Our Financials Sector Ranking has been strengthening since August—well before the Trump Bump. The addition of Regional Banks to our SI Portfolio boosts our Financials exposure to an overweight 26% versus the S&P 500’s 15% weight. Reinsurance and Developed Diversified Banks are also among the Attractively-rated options for diversification within the sector.

One of our disappointments with the Group Selection (GS) Scores in 2016 was their failure to latch on to the rebound in Energy groups.

Our disciplines remain bullish, but we periodically wonder whether we’re being too cavalier in keeping our tactical portfolios “almost” fully-invested (at 65% equities) in the face of valuations that are higher than those seen in all but perhaps 24 months of stock market history.

Given the high likelihood of a March rate hike, we can’t help but wonder if the old adage of “three steps and a stumble” really holds.

Profitable investing overseas requires not one, but two, successful decisions: 1) select an outperforming asset class; and, 2) be in a currency that provides a favorable foreign exchange impact.

CPI numbers were strong and better than expected. A big part of the recent upturn in inflation has to do with the much lower base from a year ago. We are seeing upside inflation surprises on a global basis but wage inflation is still disappointing. We are encouraged by the general uptrend in inflation data but we think the real test comes after the positive base effect subsides.

We take a deeper dive into Hotels & Leisure’s GS Score and fundamental industry drivers to explore what the group has to offer above and beyond its membership in the “Trump Trade” trend.

As we get further into the era of Trump, it will be interesting to see how the market balances anti-immigration and anti-free trade policies with deregulation and tax reform.

Building on the momentum of the past few quarters, our “one-month” Q4 ratio sits comfortably above its historical mean for the first time in seven quarters.

The market seemed hesitant to push the Trump trade any farther as new policies have focused on trade renegotiation and immigration, the less positive part of the policy package.

Tallying the overseas cash pile, predicting how much may be repatriated, and the potential impact on stock performance are challenging undertakings, which require more art than science.

Veteran market analyst Bob Farrell reminds investors that when parabolic uptrends eventually stop, the next move is never sideways. We don’t know that the Dividend Aristocrats and other bond-like stocks traced out a true parabola into last summer’s peaks, but the ugly aftermath suggests they probably did.

The Major Trend Index stabilized in a moderately bullish range during the past several weeks, yet the Momentum/Breadth/Divergence category is almost the sole carrier of the bullish torch.

Herein we provide a year-end update on the factors we determined were important to the active/passive relationship. We found that the market environment and the success of active managers changed significantly in late 2016.

While factors do offer excess return they are by no means winners in all seasons. Our findings show that factor returns are cyclical, volatile, and unstable over time.

CPI figures for December matched consensus estimates.  The Federal Reserve should be pleased to see the modest uptrend in prices.  Sustained price inflation still faces a number headwinds including: resource slack, a strong Dollar and a weakening Yuan. Energy prices saw the largest gains in 2016 after a brutal 2015. Within the Core CPI, medical care experienced notable gains.

It seems like it’s been ages since investors have been able to get excited about earnings growth, although our October 21st “Chart of the Week” showed that the S&P 500’s current earnings slump has been unremarkable in both depth and duration.

For nearly three decades The Leuthold Group has tracked its hypothetical industry group portfolios composed of the previous year’s “Dreams” (best performers) and “Nightmares” (worst performers).

We remain cyclically bullish, but it would be intellectually dishonest to try to make a serious valuation case for the stock market here.

The above caption—and Jimmy Buffett song title—comes from the “View From The North Country” section in the first-ever Green Book published in November 1981. Not much has changed in 35 years.