Green Book November 2022
A 2022 Trifecta?
Our Major Trend Index has four factor categories, and three of them (Valuation, Cyclical, Technical) remain negative. Yes, the bearish “trifecta.” If that sounds like a reprint of one of our Monday MTI memos, bear with us (pun intended). We thought the MTI—with over 125 inputs—was pretty exhaustive. It turns out that it’s lacking entire categories pertinent to stock market action:
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Featured Articles
Valuation Mirage?
Thanks to the 2009-2021 experience, an entire generation of investors can’t distinguish between a stock market that’s down in price and one that’s actually “cheap.” The current bear market seems on course to make that distinction relevant again.
Economy Soaking Up Scarce Money Supply
There might be “too much money chasing too few goods,” but some monetary measures imply there’s “no longer enough money” to finance production of those goods and still support a stock market that’s far from cheap.
Six Themes Around A Full Yield-Curve Inversion
The main yield curve drivers—fiscal and monetary policies—might be suggesting a steepening move is coming soon, while bank stock performance may also be hinting at a turn in the curve. However, a durable selloff in the U.S. dollar would be needed to support a steeper yield curve, so the tightening pain could last a while longer.
Research Preview: Returns In A Year Of Dollar Strength
The U.S. Dollar Index (DXY) has gained 16.2% YTD, its best performance in almost 40 years. However, a strong dollar is bad for those with international investments, as returns are slashed when translated back into dollars.
Estimating the Downside - November 2022
With an 8% S&P 500 advance in October, our valuation measures bounced pretty hard off the contemporary lows. The estimate for downside to the median,1957-to-date, widened from -21% to -27%; while the “New Era” estimate (1995-to-date) worsened to -12% from -5% at the beginning of October.
Beware Of The Changing Of The Guard
A rotation from Growth to Value resumed in grand fashion in October. Qualitatively, new leadership sounds like a good thing. Statistically, bulls ought to hope that the tape gets back into gear.
Table of Contents
Stock Market
- A 2022 Trifecta?
- Beware Of The Changing Of The Guard
- Economy Soaking Up Scarce Money Supply
- Which Yield Curve?
- The World As Powell Sees It
- Here We Go Again...
- VLT: A Double-Sworded Edge
- Thoughts On The Secular Outlook
- Valuation Mirage?
- A Trade Contrarians Will Love
- Bonds: Not A Four-Letter Word
Of Special Interest
Macro Monitor
Market Internals
Major Trend
Estimating the Downside
At Random
Valuation Mirage?
Thanks to the 2009-2021 experience, an entire generation of investors can’t distinguish between a stock market that’s down in price and one that’s actually “cheap.” The current bear market seems on course to make that distinction relevant again.
Economy Soaking Up Scarce Money Supply
There might be “too much money chasing too few goods,” but some monetary measures imply there’s “no longer enough money” to finance production of those goods and still support a stock market that’s far from cheap.
Six Themes Around A Full Yield-Curve Inversion
The main yield curve drivers—fiscal and monetary policies—might be suggesting a steepening move is coming soon, while bank stock performance may also be hinting at a turn in the curve. However, a durable selloff in the U.S. dollar would be needed to support a steeper yield curve, so the tightening pain could last a while longer.
Research Preview: Returns In A Year Of Dollar Strength
The U.S. Dollar Index (DXY) has gained 16.2% YTD, its best performance in almost 40 years. However, a strong dollar is bad for those with international investments, as returns are slashed when translated back into dollars.
Estimating the Downside - November 2022
With an 8% S&P 500 advance in October, our valuation measures bounced pretty hard off the contemporary lows. The estimate for downside to the median,1957-to-date, widened from -21% to -27%; while the “New Era” estimate (1995-to-date) worsened to -12% from -5% at the beginning of October.
Beware Of The Changing Of The Guard
A rotation from Growth to Value resumed in grand fashion in October. Qualitatively, new leadership sounds like a good thing. Statistically, bulls ought to hope that the tape gets back into gear.
Stock Market
- A 2022 Trifecta?
- Beware Of The Changing Of The Guard
- Economy Soaking Up Scarce Money Supply
- Which Yield Curve?
- The World As Powell Sees It
- Here We Go Again...
- VLT: A Double-Sworded Edge
- Thoughts On The Secular Outlook
- Valuation Mirage?
- A Trade Contrarians Will Love
- Bonds: Not A Four-Letter Word
Of Special Interest
Macro Monitor
Market Internals
Major Trend
Estimating the Downside
At Random
Perception for the Professional
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