Read this week's Major Trend. 

The Leuthold Major Trend Index tracks eight sentiment surveys; four from the Conference Board covering consumer confidence and four industry measures of investor convictions. Each of these are contrarian signals, meaning that negative sentiment often relates to stronger equity markets while positive sentiment leads to weaker markets. We periodically review the effectiveness of each signal in the MTI, and this study takes a fresh look at a group of indicators related to consumer confidence and investor expectations.

Read this week's Major Trend. 

Read this week's Major Trend. 

The latest CPI numbers were cooler than the seasonal pattern suggests. Our scorecard continue to suggest a mostly benign inflation picture.

Read this week's Major Trend.

The commencement of Trump’s two terms were separated by eight years, a global pandemic, trillions in stimulus, and the quiet burial of several macroeconomic and civic assumptions once thought indestructible. While the personalities and rhetoric remain familiar, the economic backdrop, policy constraints, and market sensitivities of 2025 bore little resemblance to those of 2017.

Financial markets mimicked Mother Nature in the fourth quarter, drifting into a kind of hibernation. Style returns were rangebound around zero, and the spread between returns was about as narrow as we can recall. Active portfolio performance shows there wasn’t much to pick from to add significant value.

A small-cap bounce in January is arguably the best-known of all stock market anomalies, but for much of the last decade it’s been a flop. This year, it was back in full force... until it faded. Despite giving back some of its sizzle in late January, the Russell 2000 ended the month with a 4% advantage over the S&P 500—its best January since 2023.

With structural economic and market changes, and influences of ever-evolving tech advances, years ago we introduced our “New-Era” median valuation metrics (1995-present). For the last decade, we’ve drifted further away from those “New-Era” benchmarks, which compelled us to take a look at today’s stock valuations compared to “New-New” Era median levels based on data from 2018-forward.

Annual style rebalancing triggered a sizable trim to IT exposure in the S&P 500 Value Index, but it is still the largest weight, followed closely by Financials. Revisions in the S&P 500 Growth Index caused its top-heavy concentration to become even more pronounced: Tech and Comm Services comprise 65% of the total weight. If counting the Mag 7 from Discretionary, tech titans make up 71% of the index.

In January, a surge in Japanese Government Bond yields occurred simultaneously with a selloff in the Yen—a sign of intensifying market concern about fiscal stability. Interestingly, collective stress in both the JGB and Yen has yet to spill over into the Nikkei Index, but if history is any guide, it is doubtful that Japanese equities will continue to be immune.

After the first month of Q4 reporting, S&P 500 estimated bottom-up operating EPS are now 4.5% higher than at the end of December. This bounce follows the initial script of the previous two quarters, which saw projections jump 2% July and 5% in October. Final figures for both Q2 and Q3 continued to climb as reporting progressed, so we’d presume Q4 to follow suit, increasing somewhat more before earnings season is finished. Also, Q4 has now finally shot above its pre-“Liberation Day” estimate set back in March.

Read this week's Major Trend. 

Read this week's MTI

Wise investors have long understood that fear and pessimism often create excellent buying opportunities, while exuberance and greed often produce an environment that leads to poor future returns. Sentiment is one of the four pillars of our Major Trend Index, and a wide variety of approaches to gauging the mood of investors have evolved over the years. One set of metrics within our Sentiment category focuses on the level of volatility implied in option prices, and our research shows that option volatility is a reliable, contrary indicator of sentiment, which in turn is a useful regime indicator for future returns.

Read the latest MTI update

The latest CPI numbers were largely in-line. The powerful alignment of fiscal and monetary policies will certainly alter the path of inflation this year, but for now, our discipline still suggests a mostly benign inflation picture.

Read this week's Major Trend. 

With recent extremes, both in underperformance and relative valuation, it feels like Low Vol could be near a turning point. At the very least, the margin for error is wider for this space than it has been in quite some time.