Green Book May 2025
Price Action Preempts Policy
The Leuthold Group, dated May 2025, provides an in-depth analysis of the current market conditions, offering insights into recent price movements and economic indicators. It explores the performance of various asset classes, including gold and foreign stocks, and dissects the factors influencing major market selloffs, particularly emphasizing the impact of central bank intervention and government policy, such as tariffs. The report also examines the performance of active versus passive investment strategies, suggesting that market conditions significantly influence which approach is more successful, and evaluates the current stock market internals and valuation levels, pointing to potential downside risk based on historical data.
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Featured Articles
The Bounce Looks Suspect
Out of necessity, bear market rallies and the first leg of a new advance look nearly identical; if they didn’t, the game would be too easy. However, the action (or lack of it) within the most economically sensitive groups would seem to support our bearish take.
A Canary In The Gold Miners
Today’s disproportionate outflow from gold miners even as physical gold continues to attract new money, is the proverbial “canary in the mine” that serves as a warning of looming trouble. When the miners are bleeding assets, investors may wish to take precautions against the impending risk of lower gold prices.
Anatomy Of A Major Selloff—A Cross-Asset Look
In exploring how cross-asset behavior differs between recessionary and non-recessionary market selloffs, a more striking conclusion emerged: The presence of a Fed put—or the absence there of—looks to be the more powerful force in shaping market dynamics across assets.
Active/Passive Update Q1-2025
Our research shows that weaker equity markets are favorable for active managers, and this quarter’s overall success rate of 57% is consistent with that expectation. Active managers outperformed in six of nine style boxes, led by an excellent 82% win rate for small-blend managers and a 74% success rate in large value.
Flies In The Bear’s Ointment
A Zweig Breadth Thrust (triggered in late April), has historically been a boost for the seasonal market doldrums common from May through October, with stock gains much higher during that period than in the absence of a ZBT. Maybe that explains why the “Sell In May” phenomenon hasn’t received the usual attention this year.
Frightening Ourselves Into Recession?
While the stock market has reversed about half of its February–April decline, the risk of a self-fulfilling confidence collapse remains elevated. In April, the Conference Board’s Consumer Expectations Index dropped to a level that’s been observed only once outside of a recession (mid-2011).
Table of Contents
Stock Market
- Price Action Preempts Policy
- The Bounce Looks Suspect
- A “Presidential” Put?
- Flies In The Bear’s Ointment
- No Hope From The “NOPE”
- Enjoying Our “Toys” While We Can
- Frightening Ourselves Into Recession?
- Perspectives On Gold
- Foreign Stocks: The Shift Looks Real
Of Special Interest
Macro Monitor
The Leuthold Refresh
Equity Strategies
Market Internals
- Losing Altitude
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents
Portfolios
Major Trend
Estimating the Downside
At Random
The Bounce Looks Suspect
Out of necessity, bear market rallies and the first leg of a new advance look nearly identical; if they didn’t, the game would be too easy. However, the action (or lack of it) within the most economically sensitive groups would seem to support our bearish take.
A Canary In The Gold Miners
Today’s disproportionate outflow from gold miners even as physical gold continues to attract new money, is the proverbial “canary in the mine” that serves as a warning of looming trouble. When the miners are bleeding assets, investors may wish to take precautions against the impending risk of lower gold prices.
Anatomy Of A Major Selloff—A Cross-Asset Look
In exploring how cross-asset behavior differs between recessionary and non-recessionary market selloffs, a more striking conclusion emerged: The presence of a Fed put—or the absence there of—looks to be the more powerful force in shaping market dynamics across assets.
Active/Passive Update Q1-2025
Our research shows that weaker equity markets are favorable for active managers, and this quarter’s overall success rate of 57% is consistent with that expectation. Active managers outperformed in six of nine style boxes, led by an excellent 82% win rate for small-blend managers and a 74% success rate in large value.
Flies In The Bear’s Ointment
A Zweig Breadth Thrust (triggered in late April), has historically been a boost for the seasonal market doldrums common from May through October, with stock gains much higher during that period than in the absence of a ZBT. Maybe that explains why the “Sell In May” phenomenon hasn’t received the usual attention this year.
Frightening Ourselves Into Recession?
While the stock market has reversed about half of its February–April decline, the risk of a self-fulfilling confidence collapse remains elevated. In April, the Conference Board’s Consumer Expectations Index dropped to a level that’s been observed only once outside of a recession (mid-2011).
Stock Market
- Price Action Preempts Policy
- The Bounce Looks Suspect
- A “Presidential” Put?
- Flies In The Bear’s Ointment
- No Hope From The “NOPE”
- Enjoying Our “Toys” While We Can
- Frightening Ourselves Into Recession?
- Perspectives On Gold
- Foreign Stocks: The Shift Looks Real
Of Special Interest
Macro Monitor
The Leuthold Refresh
Equity Strategies
Market Internals
- Losing Altitude
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents
Portfolios
Major Trend
Estimating the Downside
At Random
Perception for the Professional
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Sector Navigator
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