Public Publication Content

Recent Publications

The recession has begun

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The employment hit from COVID-19 was bigger and sooner than previously believed. ISM services activity clobbered by the virus. Light vehicle sales decline by the most since 2009.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Monthly sector update - April 2020

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We moved defensive on March 12, upgrading Consumer Staples and downgrading Energy, Industrials, and Financials. FANMAG and mega-cap relative performance looks unsustainable. Energy, Industrials, and Financials are upgrade candidates as we retest lows.

Ned Davis Research | Equities | U.S. Sector & Industry Focus | Weekly

Fed to the rescue

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Still on a recession watch. But, real monetary base growth is turning bullish. T-note yields are very bullish. Given this, more bears than bulls is a buy signal.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Another equity cut - down to the limit

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Shifting another 5% from stocks to bonds. Now at minimum equity allocation: 40% equities, 50% bonds, 10% cash. Watch testing of lows and recognize comparisons to bottoming process of 2008-2009.

Ned Davis Research | Equities | Global Focus | Weekly

Another devastating week for labor markets

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Jobless claims soar to double the prior week's record. Layoff plans also surge. Trade deficit shrinks, as demand evaporates. Consumer comfort turns into discomfort. NYC services activity collapses, implying a contraction in the ISM NMI.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Another devastating week for labor markets

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Jobless claims soar to double the prior week's record. Layoff plans also surge. Trade deficit shrinks, as demand evaporates. Consumer comfort turns into discomfort. NYC services activity collapses, implying a contraction in the ISM NMI.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Nine indicators that went off the charts!

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Extraordinary market movements pushed several indicators to extreme levels. Two of our favorites were the record monthly drops in the Euro-Agg and in excess returns for the U.S. Agg. Some of these indicators have already started to normalize. More will do so in the months ahead.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

COVID-19 wipes out global manufacturing

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COVID-19 caused global manufacturing to plummet in March, confirming our view that the global economy is in a severe recession. China's economy decoupled from the rest of the world as new coronavirus cases ebbed. But it will likely prove temporary as conditions in the rest of the world worsen.

Ned Davis Research | Economics | Global Focus | Weekly

Benchmark Review: Q1 was bad. Is that good?

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The S&P 500 plunged 20%, its worst Q1 on record. After 15%+ quarterly drops, the S&P 500 has rebounded sharply, on average. COVID-19 volatility hit all asset classes, with T-bonds soaring, high yield plunging, oil collapsing, and all sectors and countries falling.

Ned Davis Research | Equities | U.S. Benchmarks | Quarterly

U.S. recession/recovery scenarios

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We expect a U-shaped or a square root-shaped recession - a sharp contraction in economic activity, eventual rebound, and slower growth longer-term. Uncertainly about the path of the virus and stimulus effectiveness lead to four broad recession/recovery scenarios. Neither economic data nor financial markets are signaling yet an end to the recession.

Ned Davis Research | Economics | U.S. Focus | Monthly

ISM manufacturing activity shrinks

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Broad-based decline in ISM components. Supplier deliveries slow due to supply chain issues. ADP payrolls drop, led by small business job cuts. Construction spending falls in both the private and public sectors.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

ISM manufacturing activity shrinks

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Broad-based decline in ISM components. Supplier deliveries slow due to supply chain issues. ADP payrolls drop, led by small business job cuts. Construction spending falls in both the private and public sectors.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

What to watch for long-term buy signals

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Advisory service sentiment falls below extreme optimism - waiting for a buy signal. On average, all gains in the Value Line Geometric Index since 1980 came when Median Appreciation Potential was greater than 85, but above 110 is more like a signal to start dollar cost averaging. U.S. household equity assets as a percent of income needs to fall below 88%.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Step two of bottoming process, and a path for small-caps

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Stock market in stage two of four-step bottoming process. Breadth thrusts would signal new bull market. Small-caps have been consistent outperformers after bear market bottoms and end of recessions. Small-cap rallies have been shorter and weaker in small/large secular bears.

Ned Davis Research | Equities | U.S. Focus | Weekly

Consumer confidence down sharply

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Consumer confidence drops on sinking expectations. Most regional factory activity indexes show contraction in March. Weekly retail sales plunge, as social distancing takes a toll.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Consumer confidence down sharply

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Consumer confidence drops on sinking expectations. Most regional factory activity indexes show contraction in March. Weekly retail sales plunge, as social distancing takes a toll.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Liquidity, solvency and volatility

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There's been a dramatic improvement in the liquidity and functioning of government money markets and modest progress in others. Solvency risks remain elevated. Volatility has begun to subside.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

ETF Model holds steady

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After turbulent month, model maintains 42% allocation to stocks and 58% to bonds. Short-Term (SHY) and Long-Term Treasurys (TLT) now carry a 46.4% recommended weighting. QQQ remains the highest-weighted equity fund at 12.92%.

Ned Davis Research | ETF Selection | Model Update | Monthly

Pending home sales up before COVID-19

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Pending home sales up in February, but expect demand to slide in the coming months. Texas manufacturing in deep contraction in March.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Pending home sales up before COVID-19

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Pending home sales up in February, but expect demand to slide in the coming months. Texas manufacturing in deep contraction in March.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Love for LQD

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$6.4 billion flowed into iShares Investment Grade Corporate Bond ETF (LQD) last week. Seven-year high for long-term bonds (BLV) relative to MSCI ACWI. Cyber security ETFs (CIBR, HACK) exhibiting relative strength. 17-year relative strength low for Australian equities (EWA).

Ned Davis Research | ETF Selection | ETFs on the Move | Weekly

It called the top - will it call the bottom?

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Breadth thrusts and favorable monetary conditions have shifted my hedge fund strategy to neutral. DAVIS47B went bearish on February 14, 2020. It has been bullish at most lows. Around 1% it "called" near lows in 1987, 1990, 2002-2003, and 2008-2009.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Consumer sentiment craters

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A sharp drop in consumer sentiment mirrors unfolding economic downturn from COVID-19. Personal income up in February. Consumers saving more. A drop in electroindustry confidence portends weaker factory activity.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Consumer sentiment craters

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A sharp drop in consumer sentiment mirrors unfolding economic downturn from COVID-19. Personal income up in February. Consumers saving more. A drop in electroindustry confidence portends weaker factory activity.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Sentiment indicators put me on recession watch

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Stock market will likely give macro sell signal. Yield curve and confidence spread had already warned. High corporate debt plus low CEO confidence is a problem.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Stay bullish on gold

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We remain bullish on gold, expecting record highs ahead. Similar gold, dollar and market tendencies around volatility peak in 2008. Outlook supported by Gold Watch Report, relative trend strength versus U.S. dollar, relative sentiment, correlations, equity bear market tendencies, heightened volatility, real interest rate trends, and more.

Ned Davis Research | Equities | Global Focus | Weekly

Waterfall bottoming and sector leadership

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Sector leadership leans defensive during the bottoming process. Watch our sector bottom spotter to confirm shift in sector leadership. Financials, Consumer Discretionary, and Technology sectors tend to lead after the bottoming process is complete.

Ned Davis Research | Equities | U.S. Sector & Industry Focus | Weekly

Historic labor market transformation in one week

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The labor market craters, with a record 3.283 initial filings for unemployment benefits. Consumer comfort falls by most since 2007. A smaller goods trade deficit in February mostly reflects a virus-related disruption in supply chains.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Historic labor market transformation in one week

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The labor market craters, with a record 3.283 initial filings for unemployment benefits. Consumer comfort falls by most since 2007. A smaller goods trade deficit in February mostly reflects a virus-related disruption in supply chains.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Is COVID-19 stimulus unprecedented?

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With the risk of major global recession imminent, policy makers have sprung into action. The global monetary policy response has now superseded that of the GFC by most measures. But the fiscal response is mixed, with some countries providing much more and others much less than during the past crisis.

Ned Davis Research | Economics | Global Focus | Weekly

Upgrading Agency MBS to Marketweight

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We are upgrading agency MBS to marketweight from underweight. Open-ended Fed agency MBS purchases will help narrow spreads. Continue to underweight non-agency MBS.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

Bond ETFs reunite with NAV

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Fed commitment to buy ETFs has improved bond market liquidity. Most bond ETFs are no longer trading at steep discounts to NAV. A record $2 billion of inflows over the past two days for iShares Investment Grade Corporate Bond ETF (LQD). With Fed purchases limited to investment grade bonds, lower quality debt continues to struggle.

Ned Davis Research | ETF Selection | Highlights | Weekly

Durable goods orders up, but core weakens

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Durable goods orders up in February. But y/y momentum suggests continued weakness in manufacturing output growth. Mortgage applications decline, as mortgage rates rise.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Durable goods orders up, but core weakens

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Durable goods orders up in February. But y/y momentum suggests continued weakness in manufacturing output growth. Mortgage applications decline, as mortgage rates rise.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Waterfall declines and aftermaths

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After a waterfall decline, there is almost always a retest. The DJIA has broken the waterfall lows nearly 70% of the time. Leadership has remained defensive during the retesting phases after waterfalls. Post-retest, leadership has been aggressive. This cycle market cap and beta could be two attractive areas.

Ned Davis Research | Equities | U.S. Focus | Weekly

Selecting stocks with favorable bear traits

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Updating factor recommendations to reflect bear market. Select companies based on pretax margin, long-term eps growth, price momentum, semi-variance, and earnings revisions. Favored stocks include: Microsoft, Alphabet, Facebook, Nvidia, Amgen, McDonalds.

Ned Davis Research | Stock Selection | U.S. Portfolio Strategy | Monthly

Close to fair value

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DAVIS100 shows fair value at 2334. S661A shows it at 2302. DAVIS205 shows it even lower.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Markit U.S. flash PMIs collapse

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Both services and manufacturing PMIs decline sharply and confidence slumps amid COVID-19 disruptions. Richmond Fed activity near contraction. New home sales slip, but upward trend intact pre-COVID-19. Weekly retail sales supported by spending on household essentials.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Markit U.S. flash PMIs collapse

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Both services and manufacturing PMIs decline sharply and confidence slumps amid COVID-19 disruptions. Richmond Fed activity near contraction. New home sales slip, but upward trend intact pre-COVID-19. Weekly retail sales supported by spending on household essentials.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Upgrading IG corporates to marketweight

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We are upgrading investment grade corporate bonds to marketweight from underweight. Valuations have improved and meaningful policy support is on its way. We remain underweight high yield and expect those spreads to continue to widen.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

Oil: War of attrition

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In the current oil price war, Saudi Arabia is in the weakest position. For the last five years, Russia has tightened its purse strings and increased reserves. Low oil prices will force Saudi Arabia to make difficult decisions.

Ned Davis Research | Energy | Focus | Monthly

Another pre-COVID-19 indicator

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CFNAI shows steady-to-weaker trend growth before COVID-19 disruption.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Another pre-COVID-19 indicator

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CFNAI shows steady-to-weaker trend growth before COVID-19 disruption.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Cash is king

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$21 billion in bond ETF redemptions last week. Worst two week period for AGG (-6.6%) since October 2008. Consumer Staples (VDC) and Cloud Computing (SKYY) ETFs are breaking out relative to global equities. Canadian equities (EWC) at a 20-year low relative to global equities.

Ned Davis Research | ETF Selection | ETFs on the Move | Weekly

Close to a selling climax low

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Based upon waterfalls in 1987 and 1929, we are close to similar selling climax lows. Nevertheless, lows are usually tested and often lower lows. Watching S0108 and DAVIS125C for oversold buy signal.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

CEO optimism sliding

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Business Roundtable Survey shows CEO optimism falling, but not yet at recession level. Existing home sales jumped in February, but social distancing will slow homebuyer traffic and sales in the coming months.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

CEO optimism sliding

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Business Roundtable Survey shows CEO optimism falling, but not yet at recession level. Existing home sales jumped in February, but social distancing will slow homebuyer traffic and sales in the coming months.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Q4 2019 quarterly debt and savings update

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U.S. debt is still relatively high, although it has been improving. Net national savings is still too low. Non-financial corporate and global debt are particularly concerning.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Record speed but a lack of bottom signs ... yet

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Shifting 5% from stocks to cash, now 10% underweight equities, 10% overweight bonds and marketweight cash. Records in annualized losses, implied volatility, and correlations among regions and sectors. Recognize similarities to late 2008, when bottoming process started. Watch for non-confirmation of lows followed by broadening advance.

Ned Davis Research | Equities | Global Focus | Weekly

Jobless claims skyrocket

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Jobless claims rise by the most since 2012, weighing on consumer outlook for the economy. Philly Fed manufacturing contracts sharply. LEI too slow to reflect the fast unfolding COVID-19 crisis.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Jobless claims skyrocket

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Jobless claims rise by the most since 2012, weighing on consumer outlook for the economy. Philly Fed manufacturing contracts sharply. LEI too slow to reflect the fast unfolding COVID-19 crisis.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Social distancing and great industry risk

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Our base case estimate is for an 11% decline in 2020 EBIT. Commodity, social distancing, and banking industries are at greatest risk. Investors need to use extreme caution when investing in these areas.

Ned Davis Research | Equities | U.S. Sector & Industry Focus | Weekly

What's the risk of major global recession?

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Our estimates suggest that we are now reaching the threshold for severe global recession. If China and the U.S. were to join Europe and Japan in recession, the global downturn could be more severe than the Great Financial Crisis in 2008-2009. Historically, the more severe the slowdown, the greater the global equity market correction.

Ned Davis Research | Economics | Global Focus | Weekly

Closing out European peripheral debt trade

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We are downgrading European peripheral debt to marketweight from overweight, closing out our trade after seven years. The ECB's new PEPP should help support more risky Eurozone debt. We view risks as more balanced.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

The world's safest long-term investment?

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Consider TIPS if you are interested more in capital preservation than in making capital gains. We remain overweight. TIPS are the most attractive since 2009, as inflation breakevens have collapsed. Inflation likely to exceed 1% in the U.S. over the next 30 years.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

SPY historical comparison, support levels, and the ETF/NAV disconnect

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Wall Street Crash of 1929 is the closest volatility-adjusted match to SPY's price action since Christmas Eve 2018. If Christmas Eve low is broken, the next strong level of support for SPY is around 213.50. This level marked the peak of the 2011-2015 bull market. Volatility in the bond market has caused ETFs to trade well below NAV.

Ned Davis Research | ETF Selection | Highlights | Weekly

Housing starts and permits off slightly

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Housing starts and permits slip in February, but upward trends remain intact. Architecture billings increase, but forward-looking indexes suggest slower demand ahead. Mortgage applications decline slightly.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Housing starts and permits off slightly

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Housing starts and permits slip in February, but upward trends remain intact. Architecture billings increase, but forward-looking indexes suggest slower demand ahead. Mortgage applications decline slightly.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Q4 2019 quarterly asset allocation update

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Households, foreigners, and institutions were overweight stocks, while underweight cash at the end of 2019. This supports the argument that this bull market was in a mature phase, and future stock returns may be lower. This had been offset by heavy corporate buying, which had continued to propel the market.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Factor selection during a bear market

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Favor stocks with stronger price momentum, lower volatility, greater payout, and higher quality. Selected stocks include: Nestle, Roche, LVMH, ASML, Novo Nordisk, Schneider Electric, Relx, Experian, Smith & Nephew.

Ned Davis Research | Stock Selection | Europe Portfolio Strategy | Monthly

Earnings risks and four-step process

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Monday's decline put the market back at step one of our four-step bottoming process. S&P 500 EPS could decline 11% if the COVID-19 impact continues through Q2, and -24% if deep into 2H. P/Es tend to rise early in bull markets because the stock market bottoms before the economy and earnings.

Ned Davis Research | Equities | U.S. Focus | Weekly

Retail sales decline before COVID-19

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Retail sales declined in February, while industrial production rose. But both were pre-COVID-19, which will disrupt them in coming months. Builder confidence off slightly in March, but still supports a positive housing market outlook.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Retail sales decline before COVID-19

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Retail sales declined in February, while industrial production rose. But both were pre-COVID-19, which will disrupt them in coming months. Builder confidence off slightly in March, but still supports a positive housing market outlook.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

U.S. careening toward recession

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Financial markets are pricing in a recession. Look for confirmation in the economic data in the coming months. The depth of the slowdown and speed of recovery depend on COVID-19 progression and fiscal and monetary stimulus.

Ned Davis Research | Economics | U.S. Focus | Monthly

Carnage continues

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Bonds at a three-year high relative to stocks. iShares Min Vol Fund (USMV) made a new all-time high relative to global equities. On an absolute basis, it closed at a 51-week low. Record $8.5 billion in outflows from bond ETFs last week.

Ned Davis Research | ETF Selection | ETFs on the Move | Weekly

Capex confidence slides

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The ELFA Monthly Confidence Index drops to record low, a negative sign for the capex outlook. Empire manufacturing contracts sharply. Six-month outlook drops.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Capex confidence slides

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The ELFA Monthly Confidence Index drops to record low, a negative sign for the capex outlook. Empire manufacturing contracts sharply. Six-month outlook drops.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Fed fires bazooka but virus still standing

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The Fed's actions should lower yields for both Treasurys and MBS and result in better functioning and liquidity. Lower liquidity swap rates should reduce USD funding strains for developed economies. Actions won't narrow credit spreads for corporates, municipalities, or EM. The Fed is not out of ammunition but its weapons won't win the war against the virus.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

Fab Five Tape update

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Fab Five Tape went negative on 3/5/2020. High-low logic had turned bearish earlier on 2/14/2020. Big Mo Tape now 40.9% bullish. Global Big Mo Tape went negative on 3/6/2020.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Consumer sentiment declines as Covid-19 spreads

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Weaker consumer expectations drive down sentiment, but the level is still range-bound. Import prices drop on cheaper petroleum prices. Freight shipments still down from a year ago, implying slower business sales growth in the near-term.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Consumer sentiment declines as Covid-19 spreads

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Weaker consumer expectations drive down sentiment, but the level is still range-bound. Import prices drop on cheaper petroleum prices. Freight shipments still down from a year ago, implying slower business sales growth in the near-term.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Inflation update and reasons why it is low

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U.S. disposable personal income growth continues to slow. This is consistent with 1.7% CPI inflation. Year-to-year change in core PCE at 1.6% is still below Fed's target - high debt could be a reason.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Getting in line with a cautious outlook

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Lifting Consumer Staples to O/W, Real Estate to M/W; lowering Energy, Industrials, and Financials to U/W. We are also lowering our weighting in Materials (M/W), while increasing Health Care (O/W) and Consumer Discretionary (M/W). If we head toward recession, we will likely reduce our Tech and Com Services weights.

Ned Davis Research | Equities | U.S. Sector & Industry Focus | Weekly

Producer prices sink

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PPI declines in February, led by energy. Layoffs remain low in early March, but consumer comfort slips. Budget deficit widens. Expected to swell above OMB projection, due to Covid-19 spending.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Producer prices sink

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PPI declines in February, led by energy. Layoffs remain low in early March, but consumer comfort slips. Budget deficit widens. Expected to swell above OMB projection, due to Covid-19 spending.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

How much will China slow due to Covid-19?

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Based on data so far, we project that China's economy will have contracted in Q1. Some evidence suggests that the slowdown may be short-lived, which argues for a rebound in activity. But the outcome isn't clear, as positive and negative scenarios abound.

Ned Davis Research | Economics | Global Focus | Weekly

A deeper dive into the credit downgrade

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Last week we downgraded investment grade credit from marketweight to underweight, joining our high yield positioning. We recommended moving up in quality. Technicals are terrible amid skyrocketing volatility. We had long-standing valuation and credit concerns.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

China, the unexpected safe haven

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As the number of coronavirus cases grows globally, China is reporting a slowdown in the number of new cases. Restrictions on short selling and fiscal/monetary stimulus have lifted the spirits of Chinese retail investors. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) has gained 4.2% since the S&P 500 peaked on February 19th.

Ned Davis Research | ETF Selection | Highlights | Weekly

Allocating in volatility

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Shifting 5% exposure from stocks to bonds, now 5% underweight equities and 10% overweight bonds at 50% stocks, 45% bonds, 5% cash. Responding to Global Balanced Account Model, lack of bullish Rally Watch indicators, increasing number of Bear Watch signals, volatility tendencies, widening credit spreads, government bond price momentum, and worsening Risk-On/Risk-Off indications.

Ned Davis Research | Equities | Global Focus | Weekly

Core CPI inflation up modestly pre-Covid-19

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Core CPI inflation up slightly in February. Weaker demand due to Covid-19 will put downward pressure in the near-term. Refi mortgage applications skyrocket, as rates plunge. The move frees up consumer spending power to cushion virus impact.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Core CPI inflation up modestly pre-Covid-19

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Core CPI inflation up slightly in February. Weaker demand due to Covid-19 will put downward pressure in the near-term. Refi mortgage applications skyrocket, as rates plunge. The move frees up consumer spending power to cushion virus impact.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Sentiment better, but...

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Short-term sentiment shows more and more pessimism. ETF flows confirm. But, public is still fairly fully invested. Cash is fairly low versus stock market.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

An NDR-defined bear market. Back to step one.

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Until the market proves it is further along in its bottoming process, we are cautious on U.S. equities. The decline has met the NDR criteria for a cyclical bear market. To turn positive, watch for economic and earnings clarity, slowing of COVID-19, and technical improvement.

Ned Davis Research | Equities | U.S. Focus | Weekly

Small business optimism holding up

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NFIB Index up slightly, before Covid-19. Manpower employment outlook steady. Weekly retail sales show some weakness.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Small business optimism holding up

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NFIB Index up slightly, before Covid-19. Manpower employment outlook steady. Weekly retail sales show some weakness.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Sinking oil prices = sinking economy?

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Falling oil prices could subtract 200,000+ mining and related payrolls this year, weigh on average wage growth, and reduce capex. This will dampen the economic recovery from any Covid-19-induced economic weakness. Still, a U.S. recession call at this time is premature, given the potential for sizeable monetary and fiscal stimulus and lack of real economic data to date that reflects weakness.

Ned Davis Research | Economics | U.S. Focus | Monthly

Recession risk and when to turn bullish

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Whether the hit to economic activity is classified as recession or not will largely depend on its duration. Credit spreads tend to widen during recessions. To turn bullish watch for better valuations, stimulative fiscal policies, and curtailment of virus transmissions.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

Employment trends deteriorate

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The coronavirus creates an uncertain outlook for the labor market. Trade deficit shrinks.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Employment trends deteriorate

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The coronavirus creates an uncertain outlook for the labor market. Trade deficit shrinks.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Defensive Leadership

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Gold, Health Care, Staples, and Utilities exhibiting relative strength. Small-Caps, Financials, and Energy continue to lag. $10 billion flowed into fixed income ETFs last week.

Ned Davis Research | ETF Selection | ETFs on the Move | Weekly

Fab Five Tape turns bearish

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Tape plus Fed goes to sidelines. Volume supply above volume demand. Fab Five Tape is negative. Hedge fund strategy leans cautious.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Energy Armageddon

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The failure of OPEC+ to come to an agreement has launched an all-price war. The ultimate lows for oil will likely test the 2016 bottom. We are downgrading oil at this time while Brent has a price of $35 per barrel.

Ned Davis Research | Energy | Focus | Monthly

A look at gold

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Gold is not stretched versus long-term trend. Gold is in an uptrend. Falling real interest rates are bullish for gold.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Can a tiny virus stop a steamroller?

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The jobs market was on fire prior to the disruptions from the coronavirus. Household survey failed to confirm robust establishment survey. The strong employment report has no bearing on near-term Fed policy. Expect more easing.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Can a tiny virus stop a steamroller?

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The jobs market was on fire prior to the disruptions from the coronavirus. Household survey failed to confirm robust establishment survey. The strong employment report has no bearing on near-term Fed policy. Expect more easing.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

If proof is in the price, an upturn is uncertain

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NDR's Fed Watch II chart says the Fed has been too tight given our ongoing debt bubble. Global metals prices are not plunging, but not rallying either. And the relative strength of energy, materials, and industrials are still in long-term downtrends.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Are valuations justified? Breadth will tell us

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Valuations have improved, but watch earnings expectations to determine if stocks may have to get cheaper. With bond yields dropping, stocks appear more attractive relative to bonds, supporting 11-year secular bull. Breadth indicators will tell us if market considers valuations justified or if more weakness can be expected.

Ned Davis Research | Equities | Global Focus | Weekly

De-risking

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We are downgrading EM (USD) debt to underweight on fundamental, valuation, and funding concerns. Increasing duration to 110% from 100%. Increasing U.K. and Europe at the expense of Japan. Remain overweight U.S.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

Monthly sector update - March 2020

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Fallout from coronavirus should hit Energy, Banks, Transportation, and Consumer Services hardest. We continue to favor Health Care and housing-related industries. We may upgrade bond proxies if the coronavirus has an extended drag on GDP.

Ned Davis Research | Equities | U.S. Sector & Industry Focus | Weekly

Layoffs still low despite Covid-19

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Layoffs still low, but could spike with Covid-19, similar to post 9/11. Consumer comfort slips to lowest level this year. Factory orders decline at the start of 2020.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Layoffs still low despite Covid-19

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Layoffs still low, but could spike with Covid-19, similar to post 9/11. Consumer comfort slips to lowest level this year. Factory orders decline at the start of 2020.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

ISM services strengthen despite Covid-19

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NMI up, putting the economy on a firmer footing ahead of a potential Covid-19 outbreak in the U.S. ADP private payrolls increase at a solid rate. Show little initial impact from Covid-19.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

ISM services strengthen despite Covid-19

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NMI up, putting the economy on a firmer footing ahead of a potential Covid-19 outbreak in the U.S. ADP private payrolls increase at a solid rate. Show little initial impact from Covid-19.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

What to watch update and intermeeting cuts

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Monday's rebound is one step in a potential bottoming process. V-shape recoveries are rare. Watch earnings estimates, dividends from vulnerable sectors, and buybacks. Intermeeting Fed cuts have been bullish for stocks when the economy has avoided a recession.

Ned Davis Research | Equities | U.S. Focus | Weekly

February sentiment/valuation update

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Valuations continue to be stretched. Margin debt is high, but falling, and cash is low versus margin debt. Sentiment/confidence is stretched on a cyclical basis.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

What the intermeeting cut means

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The surprise rate cut smelled like panic and did not instill confidence in the economy. Additional actions are on the table. Revisiting the zero lower bound is possible. Except for 1998, all other occurrences of intermeeting cuts since 1991 saw lower 10-year yields one year later.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

Is the U.S. economy immune to Covid-19?

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Covid-19 is both a supply and a demand shock to the economy that will likely lead to slower growth and lower inflation in the short-run. While the fallout from the virus raises the odds of recession, there aren't yet widespread signs of one in leading indicators. Positive consumer fundamentals, housing market momentum, monetary and possibly fiscal stimulus provide offsets to a fallout from the virus.

Ned Davis Research | Economics | U.S. Focus | Monthly

New York services activity improves

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NYC and other regional indexes suggest modest growth in services in February. Weekly retail sales near steady.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

New York services activity improves

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NYC and other regional indexes suggest modest growth in services in February. Weekly retail sales near steady.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

COVID-19, the Fed and rates

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Coronavirus cases slowing in China but accelerating outside of China. We expect the Fed to cut the fed funds target rate by 50 bp at its next meeting on March 18. Expected real rates too high, contributing to a tightening of financial conditions.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

Coronavirus clobbers global manufacturing

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Global manufacturing activity plunged to a 10-year low, but readings are still not consistent with deep global recession. Global breadth held up, as most of the damage was concentrated in China. But with COVID-19 cases growing in vulnerable parts of the world, downside could spread.

Ned Davis Research | Economics | Global Focus | Weekly

ETF Model cuts equity exposure to 42%

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Technical deterioration triggered a reduction in equity exposure. Model now calling for an allocation of 42% equities / 58% bonds. Investment Grade Corporates (LQD) and Long-Term Treasurys (TLT) carry the heaviest weighting amongst the 13 ETFs in the model.

Ned Davis Research | ETF Selection | Model Update | Monthly

ISM manufacturing activity slows

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ISM components show weaker manufacturing. Slower supplier deliveries reflect supply chain issues. Construction spending up, led by public projects.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

ISM manufacturing activity slows

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ISM components show weaker manufacturing. Slower supplier deliveries reflect supply chain issues. Construction spending up, led by public projects.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Which ETFs best weathered the storm?

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U.S. Aggregate Bond ETF (AGG) at a 60-week high relative to global equities. Chinese Tech (QQQ) and Biotech (ARKG) exhibiting relative strength. Small-caps (IJR) and Energy (XLE) continue to lag. $26.5 billion in outflows from equity ETFs. Over $5.5 billion pulled from High Yield ETFs.

Ned Davis Research | ETF Selection | ETFs on the Move | Weekly

Trends over the last year

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Both bonds and gold have outperformed stocks over the last year. Our last breadth thrust indicator from early 2019 closes out profitably. Based upon its underweight status, I still think gold could shine. Biotech is also now underweight.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Personal income rises, but spending slows

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Personal saving rate up at the start of 2020. Inflation still low, giving the Fed room to cut, if necessary. Consumer sentiment rises, despite coronavirus fears. Regional factory activity mixed-to-positive. Shows limited damage from coronavirus so far.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Personal income rises, but spending slows

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Personal saving rate up at the start of 2020. Inflation still low, giving the Fed room to cut, if necessary. Consumer sentiment rises, despite coronavirus fears. Regional factory activity mixed-to-positive. Shows limited damage from coronavirus so far.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Trying to put oversold buy signal into context

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S270 flashes oversold buy signal. DAVIS265 has not yet confirmed by 20 or less. But, longer-term risks are still high.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

As bad as it gets, or more carnage to come?

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Watch for indicator developments that would be consistent with a bottoming process or continued weakness. Global Balanced Account Model, watch reports, bond market developments and risk-on/risk-off indicators will help determine whether next move will be to cut or increase equity allocation. VIX close to market bottom levels, but confirmation lacking. Volatility likely to remain elevated.

Ned Davis Research | Equities | Global Focus | Weekly

Household debt and delinquencies

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Except for home equity loans, all other household debt soars to record highs at just over $14 trillion overall, according to the NY Fed. Student loan delinquencies are high at 11%, and credit card and auto loan delinquencies are rising despite low interest rate and low unemployment. China's debt is very high.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Which economies are most impacted by China's COVID-19 outbreak?

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The economies most sensitive to slower growth in China are its neighbors in Asia. In particular, we see Hong Kong, Taiwan, South Korea, and Japan at greatest risk. Europe is also sensitive to Chinese growth and with the virus spreading to that continent, the overall risk is heightened.

Ned Davis Research | Economics | Global Focus | Weekly

Durable goods orders stabilize

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Capex orders rebound in January, but coronavirus could upend demand. Q4 real GDP growth steady at 2.1%. Consumer comfort drops, but jobless claims still low.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Durable goods orders stabilize

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Capex orders rebound in January, but coronavirus could upend demand. Q4 real GDP growth steady at 2.1%. Consumer comfort drops, but jobless claims still low.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Rates forcing us into bond proxy sectors

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Low rates are making bond proxy dividend yields very attractive. If COVID-19 does not spread in the U.S., rates may soon rebound. If the virus does spread, expect us to upgrade bond proxy sectors.

Ned Davis Research | Equities | U.S. Sector & Industry Focus | Weekly

Charts for the next decade: 10 charts that could tell the story of the 2020s

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The ten charts we selected can be tied back to four major themes: inflation, economic growth, technological change, and demographics. Secular drivers are expected to keep inflation, unit labor costs, and interest rates low for much of the decade. Although the U.S. economy is unlikely to go another decade without a recession, we see the secular bull intact, Growth outperforming Value, and Large-caps outperforming Small-caps.

Ned Davis Research | Special Report | Mixed

Violent drop from the highs

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SPY down 6% in two days, but still within 10% of its recent high. Above average returns following seven similar cases. Two day selloff providing opportunity in Large-Cap Growth, Technology, and Semiconductor ETFs.

Ned Davis Research | ETF Selection | Highlights | Weekly

New home sales best since 2007

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New home sales and prices rise, as housing demand strengthens. Mortgage applications continue to trend up.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

New home sales best since 2007

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New home sales and prices rise, as housing demand strengthens. Mortgage applications continue to trend up.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Pick companies with positive earnings revisions

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Earnings revisions strategy rallies following extreme optimism in sentiment. Select companies based on free cash flow yield, cash position, price momentum, EPS growth/stability, and earnings revisions. Favored stocks include: Facebook, Bank of America, UnitedHealth, Intel, PayPal, Accenture, Thermo Fisher, Texas Instruments.

Ned Davis Research | Stock Selection | U.S. Portfolio Strategy | Monthly

Complacency jumps after coronavirus scare

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NDR crowd sentiment poll dips over coronavirus fears and goes back to excessive optimism. Likewise, ETF fund flows, after going neutral, go back to mildly excessive optimism. A parabolic uptrend on the FANMAG stocks also suggests excesses.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

After big drop, what to watch

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Complacency over coronavirus and the election left stocks vulnerable. Watch for positive divergences on declines and strong breadth on rebounds. Long-term technicals are strong, but watch for deterioration for signs of a topping process.

Ned Davis Research | Equities | U.S. Focus | Weekly

Consumer confidence holding up high

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Consumer confidence near highest since 2000. Bodes well for consumer spending growth outlook. Existing home prices continue to increase amid low mortgage rates and strong household fundamentals. Richmond manufacturing shrinks, but services activity strengthens.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Consumer confidence holding up high

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Consumer confidence near highest since 2000. Bodes well for consumer spending growth outlook. Existing home prices continue to increase amid low mortgage rates and strong household fundamentals. Richmond manufacturing shrinks, but services activity strengthens.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

What is the best analog for COVID-19?

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9/11 and the Japanese tsunami may be better analogs for COVID-19 than prior WHO global health emergencies. Treasury prices rallied for up to two months after those events. Sentiment suggests further room to rally in the near term.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

CFNAI shows below-trend growth

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CFNAI shows some improvement in economic activity, but growth still below trend. Texas is third regional index to strengthen in February. Suggests firmer factory activity nationwide.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

CFNAI shows below-trend growth

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CFNAI shows some improvement in economic activity, but growth still below trend. Texas is third regional index to strengthen in February. Suggests firmer factory activity nationwide.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Crude oil in contango

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Last week, our crude oil term structure indicator flipped from backwardation to contango for only the third time in seven years. Contango reflects a bearish supply/demand dynamic and incentivizes short positions. Despite this bearish development, our indicators are mixed. We remain neutral crude oil.

Ned Davis Research | Energy | Focus | Monthly

Fab Five update

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Fab Five fell to neutral. But, still on a January 2019 buy signal. Fab Five Tape is neutral, but at +3.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

G7 and BRIC outlook: Green shoots before coronavirus

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We provide our quarterly economic update of the world's major countries and regions. Compared to our last outlook in November, economic conditions have broadly improved due to easier monetary policy and ebbing trade tensions. But the recent coronavirus outbreak creates a near-term risk, most acutely for China.

Ned Davis Research | Economics | Global Focus | Weekly

Dollar or gold? Go with gold

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Rising U.S. dollar and gold have broken from inverse correlation. With gold trend stronger and more sustainable, inverse correlation likely to reassert with dollar weakness. While negative real rates support gold, narrowing differentials negative for dollar.

Ned Davis Research | Equities | Global Focus | Weekly

Private sector activity slows

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Markit U.S. flash PMIs drop, largely due to coronavirus impact on demand. Existing home sales slip, but y/y momentum still strong. Commercial real estate market conditions improve.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Private sector activity slows

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Markit U.S. flash PMIs drop, largely due to coronavirus impact on demand. Existing home sales slip, but y/y momentum still strong. Commercial real estate market conditions improve.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Industry themes for 2020

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Discretionary home-related is our favorite near-term theme. Medicare for All fears are creating buying opportunities in health care services. We remain optimistic on the next video game cycle.

Ned Davis Research | Equities | U.S. Sector & Industry Focus | Weekly

Employment situation contradictions

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Employment growth slows, but still strong. Employment Trends Index hits new yearly high. But downside jolt on job openings. And real weekly earnings are flat from a year ago.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

QQQ is looking a lot like it did in late 1999

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QQQ is up 65% since Christmas Eve 2018, drawing comparisons to the Tech Bubble. Our pattern matching tool agrees, returning October 1998 - December 1999 as the closest volatility-adjusted match. However, broad market breadth is much healthier now than in late 1999.

Ned Davis Research | ETF Selection | Highlights | Weekly

Is FANMAG in a bubble?

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Technical, sentiment, and (to a lesser extent) fundamental data do not support the bubble case for FANMAG/large-cap Growth. The macro backdrop of a long expansion and excess stimulus is ideal for bubble conditions. The absence of a bubble does not prevent a cyclical pullback or the emergence of a bubble in the future.

Ned Davis Research | Equities | U.S. Focus | Weekly

LEI rebounds strongly

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Leading indicators suggest some economic growth improvement in 2H 2020. Philly Fed manufacturing soars. No visible negative impact from coronavirus or slower global growth. Layoffs remain low. Consumer economic expectations pick up.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

LEI rebounds strongly

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Leading indicators suggest some economic growth improvement in 2H 2020. Philly Fed manufacturing soars. No visible negative impact from coronavirus or slower global growth. Layoffs remain low. Consumer economic expectations pick up.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

Wall of money moves into bonds

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Every major sector has been buying bonds this year. Flows into bond mutual funds and ETFs have totaled a record $104 billion so far in 2020. Foreign investors and banks continue to buy bonds.

Ned Davis Research | Fixed Income | Focus | Bi-Weekly

Housing market strengthens

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Strong trend and momentum in housing starts and permits bode well for the housing market outlook. PPI inflation rises on stronger trade margins. But level still subdued, keeping the Fed on hold. Architecture billings suggest a pickup in nonresidential construction spending in 2H 2020.

Ned Davis Research | Economics | U.S. Daily Economic Perspectives | Daily

Housing market strengthens

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Strong trend and momentum in housing starts and permits bode well for the housing market outlook. PPI inflation rises on stronger trade margins. But level still subdued, keeping the Fed on hold. Architecture billings suggest a pickup in nonresidential construction spending in 2H 2020.

Ned Davis Research | Economics | U.S. Daily Perspectives NL | Daily

DAVIS265 question

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DAVIS265 fell sharply from 83% to 44% bulls recently. The reasons can be seen on the daily DAVIS265 series charts. My guess is that the coronavirus really caused a lot of caution.

Ned Davis Research | Ned's Insights | Institutional Hotline | 3X Weekly

Pick stocks with higher free cash flow yields

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Favor stocks with stronger price momentum, lower semivariance, greater shareholder yield, and higher free cash flow yield. Favored Stocks Include: Roche, L'Oreal, Novo Nordisk, Kering, Safran, British American Tobacco, Relx, Associated British Foods, WPP, Next.

Ned Davis Research | Stock Selection | Europe Portfolio Strategy | Monthly

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