and the Fed’s projected rate path, it would not surprise us to see a flatter curve without the help of fiscal stimulus in the next few months.

     

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  • Major Trend

    MTI: Supply/Demand Reversed Some Recent Gains

    December 12, 2017 BY Doug Ramsey

    See this week's Major Trend Index.

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  • Oil Says It's Finally Time To BUY Energy!

    December 11, 2017 BY James Paulsen

    Energy stocks have persistently underperformed throughout this bull market. The relative total return performance of the S&P 500 Energy sector since the start of this bull market is the worst of all 11 sectors, trailing the overall S&P 500 index by almost 270%! Understandably, this chronic underperformer offering little positive price momentum is significantly underweighted in most portfolios. However, a simple valuation technique based on the relative price of crude oil suggests energy stocks may soon start outpacing the overall market. That is, Oil says it may finally be time to BUY Energy stocks!

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  • COTW

    Yawn? Another Sentiment Warning

    December 08, 2017 BY Doug Ramsey

    The stock market has disregarded any and all caution flags throughout 2017, and the consensus is that it will continue do so through year-end.

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  • Stock Market

    Stock Market Observations

    December 07, 2017 BY Doug Ramsey

    Economic and momentum considerations have kept us mostly aboard this bull for much longer than our value-seeking inner selves would have otherwise allowed.

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  • Stock Market

    The Chart The Fed Forgot

    December 07, 2017 BY Doug Ramsey

    The Fed has long claimed itself to be “data dependent” while providing less and less information on those data points it considers most relevant. We can’t know what’s on that list, but we certainly know what isn’t: the ISM Manufacturing Composite, which (prior to the current cycle) provided an excellent gauge of the Fed’s policy bias.

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  • Bonds

    Anatomy Of A Flattening Cycle—Flatter For Longer

    December 07, 2017 BY Chun Wang

    The calm appearance of the 10-year yield masked a big curve-flattening move that has accelerated the last few months.

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  • Stock Market

    Playing The Bounce: Does The November List Bounce?

    December 07, 2017 BY Jun Zhu

    We reconstituted the November and October “Bounce” screens back to 1986 and compared their average performance versus the “non-bounce” companies. Compared with the October list, the November list shows a much weaker bounce effect.

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  • Could Small Shifts Change Minds?

    December 04, 2017 BY James Paulsen

    The financial markets have recently been bolstered by an unexpected acceleration in economic momentum without a noticeable worsening in inflation or bond yields. At the beginning of 2017, most anticipated another 2%-ish growth rate in the U.S., and few recognized the global recovery was headed for a synchronized expansion. However, the U.S. appears poised for a third consecutive quarter of real GDP growth in excess of 3%, and participation in this global recovery has never been broader. Moreover, since improved economic growth has not aggravated inflation or bond yields, many believe the stock market is in a sweet spot headed for a melt-up.  

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  • COTW

    The "Mo-Mo" Market Probably Isn't Finished

    December 01, 2017 BY Doug Ramsey

    Momentum has had a terrific year relative to all other quant factors, but Wednesday’s action forewarns of the mayhem that will likely accompany the eventual rotation out of Momentum (and Growth) and into Value stocks.

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  • A Capital Goods Crescendo?

    November 27, 2017 BY James Paulsen

    Business investment has not played a central role in the contemporary economic recovery or bull market. Persistently sluggish growth, high unemployment, disinflation, and fears of another imminent recession have kept economic behaviors far too conservative for a capital goods cycle. However, recent conditions have become much more conducive for investment, increasing the possibility this recovery could end with a capital goods crescendo.

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  • Volatility With A Smile!

    November 20, 2017 BY James Paulsen

    Volatility has always been an integral part of the stock market. Prices go up and down and investors have long recognized that the frequency and magnitude of these swings often provide valuable information about the future. The Vix Volatility Index, the Average True Range, and Bollinger Bands are just a few examples of volatility indicators regularly monitored by traders to help assess bullish or bearish sentiment, overbought or oversold conditions or a peaking or basing pattern.

     

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  • COTW

    The Seasonality Of Earnings Season

    November 17, 2017 BY Scott Opsal

    Years ago, Monty Python’s classic comedy sketch introduced us to the Department of Redundancy Department.

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  • Inflation Watch

    Inflation-Yield Curve Too Flat

    November 16, 2017 BY Chun Wang

    The latest CPI numbers are in-line with expectations. The divergence between inflation break-evens and the yield curve is worth close monitoring. Given that the global recovery is still intact, we don’t think the current inflation picture justifies the flatness of the yield curve.

     

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  • No More Juice?

    November 13, 2017 BY James Paulsen

    The juice fueling this bull market may finally be running low. During the last six months, financial liquidity has contracted mildly, signaling the foundation under investors’ feet may be turning to sand.

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  • COTW

    Tax Reform Or Not, The Budget Is Already Busted

    November 10, 2017 BY Doug Ramsey

    In 2010 and 2011, we were sometimes chastised for not paying more attention to exploding federal  deficits, which at the time were running between 8% to 10% of GDP. We argued that a substantial share of these budget shortfalls was cyclical in nature, and would eventually be reversed by an improving economy.

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  • Stock Market

    Stock Market Observations

    November 07, 2017 BY Doug Ramsey

    We remain bullish on stocks but with very limited visibility into 2018.

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  • Stock Market

    A Mysterious Bond BUY Signal…

    November 07, 2017 BY Doug Ramsey

    Sometimes we feel compelled to report findings that conflict with our outlook. And then there are the even rarer times we actually do it.

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  • Of Special Interest

    The Case Of The Disappearing Value Premium

    November 07, 2017 BY Scott Opsal

    Market history teaches us that investors behave differently in groups than they do as individuals.

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