Green Book July 2021
Music For The “Mania”
At some point during the June/July streak of seven-consecutive S&P 500 daily-closing highs, an album from 1980 popped into our heads: Nothin’ Matters And What If It Did—released when John Mellencamp was still known as John Cougar. It brought to mind some “nothin’s” that seem not to matter.
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Featured Articles
Reflation Trade—Still Has The Benefit Of The Doubt
The Fed surprised the market with a hawkish projection of two rate hikes in 2023. Real yields did not move up as they typically do with such an episode. Overall, the damage was limited to the reflation trade, and the risk-rally is intact.
Research Preview: High Yield’s Heyday
High yield corporate bonds returned over +15% for the twelve months ended June 30th, building on a strong five-year run that was interrupted by a short, but painful, drop at the onset of COVID-19. Chart 1 indicates that high yield bonds compound at a remarkably steady rate, with infrequent but severe drawdowns during times of financial stress.
Infrastructure Spending & Beneficiaries
While not yet set in stone, it is the consensus view that infrastructure spending will be raised to a higher level for the next few years compared to past baseline expenditures. Although the exact numbers are still unknown, we examined the President Biden-endorsed bipartisan plan to provide a picture of the relative scale of the anticipated spending in the context of historical trends. In addition, we identified a group of industries that may be beneficiaries of the proposal.
Peak Earnings Yield A Rock-Bottom Forecast
At today’s 30.8x, the Peak P/E stands in the 99th percentile on all time horizons except the “New Era” (1995-to-date). Yet, that’s still five “handles” below the 35.8x all-time high recorded in December 1999. If that figure is matched, the S&P 500 will top 5,000.
Hard Facts Behind An Easy Job Market
Statistically, when jobs are “easy to get”—as all the survey evidence now indicates—attractive long-term returns for stocks typically become “hard to get.”
Automotive Retail: Attractive Amidst Industry Recovery
Automotive Retail currently ranks Attractive per our Group Selection Scores. This group offers a range of exposure to a bumpy—but recovering—U.S.-auto industry made up of car dealerships and auto parts & service retailers.
Table of Contents
Stock Market
- Infrastructure Spending & Beneficiaries
- Music For The “Mania”
- The Short-Term Tea Leaves: Suddenly Wilting?
- Hard Facts Behind An Easy Job Market
- The Inflation Surge In Context
- Are High Prices A Form Of “Tightening?”
- Why The Fed Is Hog-Tied
- Peak Earnings Yield A Rock-Bottom Forecast
- “Provincialism” Pays
- 2020 Post-Mortem
Of Special Interest
Macro Monitor
- Reflation Trade—Still Has The Benefit Of The Doubt
- Risk Aversion Index: Stayed On “Lower Risk” Signal
Equity Strategies
Market Internals
Portfolios
Major Trend
Fund Flow Trends
Estimating the Downside
At Random
Reflation Trade—Still Has The Benefit Of The Doubt
The Fed surprised the market with a hawkish projection of two rate hikes in 2023. Real yields did not move up as they typically do with such an episode. Overall, the damage was limited to the reflation trade, and the risk-rally is intact.
Research Preview: High Yield’s Heyday
High yield corporate bonds returned over +15% for the twelve months ended June 30th, building on a strong five-year run that was interrupted by a short, but painful, drop at the onset of COVID-19. Chart 1 indicates that high yield bonds compound at a remarkably steady rate, with infrequent but severe drawdowns during times of financial stress.
Infrastructure Spending & Beneficiaries
While not yet set in stone, it is the consensus view that infrastructure spending will be raised to a higher level for the next few years compared to past baseline expenditures. Although the exact numbers are still unknown, we examined the President Biden-endorsed bipartisan plan to provide a picture of the relative scale of the anticipated spending in the context of historical trends. In addition, we identified a group of industries that may be beneficiaries of the proposal.
Peak Earnings Yield A Rock-Bottom Forecast
At today’s 30.8x, the Peak P/E stands in the 99th percentile on all time horizons except the “New Era” (1995-to-date). Yet, that’s still five “handles” below the 35.8x all-time high recorded in December 1999. If that figure is matched, the S&P 500 will top 5,000.
Hard Facts Behind An Easy Job Market
Statistically, when jobs are “easy to get”—as all the survey evidence now indicates—attractive long-term returns for stocks typically become “hard to get.”
Automotive Retail: Attractive Amidst Industry Recovery
Automotive Retail currently ranks Attractive per our Group Selection Scores. This group offers a range of exposure to a bumpy—but recovering—U.S.-auto industry made up of car dealerships and auto parts & service retailers.
Stock Market
- Infrastructure Spending & Beneficiaries
- Music For The “Mania”
- The Short-Term Tea Leaves: Suddenly Wilting?
- Hard Facts Behind An Easy Job Market
- The Inflation Surge In Context
- Are High Prices A Form Of “Tightening?”
- Why The Fed Is Hog-Tied
- Peak Earnings Yield A Rock-Bottom Forecast
- “Provincialism” Pays
- 2020 Post-Mortem
Of Special Interest
Macro Monitor
- Reflation Trade—Still Has The Benefit Of The Doubt
- Risk Aversion Index: Stayed On “Lower Risk” Signal
Equity Strategies
Market Internals
Portfolios
Major Trend
Fund Flow Trends
Estimating the Downside
At Random
Perception for the Professional
March 2026 Issue
Featured Articles
Sector Navigator
March 2026 Issue
