Green Book June 2013
We’re Bullish - But There’s Not A Good Valuation Case Right Now
Strong internal market action argues against the outbreak of a new bear but doesn’t preclude a correction. The debate over the QE “taper” erupted just as a long-reliable Fed-tracking tool tells us it’s time to ease. Are alternative assets effective in hedging portfolios? Commodity producers seem to believe a commodity boom is set to repeat, probably ensuring that it won’t. Record breaking YTD fund flows in 2013. Navigating the perfect storm in the South Korean equity market. Q1 earnings reports tracking significantly below average. Global yield curve confirms “muddle through” view of the global economy. The 10-year yield will likely consolidate around 200-215 before taking a shot at 245.
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Featured Articles
Timing The “Taper”
The new debate over the QE “taper” erupted at the same time that a long-reliable Fed-tracking tool is telling us it’s time to ease.
Are Alternative Assets Effective In Hedging Portfolios?
Alternative assets have attractive return rates since 1994. But their portfolio diversification benefits have diminished as they become more equity like, though their correlations to bonds have fallen.
Commodities: Still Worried About Supply
Commodity producers seem to believe that last decade’s commodity boom is set to repeat. This belief itself probably ensures that it won’t.
Record Breaking YTD Fund Flows In 2013
While flows into the largest mutual fund category by assets have petered out in recent months, a number of impressive fund flow trends quietly remain intact.
Navigating The Perfect Storm In The South Korean Equity Market
South Korea is facing a perfect storm of military threats, anemic economic growth both at home and abroad, a competitive threat from Japan’s depreciating currency, and a sell-off from a large ETF sponsor. Will its stock market decline further or is this an opportunity to do some bargain hunting?
Up/Down Earnings Ratio: Q1 Reports Are Tracking Significantly Below Average
With two months of Q1 earnings reports in, results are very weak with a reading of 1.16, well below the historical average of 1.57. This is the lowest two-month reading we’ve seen since Q4 2009.
Global Yield Curve Confirms “Muddle Through” View
The global yield curve is in a sideways range bound pattern, indicating anemic demand for credit. An examination of developed and emerging countries confirms our “muddle through” view.
10-Year Still Range Bound Between 185-245 But Expect Higher Volatility
We think the 10-year yield will likely consolidate around 200-215 before taking a shot at 245. The 245 level looks like a strong barrier and will likely hold in the foreseeable future.
Table of Contents
Stock Market
- Record Breaking YTD Fund Flows In 2013
- Navigating The Perfect Storm In The South Korean Equity Market
- Summer Doldrums?
- Two Charts, A World Apart
- Stocks And The Economy
- Market Internals: Today Vs. Past Peaks
- Timing The “Taper”
- The Rolling Stock Market Top Of 2013 (… And 2011, 2010, And 2009)
- Commodities: Still Worried About Supply
Of Special Interest
Macro Monitor
- 10-Year Still Range Bound Between 185-245 But Expect Higher Volatility
- Global Yield Curve Confirms “Muddle Through” View
- Inflation Slides Again
- RAI Rose Again And Stays On “Higher Risk” Signal—Remain Cautious
- U.S. Investment Grade Corporate Bonds: Maintain Favorable
- U.S. Municipal Bonds: Maintain Neutral
- U.S. High Yield Corporate Bonds: Maintain Neutral
- Long U.S. Treasuries: Big Move In May, Downside Still Significant
Equity Strategies
- Domestic and Global Group Models: Agreement On Financials, Industrials
- The Short Side — Slightly Ahead YTD
- Select Domestic Groups Upgraded To Attractive
- Select Industries: Airlines And Rails Remain Largest Group Holdings
Market Internals
- Up/Down Earnings Ratio: Q1 Reports Are Tracking Significantly Below Average
- S&P 500: Equal Weighted Outperforms During May
- Dissecting The Capital Tier Indices—Majority Of P/E Ratios Rise
- Small Cap Premium Rises As Small Caps Outperform In May
- Growth Wins In Mid And Small Caps But Lags In Large Caps
- Small Caps Outperform In May
- Growth Stays Cheap Relative To Value
- Q1 Median Revenue Comparisons: Slowdown For All Cap Tiers
- Q1 Median Company Earnings Growth Rates Positive, But Below Previous Quarters
Portfolios
Major Trend
Estimating the Downside
At Random
Timing The “Taper”
The new debate over the QE “taper” erupted at the same time that a long-reliable Fed-tracking tool is telling us it’s time to ease.
Are Alternative Assets Effective In Hedging Portfolios?
Alternative assets have attractive return rates since 1994. But their portfolio diversification benefits have diminished as they become more equity like, though their correlations to bonds have fallen.
Commodities: Still Worried About Supply
Commodity producers seem to believe that last decade’s commodity boom is set to repeat. This belief itself probably ensures that it won’t.
Record Breaking YTD Fund Flows In 2013
While flows into the largest mutual fund category by assets have petered out in recent months, a number of impressive fund flow trends quietly remain intact.
Navigating The Perfect Storm In The South Korean Equity Market
South Korea is facing a perfect storm of military threats, anemic economic growth both at home and abroad, a competitive threat from Japan’s depreciating currency, and a sell-off from a large ETF sponsor. Will its stock market decline further or is this an opportunity to do some bargain hunting?
Up/Down Earnings Ratio: Q1 Reports Are Tracking Significantly Below Average
With two months of Q1 earnings reports in, results are very weak with a reading of 1.16, well below the historical average of 1.57. This is the lowest two-month reading we’ve seen since Q4 2009.
Global Yield Curve Confirms “Muddle Through” View
The global yield curve is in a sideways range bound pattern, indicating anemic demand for credit. An examination of developed and emerging countries confirms our “muddle through” view.
10-Year Still Range Bound Between 185-245 But Expect Higher Volatility
We think the 10-year yield will likely consolidate around 200-215 before taking a shot at 245. The 245 level looks like a strong barrier and will likely hold in the foreseeable future.
Stock Market
- Record Breaking YTD Fund Flows In 2013
- Navigating The Perfect Storm In The South Korean Equity Market
- Summer Doldrums?
- Two Charts, A World Apart
- Stocks And The Economy
- Market Internals: Today Vs. Past Peaks
- Timing The “Taper”
- The Rolling Stock Market Top Of 2013 (… And 2011, 2010, And 2009)
- Commodities: Still Worried About Supply
Of Special Interest
Macro Monitor
- 10-Year Still Range Bound Between 185-245 But Expect Higher Volatility
- Global Yield Curve Confirms “Muddle Through” View
- Inflation Slides Again
- RAI Rose Again And Stays On “Higher Risk” Signal—Remain Cautious
- U.S. Investment Grade Corporate Bonds: Maintain Favorable
- U.S. Municipal Bonds: Maintain Neutral
- U.S. High Yield Corporate Bonds: Maintain Neutral
- Long U.S. Treasuries: Big Move In May, Downside Still Significant
Equity Strategies
- Domestic and Global Group Models: Agreement On Financials, Industrials
- The Short Side — Slightly Ahead YTD
- Select Domestic Groups Upgraded To Attractive
- Select Industries: Airlines And Rails Remain Largest Group Holdings
Market Internals
- Up/Down Earnings Ratio: Q1 Reports Are Tracking Significantly Below Average
- S&P 500: Equal Weighted Outperforms During May
- Dissecting The Capital Tier Indices—Majority Of P/E Ratios Rise
- Small Cap Premium Rises As Small Caps Outperform In May
- Growth Wins In Mid And Small Caps But Lags In Large Caps
- Small Caps Outperform In May
- Growth Stays Cheap Relative To Value
- Q1 Median Revenue Comparisons: Slowdown For All Cap Tiers
- Q1 Median Company Earnings Growth Rates Positive, But Below Previous Quarters
Portfolios
Major Trend
Estimating the Downside
At Random
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