Performance
Tech Watch…..S&P Tech Subset Down 12% In August
Can there be a significant market rally without a tech rally? Maybe not. S&P 500 tech weight (16.9%) now slightly below our “normal” target weight of 17%.
Bond Market Summary
GDP growth still barely positive, but trend has been sharply lower. May already be halfway through a recession. Tech bust and Q2 profit decline additionally support this view.
Scanning The Markets
It’s been a very difficult market, as there has been very little prolonged group leadership. This is to be expected near market bottoms, as investors are shifting assets quickly in these uncertain times.
Capitalization Tier Meausres
Continuing to evaluate the Leuthold Index methodology.
Summer Rally In August?
We were wrong about a rally in July...What about August?...Much to your family’s dismay, you may want to bring along your cell phone and laptop to the beach this month.
Performance From A Long Term Perspective
Don’t let the roller-coaster ride of the short term lead to abandonment of sound, long-term investment strategies. Despite 2000-2001 declines, stock market performance over the last ten years is still beating long-term, median equity returns.
Bond Market Summary
Economy may already be halfway through a recession, but expect economic uptick by early 2002. Fed near end of easing.
Scanning The Markets
Small cap stocks were clearly superior in June, with the Russell 2000 rising 3.3% and the S&P Small Cap Index up 3.6%.
Internet Debacle (Opportunity?) Index
These internet stocks soared during the insanity phase and recently suffered through the debacle. It may now be time to start looking for opportunities here.
Capitalization Tier Meausres
Continuing to evaluate Leuthold Index methodology.
"Value" Performance Superiority May Diminish Or Even End Soon
Our work indicates Small and Mid Cap growth stock action is heating up. It is entirely possible that a transition to Small and Mid Cap growth leadership is already in the works.
What About the Recession and the Awful Earnings?
The NBER (U.S. “recession judge”) often fails to label recessions until after they are over. Sector Earnings in 2001: Estimate operating earnings for the cap weighted measures will be down 15%, maybe 20%. Expect the economy will start to stabilize by year-end, and improve in early 2002.
"The Pause That Refreshes...."
Leadership Expectations: Small and Mid Caps (not Large Caps); Energy Rebound; Biotech and Broad Health Care; some Technology subsets. How long for the NASDAQ to recover to previous highs? Assuming an 11% annual growth rate, the “NAZ” will not recoup until September 2009.
Bond Market Summary
Expect Q2 and Q3 GDP to weaken due to business cost cutting, lagging global economy and less robust consumer spending. But, tax rebate, the Fed, and money supply growth should spawn new economic expansion by early 2002.
Scanning The Markets
Tech was hit hard in the last half of May, with eight of the 20 worst performers being Tech related.
Capitalization Tier Meausres
Continuing to evaluate Leuthold Index methodology.
Internet Debacle Index
Internet Debacle’s May performance (-0.6%) was pulled down by the large number of components in the B2B Software segment.
Stock Market Supply/Demand
U.S. focus equity fund net inflow of $15 billion is estimated for May, which is somewhat less than the $17.5 billion net inflow in April, but somewhat more than $13.2 billion net inflow last May.
Tech Watch…..Weak In May
Tech stocks struggled again as a torrent of disappointing news showered the group in May.
"Value" Performance Superiority May Soon End
Value may continue to outperform Growth for the balance of the year, but by a narrower margin.
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