Green Book July 2017
Skies Are Clear, But Travel Not Recommended
We feel like the bull’s pediatrician, marveling at its outward youthful exuberance.
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Featured Articles
Skies Are Clear, But Travel Not Recommended
Two years ago, we played the role of the bull market’s mortician, preparing it for burial after a six-year run that had taken it to valuations on par with those at the 2007 top.
Stock Market Observations
While the S&P 500 remains below our 2,550-2,600 summer target zone, we can’t help but be impressed by the quality of its recent highs—including confirmations by all of the “Red Flag” bellwethers except the S&P 500 Financials (which barely missed a new high on July 7th).
What Does The Low Vol Divergence Mean?
Low Volatility stocks have been the darlings of this bull market, and Low Vol is now considered a long-term “alpha generator” alongside such Hall of Fame quant factors as Low P/E and Price Momentum.
Recent Years’ Oil Price Experience Akin To 1980s’
We revisit commentary we published in 2015 regarding the late-2014 oil price crash and review why, at that time, we believed oil prices could stay at depressed levels for a longer period than most expected. Additionally, we advise avoiding two Energy sector segments: companies with high balance-sheet risk, and Energy Royalty Trusts.
Beatlemania And Narrow Markets
In April 1964, the Beatles simultaneously held the top-five spots on the Billboard Hot 100, a unique feat in the history of modern music.
Bond Conundrum—This Time Is Not That Different
Despite the late reversal in rates and the yield curve, the flattening trend of the yield curve remains intact. The fact that longer-term bond yields have fallen while the Fed is raising rates brings back memories of the “bond conundrum” episode during 2004-2006.
Humble Oil
With Energy stocks underperforming the S&P 500 by 20% YTD, contrarian clients are wondering if the sector holds any promise. Here we look for valuation signals that offer encouragement for bargain-hunting investors willing to buy on weakness.
Table of Contents
Stock Market
- Skies Are Clear, But Travel Not Recommended
- Stock Market Observations
- What Does The Low Vol Divergence Mean?
- Today Versus The Tech Bubble Peak
- Small Caps Out Of “Phase?”
- “Mo-Mo” Market Ahead?
- Energy Still Out Of Sync
- Bonds And Aristocrats
- Recent Years’ Oil Price Experience Akin To 1980s’
- Areas To Avoid In The Energy Sector
- Special Announcement: James Paulsen, PhD
Of Special Interest
Macro Monitor
- Bond Conundrum—This Time Is Not That Different
- Risk Aversion Index: New “Lower Risk” Signal
- US Bonds
Equity Strategies
Quant
Market Internals
- Earnings Momentum
- Small And Large Are Even-Steven
- Value Has A Moment In The Sun
- S&P 500: That Makes Seven In A Row
Portfolios
Major Trend
Estimating the Downside
At Random
Skies Are Clear, But Travel Not Recommended
Two years ago, we played the role of the bull market’s mortician, preparing it for burial after a six-year run that had taken it to valuations on par with those at the 2007 top.
Stock Market Observations
While the S&P 500 remains below our 2,550-2,600 summer target zone, we can’t help but be impressed by the quality of its recent highs—including confirmations by all of the “Red Flag” bellwethers except the S&P 500 Financials (which barely missed a new high on July 7th).
What Does The Low Vol Divergence Mean?
Low Volatility stocks have been the darlings of this bull market, and Low Vol is now considered a long-term “alpha generator” alongside such Hall of Fame quant factors as Low P/E and Price Momentum.
Recent Years’ Oil Price Experience Akin To 1980s’
We revisit commentary we published in 2015 regarding the late-2014 oil price crash and review why, at that time, we believed oil prices could stay at depressed levels for a longer period than most expected. Additionally, we advise avoiding two Energy sector segments: companies with high balance-sheet risk, and Energy Royalty Trusts.
Beatlemania And Narrow Markets
In April 1964, the Beatles simultaneously held the top-five spots on the Billboard Hot 100, a unique feat in the history of modern music.
Bond Conundrum—This Time Is Not That Different
Despite the late reversal in rates and the yield curve, the flattening trend of the yield curve remains intact. The fact that longer-term bond yields have fallen while the Fed is raising rates brings back memories of the “bond conundrum” episode during 2004-2006.
Humble Oil
With Energy stocks underperforming the S&P 500 by 20% YTD, contrarian clients are wondering if the sector holds any promise. Here we look for valuation signals that offer encouragement for bargain-hunting investors willing to buy on weakness.
Stock Market
- Skies Are Clear, But Travel Not Recommended
- Stock Market Observations
- What Does The Low Vol Divergence Mean?
- Today Versus The Tech Bubble Peak
- Small Caps Out Of “Phase?”
- “Mo-Mo” Market Ahead?
- Energy Still Out Of Sync
- Bonds And Aristocrats
- Recent Years’ Oil Price Experience Akin To 1980s’
- Areas To Avoid In The Energy Sector
- Special Announcement: James Paulsen, PhD
Of Special Interest
Macro Monitor
- Bond Conundrum—This Time Is Not That Different
- Risk Aversion Index: New “Lower Risk” Signal
- US Bonds
Equity Strategies
Quant
Market Internals
- Earnings Momentum
- Small And Large Are Even-Steven
- Value Has A Moment In The Sun
- S&P 500: That Makes Seven In A Row
Portfolios
Major Trend
Estimating the Downside
At Random
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