Green Book June 2007
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Featured Articles
2007 OUTLOOK: CPI Accelerating In Q4, Economy Creeping Along, But Expect Recession In 2008
Expect economic expansion to pick up a bit after weak first quarter, but a 2008 recession is a possibility.
Inflation Acceleration Expected In Second Half 2007
Inflationary trends are not slowing. The six month annualized PPI rate of change is almost +10% and the CPI almost +5%, both above their respective twelve month rates.
Interest Rates And Stock Valuations: A Broken Linkage?
A look at the relationship between bond and stock yields as justification for today’s expectations of a continued bull market and for the current LBO craze. No evidence that Fed-type valuation models help forecast future market returns.
Keep An Eye On The LEI – Leading Indicators Have Topped, But Have Yet To Roll Over
The Index of Leading Economic Indicators has a proven track record of indicating when a recession may be near. Although this index has been trending sideways for quite some time, it has not yet rolled over.
LBO Screen Update
After one of the most active months ever for private equity offers, we revisit our LBO screen in “Inside the Stock Market” section. This screen has thus far outperformed the S&P 500 since we introduced it in January of 2006.
Large-Cap Growth: Could A Long Wait Get Even Longer??
Valuations set the stage for better performance out of growth. But it is important to note that there’s precedent for the value cycle—seemingly already overextended in time and price—to get much more extended.
May Market Action
It is getting increasingly clear that current stock market gains are being built upon the backs of corporate and private equity investors.
Mutual Fund Flow…..U.S. Equity Fund Flow Slips Into Net Redemptions
This is the first time that combined net demand for open-end funds and ETFs has been negative since last December, and is quite interesting, even unusual, considering the stock market continued to post new highs during the most recent month.
Oil & Gas Drilling– New Group Addition To Select Industries Portfolio
Oil & Gas Drilling is tied for fifth in our Group Selection Scores this month and was purchased for the equity portfolio.
Sentiment: Still Plenty of Non-Believers
Our Attitudinal analysis—or investor sentiment—normally deteriorates badly leading into a major market top, but has held up surprisingly well in the face of the last several weeks’ almost relentless, daily upside action.
View From The North Country
Steve Leuthold revisits the 1987 stock market, and includes some excerpts of his commentary in the Green Book from the months leading up to the October crash. There are some stunning similarities to today’s market. Also, commentary on the current China stock market. Some have compared it to Japan in the late 1980s, but there are distinct differences.
Table of Contents
Stock Market
- View From The North Country
- May Market Action
- LBO Screen Update
- Keep An Eye On The LEI – Leading Indicators Have Topped, But Have Yet To Roll Over
- Large-Cap Growth: Could A Long Wait Get Even Longer??
- Sentiment: Still Plenty of Non-Believers
- Mutual Fund Flow…..U.S. Equity Fund Flow Slips Into Net Redemptions
Of Special Interest
Macro Monitor
Equity Strategies
Inflation Watch
2007 OUTLOOK: CPI Accelerating In Q4, Economy Creeping Along, But Expect Recession In 2008
Expect economic expansion to pick up a bit after weak first quarter, but a 2008 recession is a possibility.
Inflation Acceleration Expected In Second Half 2007
Inflationary trends are not slowing. The six month annualized PPI rate of change is almost +10% and the CPI almost +5%, both above their respective twelve month rates.
Interest Rates And Stock Valuations: A Broken Linkage?
A look at the relationship between bond and stock yields as justification for today’s expectations of a continued bull market and for the current LBO craze. No evidence that Fed-type valuation models help forecast future market returns.
Keep An Eye On The LEI – Leading Indicators Have Topped, But Have Yet To Roll Over
The Index of Leading Economic Indicators has a proven track record of indicating when a recession may be near. Although this index has been trending sideways for quite some time, it has not yet rolled over.
LBO Screen Update
After one of the most active months ever for private equity offers, we revisit our LBO screen in “Inside the Stock Market” section. This screen has thus far outperformed the S&P 500 since we introduced it in January of 2006.
Large-Cap Growth: Could A Long Wait Get Even Longer??
Valuations set the stage for better performance out of growth. But it is important to note that there’s precedent for the value cycle—seemingly already overextended in time and price—to get much more extended.
May Market Action
It is getting increasingly clear that current stock market gains are being built upon the backs of corporate and private equity investors.
Mutual Fund Flow…..U.S. Equity Fund Flow Slips Into Net Redemptions
This is the first time that combined net demand for open-end funds and ETFs has been negative since last December, and is quite interesting, even unusual, considering the stock market continued to post new highs during the most recent month.
Oil & Gas Drilling– New Group Addition To Select Industries Portfolio
Oil & Gas Drilling is tied for fifth in our Group Selection Scores this month and was purchased for the equity portfolio.
Sentiment: Still Plenty of Non-Believers
Our Attitudinal analysis—or investor sentiment—normally deteriorates badly leading into a major market top, but has held up surprisingly well in the face of the last several weeks’ almost relentless, daily upside action.
View From The North Country
Steve Leuthold revisits the 1987 stock market, and includes some excerpts of his commentary in the Green Book from the months leading up to the October crash. There are some stunning similarities to today’s market. Also, commentary on the current China stock market. Some have compared it to Japan in the late 1980s, but there are distinct differences.
Stock Market
- View From The North Country
- May Market Action
- LBO Screen Update
- Keep An Eye On The LEI – Leading Indicators Have Topped, But Have Yet To Roll Over
- Large-Cap Growth: Could A Long Wait Get Even Longer??
- Sentiment: Still Plenty of Non-Believers
- Mutual Fund Flow…..U.S. Equity Fund Flow Slips Into Net Redemptions
Of Special Interest
Macro Monitor
Equity Strategies
Inflation Watch
Perception for the Professional
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