Green Book November 1986
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Featured Articles
A Hard Look: Growth Versus Cyclical
In October, the market flip flopped with big growth stocks leading and cyclicals and basics mostly lagging. We continue to think underlying market leadership is “growth,” but we are no longer so sure. We have taken a hard look at the “cyclical” argument, including two of our own proprietary earnings momentum tools. From an earnings standpoint, 1987 might be a better earnings year than most expect.
Bond Market Summary
Even considering these deficit related problems, we have to remain cyclically bullish on T-bonds for the next few months. The bond market just has too much going for it. Most of our inflation work remains cool, but this month we present two momentum measures for the PPI and CPI that may appear ominous to some.
Client Questions
Here again are some of the client queries we have had over the last month or so.
Has the Stock Market Become the Derivative?
You are undoubtedly sick of reading about program trading, but this “In Focus” feature may be helpful. Portfolio Insurance, Index Fund Arbitrage and Interest Enhancement Programs are now all-important stock market factors, at least at times. We also offer one controversial but probable restriction that may well be imposed on the program gang.
Inside the Stock Market
The Major Trend Index improved slightly but remains negative, as it has since mid June. The October rally was no surprise and could carry farther, momentarily making new highs in DJIA and S&P 500 (but not broader measures). A major cyclical bull market top in progress. Watch out. View rally as selling opportunity.
Joke of the Month
Again, the joke of the month comes from Texas, but not from out regular Texas source. This time the award goes to Gene Vaughan of Vaughan, Nelson, McConnell and Scarborough.
The Waves of Cash…An Update
In September, $3 billion was switched from money market funds to equity mutual funds and $5 billion was switched out. Over 50 investment services now make mutual fund and market timing recommendations. Herein we track the dramatic increase in fund switching and comment on the implications.
View from the North Country
Update on the coming Japanese Oil Patch invasion: We are now even more convinced, it is only a matter of time.…ARFF (Angry Revengeful Frequent Flyers) – You too can be a member!
Table of Contents
Stock Market
- View from the North Country
- Inside the Stock Market
- Client Questions
- The Waves of Cash…An Update
- Has the Stock Market Become the Derivative?
Of Special Interest
Macro Monitor
At Random
A Hard Look: Growth Versus Cyclical
In October, the market flip flopped with big growth stocks leading and cyclicals and basics mostly lagging. We continue to think underlying market leadership is “growth,” but we are no longer so sure. We have taken a hard look at the “cyclical” argument, including two of our own proprietary earnings momentum tools. From an earnings standpoint, 1987 might be a better earnings year than most expect.
Bond Market Summary
Even considering these deficit related problems, we have to remain cyclically bullish on T-bonds for the next few months. The bond market just has too much going for it. Most of our inflation work remains cool, but this month we present two momentum measures for the PPI and CPI that may appear ominous to some.
Client Questions
Here again are some of the client queries we have had over the last month or so.
Has the Stock Market Become the Derivative?
You are undoubtedly sick of reading about program trading, but this “In Focus” feature may be helpful. Portfolio Insurance, Index Fund Arbitrage and Interest Enhancement Programs are now all-important stock market factors, at least at times. We also offer one controversial but probable restriction that may well be imposed on the program gang.
Inside the Stock Market
The Major Trend Index improved slightly but remains negative, as it has since mid June. The October rally was no surprise and could carry farther, momentarily making new highs in DJIA and S&P 500 (but not broader measures). A major cyclical bull market top in progress. Watch out. View rally as selling opportunity.
Joke of the Month
Again, the joke of the month comes from Texas, but not from out regular Texas source. This time the award goes to Gene Vaughan of Vaughan, Nelson, McConnell and Scarborough.
The Waves of Cash…An Update
In September, $3 billion was switched from money market funds to equity mutual funds and $5 billion was switched out. Over 50 investment services now make mutual fund and market timing recommendations. Herein we track the dramatic increase in fund switching and comment on the implications.
View from the North Country
Update on the coming Japanese Oil Patch invasion: We are now even more convinced, it is only a matter of time.…ARFF (Angry Revengeful Frequent Flyers) – You too can be a member!
Stock Market
- View from the North Country
- Inside the Stock Market
- Client Questions
- The Waves of Cash…An Update
- Has the Stock Market Become the Derivative?
Of Special Interest
Macro Monitor
At Random
Perception for the Professional
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Sector Navigator
March 2026 Issue
