Read this week's Major Trend.

Read this week's Major Trend. 

The CPI numbers were slightly hotter than consensus. Our inflation scorecard suggests higher inflation pressure ahead.

Read this week's Major Trend. 

April market action delivered two rare events: a 13-day winning streak in the NASDAQ and a +12% month  in the S&P 500 (trough to peak). Both have historically pointed toward strong forward returns. And yet they could not be more different in how they get there.

In a strategic pivot, Allbirds, Inc. withdrew from the footwear trade to redeploy assets into an AI data center rental business. Its stock jumped 582% within three days. The notion of a “582% blip” prompted us to further explore the phenomenon of lottery stocks and the behavioral-finance research into investors’ appetite for lottery-like payoffs.

The greatest investment risk from the trillions of dollars betting on AI is that overbuilding will lead to excess capacity with competition driving pricing toward marginal costs. Many players are tossing their hats into the ring, but new-era spending booms often end with just a few dominant firms.

Market-based measures are favorable, and the war-driven confidence shock has partially reversed. Despite recent volatility, the employment picture improved a bit, although full-time employment is a persistent reminder that labor market health remains fragile.

We compiled a list of indicators to watch for potential private-credit contagion, sorted into three tiers. The first tier, with the most direct private credit exposure and sensitivity to liquidity risk, is flashing a red flag; whereas the other two are graded as “cautionary” to “okay”—early signs of contagion, but not yet serious.

Read this week's Major Trend. 

Estimated bottom-up operating EPS for the S&P 500 shot 11% higher following results from the first month of reporting. Upward revisions during earnings season have become the norm for the last several quarters—with projections usually inflating in the high single digits from start to finish. Results for the first quarter seem to be different, with an initial spike standing head and shoulders above previous quarters. Forward quarters have moved higher as well and, in total, have dampened a good chunk of the multiple expansion that would normally follow a double-digit surge in the S&P 500.

Read this week's Major Trend. 

Read this week's Major Trend. 

This month’s Leuthold Refresh provides a quarterly update on our factor regime analysis. Factors or styles have historically performed differently under various economic and market conditions, and we have mapped these relationships to identify which factors are best positioned for today’s environment.

Read this week's Major Trend. 

The CPI numbers were either in-line or slightly better than consensus. Our inflation scorecard edges up slightly but remains neutral. It pays to be patient.

For much of the last year, we’ve noted markets have persistently underpriced geopolitical risk, treating it like background noise versus a real threat. Recent events have forced a correction to that stance. Oil, in turn, has reclaimed its function as a geopolitical risk hedge—a role it had abandoned for a long time.

Stocks in the Energy sector have massively outperformed since the Iran war onset; yet prior to that, the fundamentals in this space had already strengthened and the oil price surge is an extra bonus. Expectations have remained low while positive surprises have been delivered, making for a favorable setup.

The index had its worst month since the tariff tantrum one year ago. Yet, a sharp rally on the last trading day took some of the sting out of the March loss; downside estimates narrowed by a similar amount.

There’s been a major return benefit for selling AAPL when it hits a 7% SPX weight and repurchasing after reverting back to a 6% weight. We tracked three options to switch into after a 7% “sell” trigger, holding till a new buy is flagged, and each crushed the approach of holding AAPL through the rotation.