Public Publication Content

Recent Publications

Employment outlook better, but I'm still skeptical

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The surge in the household employment survey is a big win for bulls. Hires are strong and workers are confident. Yet, Manpower survey ticks down and Employment Trends are weak.

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

Will China put the global economy into severe recession?

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Economic conditions in China have continued to worsen, led by manufacturing and trade-related sectors. But the consumer and services sides of the economy have remained resilient. We see limited signs that China will pull the global economy into a severe recession.

Ned Davis Research | Economics | Global Focus | Weekly

Neutralizing Growth/Value in sector allocation

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We are upgrading Energy and Industrials to marketweight and downgrading Consumer Discretionary to marketweight. The moves put us in line with the move to neutralize Growth versus Value. While we are skeptical of a sustained move for Value sectors, we remain vigilant as Value sectors have become very long-term oversold relative to Growth sectors.

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

Existing home sales exceed expectations

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Existing home sales best since March 2018, boosted by lower mortgage rates. But LEIs point to slower economic growth ahead. CEO optimism drops. Philly Fed region factory activity moderates.

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

Existing home sales exceed expectations

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Existing home sales best since March 2018, boosted by lower mortgage rates. But LEIs point to slower economic growth ahead. CEO optimism drops. Philly Fed region factory activity moderates.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Gold's new high potential

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New record highs in gold will be increasingly likely if current macro environment and investment climate persists. Outlook supported by gold's correlations with yields, the nominal and real yield trends, rising volatility, long-term trend strength, bullish Gold Watch aggregate, and historical comparisons showing upside potential.

Ned Davis Research | Equities | Global Focus | Weekly

Adding USO to Satellite Portfolio

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Yesterday NDR upgraded its oil outlook from neutral to bullish. Commodity ETFs typically underperform the underlying commodity they track due to a negative roll yield. With the crude futures curve in backwardation, the United States Oil Fund (USO) offers an attractive vehicle to play our bullish crude call.

Ned Davis Research | ETF Selection | Highlights | Weekly

What happens between the second and third rate cuts?

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Fed implemented its second rate cut thereby establishing an easing cycle. Another rate cut is possible by yearend if trade uncertainties linger. We are focused on European fiscal policies and Brexit. Bond market performance between the second and third rate cuts has been mixed.

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

Housing starts and permits jump

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Housing starts and permits best since 2007. But architecture billings sink, pointing to a decline in nonresi construction in 1H 2020. CFO optimism drops, as most execs see a recession by the end of 2020.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Housing starts and permits jump

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Housing starts and permits best since 2007. But architecture billings sink, pointing to a decline in nonresi construction in 1H 2020. CFO optimism drops, as most execs see a recession by the end of 2020.

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

Will this oil price spike end the expansion?

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Higher oil prices can lead to slower consumer spending and economic growth, and higher inflation expectations. But correlations have weakened over time. Mining capex and employment could benefit. Most consumers well positioned to withstand an oil price spike. Relatively more pain at the low end of the income distribution.

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

Big rotations tend to persist. Neutral on Growth/Value.

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Violent rotations to Value tend to persist for a few months, so we are changing our tactical recommendation from Growth to neutral. A secular shift would require sustained faster economic growth. The rotation has lifted broad market breadth.

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

Stocks and gold versus M2 money supply

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Money matters. Stocks look high versus M2 money supply. Gold looks neutral versus M2 money supply. Global gold production is very low versus global money supply.

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

Select higher quality, cheaper stocks

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Momentum/value relative strength recently rolled over following parabolic rise. Updating recommended factor list to reflect the environment. Favored Stocks Include: Deutsche Post, Hennes & Mauritz, Koninklijke, Fiat Chrysler, Imperial Brands, WPP, Bunzl, Kingfisher.

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

Saudi attacked - Oil upgrade

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Following the Abqaiq attack, we are upgrading our oil outlook from neutral to bullish. By our estimates, conservatively, 2 million barrels of production capacity will remain offline for the foreseeable future. Total Petroleum Inventory model now on a strong buy.

Ned Davis Research | Commodities | Focus | Monthly

Industrial production up, but y/y momentum weak

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Industrial production up, but weak y/y momentum suggests lack of underlying strength. Higher builder confidence bodes well for housing starts in the near-term. Weekly retail sales mixed.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Industrial production up, but y/y momentum weak

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Industrial production up, but weak y/y momentum suggests lack of underlying strength. Higher builder confidence bodes well for housing starts in the near-term. Weekly retail sales mixed.

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

The yield curve and what really matters for recession

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FOMC to cut fed funds target range by 25 bp and keep its options open. What really matters for recession is when businesses let go of labor. Strong August household survey suggests expansion not over.

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

Investors return to equities

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$22 billion flowed into equity ETFs last week. Largest one-week total since March. Flows were fairly concentrated with SPDR S&P 500 ETF Trust (SPY) taking in $10.4 billion and iShares Russell 2000 ETF (IWM) taking in $2.4 billion.

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

Empire manufacturing and outlook slow

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Empire state factory activity and outlook show broad-based weakness. Cass Freight shipments continue to decline y/y, a precursor to slower economic growth.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Empire manufacturing and outlook slow

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Empire state factory activity and outlook show broad-based weakness. Cass Freight shipments continue to decline y/y, a precursor to slower economic growth.

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

A/D line hits new highs, but watch 2840 and 2740

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A/D line hits new all-time high. But there are still lots of new high and new low divergences. Watch 2840 and 2740 on S&P 500.

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

Consumer strength supports the economy

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Retail sales exceed expectations. Consumer sentiment up. Both suggest continued expansion. Federal budget deficit surpasses $1.0 trillion for the first time since 2012. Import prices fall, mostly on U.S. dollar strength.

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

Consumer strength supports the economy

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Retail sales exceed expectations. Consumer sentiment up. Both suggest continued expansion. Federal budget deficit surpasses $1.0 trillion for the first time since 2012. Import prices fall, mostly on U.S. dollar strength.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Interest rates too high for the market and economy?

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Long-term interest rates are near multi-decade lows. But we have a debt bubble. So any rise in rates can slow growth.

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

Cheap and expensive sectors: A five year view

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We updated a look at sector valuations using a methodology from our CRS group. Not surprisingly, Technology and Utilities look most expensive while Financials, Energy, and Materials look the cheapest. Somewhat surprising, Consumer Discretionary and Communication Services also look cheap on several valuation measures.

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

What happens to bonds after the second rate cut?

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Yields tend to be flat to higher in the weeks following the second cut. Bond prices usually rallied the day of the cut and/or the following day. The term premium leaned toward increasing up to a year after the second cut.

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

Core CPI inflation above Fed's target

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Core CPI inflation picked up to its highest rate in 11 years, but not likely to change Fed policy path. Jobless claims drop, as labor market remains as tight as ever. Consumer comfort maintains an upward trend.

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

Core CPI inflation above Fed's target

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Core CPI inflation picked up to its highest rate in 11 years, but not likely to change Fed policy path. Jobless claims drop, as labor market remains as tight as ever. Consumer comfort maintains an upward trend.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Reflationary ripples

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Hints of reflation have triggered a violent reversal in some of Wall Street's most crowded trades. The last time small-cap value outperformed large-cap momentum by more than 5% over two days was after the 2016 election. Further improvement in global macro and technical indicators would increase the potential for a strong year-end rally.

Ned Davis Research | ETF Selection | Highlights | Weekly

Producer price inflation still limited

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Producer prices up, but inflation broadly in check. The lowest mortgage rates in three years boost housing demand. Wholesale inventories rise.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Producer price inflation still limited

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Producer prices up, but inflation broadly in check. The lowest mortgage rates in three years boost housing demand. Wholesale inventories rise.

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

Tariffs and inventories - what goes up, must come down?

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Businesses have front-loaded inventories ahead of tariffs, boosting GDP growth in the short-term. But this creates a risk of a deeper inventory correction, as demand moderates. Tariffs create cost-push inflation, with a larger impact likely in late 2019 and into 2020.

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

August 2019 sentiment/valuation update

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Stocks are overvalued relative to earnings. Stocks are stretched using cyclical sentiment. Cash reserves are still relatively low.

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

Second rate cuts: two divergent outcomes for stocks

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The stock market has gained 20.3% in the year after the second rate cut, on average. The big exceptions have occurred when the economy fell into recession after the easing cycle began. Low recession risks support the case for a bullish outcome.

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

Small business optimism declines

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NFIB small business optimism down, led by worries about the economy and real sales growth. Hiring plans for Q4 ease slightly, but the labor market remains tight.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Small business optimism declines

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NFIB small business optimism down, led by worries about the economy and real sales growth. Hiring plans for Q4 ease slightly, but the labor market remains tight.

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

Risk Mitigation

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Reducing our overweight to Europe to 30% from 40%. Increasing the U.S. to a marketweight 50% from 45%. Increasing Japan to an underweight 10% from 5%. Concerned that the ECB's expected easing of monetary conditions has largely been priced in. Extended duration means that interest rate risk is high.

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

Strong demand for fixed income funds

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Fourth straight week that fixed income ETFs have seen inflows of at least $3 billion. iShares Semiconductor ETF (SOXX) closed last week at a 17-year high relative to global equities.

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

Employment trends moderate

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ETI suggests slower payrolls and real GDP growth ahead. OECD U.S. CLI also suggests a worsening economic growth outlook, but no recession yet.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Employment trends moderate

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ETI suggests slower payrolls and real GDP growth ahead. OECD U.S. CLI also suggests a worsening economic growth outlook, but no recession yet.

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

Oil: Is a bullish storm building?

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Political pressure, investor dissatisfaction and Saudi Arabian desperation are creating a bullish backdrop for oil. Despite weak price performance this year, physical market indicators are increasingly bullish. For now we remain neutral oil, but further indicator improvement will move us back into the bull camp.

Ned Davis Research | Commodities | Focus | Monthly

Is this the bottom?

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Global manufacturing continued to contract in August. But some indicators are showing tentative signs of bottoming. Time will tell if more accommodative monetary policy wins over rising geopolitical risk. Europe continues to struggle, the U.S. has succumbed to weakness, while the outlook in China remains mixed.

Ned Davis Research | Economics | Global Focus | Weekly

Watch Fab Five tape

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The Fab Five Tape Composite is neutral. Big Mo Tape and NDR Supply and Demand are low neutral. If the Fab Five Tape goes negative, I would lean cautious.

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

Coming out of the woodwork to find jobs!

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Huge jump in household employment, mainly among prime-age workers. Slower economic growth denting job gains. AHE rebounds as workers become harder to find.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Coming out of the woodwork to find jobs!

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Huge jump in household employment, mainly among prime-age workers. Slower economic growth denting job gains. AHE rebounds as workers become harder to find.

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

Twin deficits are a problem

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Despite the belief by many that deficits can be stimulative, my work shows they weigh on growth. Budget deficits are higher than they look and they look really bad. More government spending can crowd out private investment.

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

Stronger services activity and employment keep recession risk low

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ISM services activity strengthens. Private payrolls growth solid, but some signs of trade-related layoffs. Factory orders up, but trend suggests continued manufacturing weakness.

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

Stronger services activity and employment keep recession risk low

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ISM services activity strengthens. Private payrolls growth solid, but some signs of trade-related layoffs. Factory orders up, but trend suggests continued manufacturing weakness.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Monthly Sector Update - September 2019

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Deteriorating trade talks and weak economic data spurred a flight to safety and yield. Utilities and Real Estate were clear leaders, and Energy and Financials clear laggards. NDR's no-recession outlook coupled with an equity underweight keeps us overweight both cyclical and defensive sectors.

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

Is the European peripheral debt trade still working?

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Although gains have been more subdued lately, the trade is still working. The ECB is expected to resume asset purchases next week. Remain overweight peripheral debt.

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

Trade deficit narrows slightly

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Trade deficit narrows with China, but widens with other countries and regions. NYC services activity edges up, ahead of the ISM Non-Manufacturing Index tomorrow. Weekly retail sales and mortgage apps suggest consumer spending and housing holding up.

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

Trade deficit narrows slightly

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Trade deficit narrows with China, but widens with other countries and regions. NYC services activity edges up, ahead of the ISM Non-Manufacturing Index tomorrow. Weekly retail sales and mortgage apps suggest consumer spending and housing holding up.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

From mid-caps to large-caps

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We discuss six reasons for shifting from mid-caps to large-caps. While large-cap outperformance is likely part of a flight to safety, we do not see enough evidence to downgrade our U.S. equity outlook from neutral. Small-caps remain in a secular bear relative to large-caps.

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

Long-term gold update and DAVIS265 below 20%

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Gold bullion is at its long-term uptrend. And gold stocks are relatively cheap versus gold. Mining stocks are underweight in the stock market. When DAVIS265 goes below 20%, it is usually short-term bullish.

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

ETF Model slashes equity exposure to 28%

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Top-level technical factors have joined macro factors in favoring bonds over stocks. The recommended portfolio is top heavy, with U.S. Long-Term Treasurys (TLT) and Investment Grade Corporates (LQD) both carrying a 28.2% weighting.

Ned Davis Research | ETF Selection | Model Update | Monthly

Buying bonds for capital appreciation not income

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The U.K. market led the way last month, as Brexit uncertainty pushed gilt yields to record lows. With $16.8 trillion of negative yielding debt, investors are playing for capital appreciation instead of income. Long-term Treasurys had their 4th best month on record.

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

ISM manufacturing contracts

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Broad-based decline in factory activity, but not a recessionary signal yet. Construction spending up slightly, but y/y momentum still negative.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

ISM manufacturing contracts

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Broad-based decline in factory activity, but not a recessionary signal yet. Construction spending up slightly, but y/y momentum still negative.

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

What if a bear market happens despite low interest rates?

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Interest rates are low and falling, Fed friendly. But uncertainty can create tightening conditions. Watch the Fab Five Tape Composite.

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

Consumer spending jumps amid subdued inflation

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Strong PCE growth and subdued inflation suggest no imminent recession. But cracks emerge, as consumer sentiment plunges. State leading indexes weaken. Regional factory activity mixed.

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

Consumer spending jumps amid subdued inflation

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Strong PCE growth and subdued inflation suggest no imminent recession. But cracks emerge, as consumer sentiment plunges. State leading indexes weaken. Regional factory activity mixed.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Some stock externals question bullish outlook

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Net asset values and income question if assets are in a bubble. In the U.S., the output gap says we are late cycle. The unemployment rate also suggests a struggle for stocks.

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

Nine ominous similarities

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Nine conditions are similar to conditions at the onset of last year's fourth quarter decline. Reallocation to equities would require improved valuations, a breadth recovery, a more encouraging message from our watch reports, and a shift from risk aversion to risk appetite on increasing certainty that economic conditions will improve and better earnings growth will follow.

Ned Davis Research | Equities | Global Focus | Weekly

Q2 real GDP revised slightly down, but corporate profits rebound

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Stronger consumer spending and corporate profits curtail recession fears. Real GDP on track for 2.0%+ growth in Q3. Consumer comfort and jobless claims trends support a positive outlook for consumer spending growth this year. Pending home sales drop, as housing market struggles despite lower mortgage rates.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Q2 real GDP revised slightly down, but corporate profits rebound

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Stronger consumer spending and corporate profits curtail recession fears. Real GDP on track for 2.0%+ growth in Q3. Consumer comfort and jobless claims trends support a positive outlook for consumer spending growth this year. Pending home sales drop, as housing market struggles despite lower mortgage rates.

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

Not banking on Financials

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Falling interest rates and a flattening yield curve are weighing on Financials. Sector Model is bearish on Financials; Banks Scorecard is bearish on Banks. We are putting Financials on watch for a downgrade.

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

More evidence of a short-term bottom

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The last 17 times we have seen the current combination of pessimism/oversold conditions, SPY was higher a month later. ARKK and OIH were amongst the top performers following the last two occurrences.

Ned Davis Research | ETF Selection | Highlights | Weekly

How trade uncertainty feeds into economy and markets

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The Trade Uncertainty Index has surged to all-time highs this year. The spike in uncertainty coincided with the beginning of the global slowdown in 2018, while equities have shown a stronger reaction more recently. Most countries have fallen victim to the trade tensions, with many showing even higher levels of uncertainty than the U.S.

Ned Davis Research | Economics | Global Focus | Weekly

Big Mo Tape's big drop

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Big Mo Tape has fallen sharply since mid-July. When Big Mo Tape has fallen this much, this quickly, DAVIS250A has turned bearish 78% of the time. We are not following the U.S. Stock Market Model's bullish reading and remain neutral on our U.S. equity outlook.

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

Mortgage applications fall

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Mortgage apps decline, despite lower mortgage rates.

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

Mortgage applications fall

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Mortgage apps decline, despite lower mortgage rates.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Oversold buy signal

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S270 Trading Index flashes an oversold buy signal. This is confirmed by DAVIS265 below 20. Yet longer-term data in my earlier Hotline this morning shows high risks.

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

Favor companies with stronger earnings revisions

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Earnings revisions strategy has a number of tailwinds. Select companies based on higher free cash flow yield, shareholder yield, growth expectations and earnings revisions. Favored stocks include: Microsoft, Apple, Bank of America, Intel, Starbucks, Texas Instruments, Booking Holdings, Anthem.

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

Uncertainty preventing CRE excesses

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Economic uncertainty is weighing on new CRE development limiting overbuilding. Returns continue to accrue to existing properties. Remain overweight Industrial and underweight Retail. Although cap rates remain low, the continued hunt for yield means that CRE deserves a place in large, diversified portfolios.

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

Long-term sentiment/valuation charts on stocks

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Long-term trend is upward, but overbought. Cyclical sentiment is very extended. And cyclical valuation is generally very overvalued.

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

Consumer confidence still runs high

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Consumer confidence close to highest level since 2000. But confidence spread flashes a warning signal for the economy. Existing home prices continue to cool. Richmond manufacturing comes back up from contraction.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Consumer confidence still runs high

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Consumer confidence close to highest level since 2000. But confidence spread flashes a warning signal for the economy. Existing home prices continue to cool. Richmond manufacturing comes back up from contraction.

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

Hedging equities with bonds

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Treasurys and corporates can protect against equity declines, but Treasurys are a better hedge against recessions. There were only three years where Treasurys, corporates, and equities all declined: 1931, 1969, and 2018. In recent years, the correlations between equities and Treasurys have been modestly negative, but modestly positive between equities and corporates.

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

Precious Metals Shine

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Precious metals fund (DBP) closed the week at a 5-year high. GLD saw the largest inflows ($797 million) of any ETF last week. Fourth consecutive week of outflows for equity ETFs.

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

Durable goods orders show capex still weak

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Durable goods orders up in July, but negative y/y momentum points to weak factory output growth. CFNAI shows a slower economy, but no recession. Texas manufacturing activity recovers modestly.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Durable goods orders show capex still weak

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Durable goods orders up in July, but negative y/y momentum points to weak factory output growth. CFNAI shows a slower economy, but no recession. Texas manufacturing activity recovers modestly.

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

Global stock trends diverge

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S&P 500 made a new all-time high in July. But other developed markets did not confirm. And ex Brazil and Australia, many other global markets are in downtrends.

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

TIPS cheap

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We reiterate our TIPS recommendation based on valuation. Expect some cyclical upward pressures on inflation to emerge in the coming months. We're looking for an additional 50 bp reduction in the target range this year to bring the real fed funds rate slightly below zero.

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

Revised global model supports bearish outlook

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First major revision to the GBAM since its launch in October 2012. Revamped model should respond quicker to sharp changes in market conditions. Underweight allocation supported by intra-month readings in the model.

Ned Davis Research | Equities | Global Focus | Weekly

New home sales remain volatile

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New home sales decline in July, but trend still stable-to-positive.

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

New home sales remain volatile

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New home sales decline in July, but trend still stable-to-positive.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Are the bulls running out of excuses?

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Several cycle-based indicators have flashed warning signals in 2019, and the bulls have tried to debunk them. Objective data suggest the bearish indicators are either poor timing tools or not confirmed by similar indicators. Our intermediate-term U.S. equity outlook remains neutral.

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

Some mixed macro charts

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Inventory gain is strong, but imports have weakened. Equipment spending is falling, but banks ease standards. ISM combo is still weakening, but there has been an uptick in money supply growth.

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

Profiting from recent retail sales trends

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Online retail sales growth is driving the rebound in core discretionary spending. ProShares Long Online / Short Stores ETF (CLIX) is up 26% year-to-date versus a 3% decline for the SPDR S&P Retail ETF (XRT).

Ned Davis Research | ETF Selection | Highlights | Weekly

Private sector activity weakens

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Markit U.S. flash Manufacturing PMI shows contraction, while Services PMI near stagnation. LEI up in July, but weaker y/y momentum suggests slower economic growth ahead. Consumer comfort shows unease about the economy, even though jobless claims decline.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Private sector activity weakens

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Markit U.S. flash Manufacturing PMI shows contraction, while Services PMI near stagnation. LEI up in July, but weaker y/y momentum suggests slower economic growth ahead. Consumer comfort shows unease about the economy, even though jobless claims decline.

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

Online retail sales are surging. Time to get defensive?

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Surging online sales growth could be a late-cycle warning. Back-to-school sales growth slower than last year is a near-term concern. We maintain our Discretionary/Retail overweight while the consumer remains on solid footing.

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

Negative rates might be a sign of better to come

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A record share of countries have ten-year nominal and real yields in negative territory. Historically, breadth has peaked in the mature stage of global economic slowdowns. If we've indeed seen a peak, it could be sign that the global slowdown is nearing an end.

Ned Davis Research | Economics | Global Focus | Weekly

Economic growth worsens across more states

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While growth is surely slowing, our Recession Probability Model still shows low odds of recession at this time. Low mortgage rates and improving affordability boost existing home sales. But weak architecture billings and construction backlog suggest soft CRE activity ahead.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Economic growth worsens across more states

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While growth is surely slowing, our Recession Probability Model still shows low odds of recession at this time. Low mortgage rates and improving affordability boost existing home sales. But weak architecture billings and construction backlog suggest soft CRE activity ahead.

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

Don't fight price momentum

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Price momentum strategies outperforming. Complement price momentum with interest coverage, earnings revisions, and free cash flow/enterprise value. Favored Stocks Include: Nestle, Novartis, Roche, L'Oreal, Allianz, GlaxoSmithKline, Relx, Prudential, Compass Group.

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

Hedge fund sentiment

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Large speculators are short bond futures. Large speculators are long stock futures. Relative valuation on top 20 stocks by market cap are neutral.

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

Should you worry about the yield curve inversion?

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A 10Y-2Y YC inversion is not a sufficient condition for recession. But historically the inversion has been followed by increased volatility in stock prices and slower economic growth a year later. The risk of recession will rise more meaningfully if financial conditions tighten and/or the weakness in manufacturing spreads to services.

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

Truck tonnage trend suggests slower economic growth

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While truck tonnage rebounded in July, the y/y trend corresponds to slower economic growth. Retail sales data mixed-to-positive.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Truck tonnage trend suggests slower economic growth

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While truck tonnage rebounded in July, the y/y trend corresponds to slower economic growth. Retail sales data mixed-to-positive.

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

Yield curve trade not working but not unusual

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It is not unusual for the yield curve to flatten some in between the first and second rate cuts before steepening. The yield curve still has an odd shape. We will consider closing out the steepener trade if the 10-2 curve inverts. Global yield compression is making the historical precedent less relevant.

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

Energy: Trend model & sentiment update

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Since May, most Energy industries are in freefall. Our Energy Trend Model has remained bearish through 2019. Energy sentiment is pessimistic but not at an extreme.

Ned Davis Research | Commodities | Focus | Monthly

Defensive funds exhibiting relative strength

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Gold, corporates, Treasurys, Utilities, and REITs all broke to significant new highs relative to global equities. Energy (XLE) relative strength is at an 18-year low. Third consecutive week of outflows from equity ETFs.

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

Neutral hedge fund trading strategy

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Russell 2000 is down since January 2018. Big Mo Tape is making a series of lower peaks. Short-term sentiment on DAVIS265 got very oversold.

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

The journey vs. the destination

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The FOMC is on a journey, evaluating conditions along the way. The market jumps to the destination. Rising inflation could complicate the journey. Falling bond yields cannot go on forever. Current bond market environment may be a mirror image of last fall.

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

Housing starts fall, but permits rebound

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Stronger permits and lower mortgage rates bode well for housing starts in the near-term. But consumer sentiment drops. Weaker freight activity suggests slower economic growth.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Housing starts fall, but permits rebound

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Stronger permits and lower mortgage rates bode well for housing starts in the near-term. But consumer sentiment drops. Weaker freight activity suggests slower economic growth.

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

Listening to what markets say about macro

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The dollar has been strong, and commodities have been weak. Raw industrial material prices are particularly concerning. Economically sensitive stock sectors are relatively weak.

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

History points to a short-term bottom

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Only three S&P 500 stocks were positive yesterday. Despite this, 50-day moving average continues to distance itself from 200-day moving average. Nine previous instances of a 100:1 down day with 50-day above 200-day by at least 5%. Market was positive three months later in every case.

Ned Davis Research | ETF Selection | Highlights | Weekly

An eye on the VIX and the broader watch lists

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Market status described by Rally Watch, Bear Watch and Bottom Watch reports. Indicators consistent with downtrend, but not supporting bottom prospects. Reports identify levels to watch on VIX, breadth, sentiment and others.

Ned Davis Research | Equities | Global Focus | Weekly

Strong consumer, but weak production

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Retail sales jump shows resilient consumer. But industrial production falls. Manufacturing outlook remains bleak. Modest upward trends in productivity growth and unit labor costs.

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

Strong consumer, but weak production

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Retail sales jump shows resilient consumer. But industrial production falls. Manufacturing outlook remains bleak. Modest upward trends in productivity growth and unit labor costs.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Profiting from the next-generation video game cycle

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The next-gen Xbox gaming console is slated to launch holiday season 2020. Entertainment Software companies tend to start outperforming 15 months prior to new console launches. We recommend overweighting the Interactive Home Entertainment industry.

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

Import prices remain in deflation territory

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The stronger dollar continues to suppress import prices. Mortgage applications spike.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Import prices remain in deflation territory

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The stronger dollar continues to suppress import prices. Mortgage applications spike.

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

Minimizing Losses Helps Long-Term Returns

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This white paper explores historical corrections and evaluates their impact on long-term performance. The key takeaways of our analysis include: portfolios with larger maximum declines tend to have lower risk-adjusted returns; more volatile markets tend to have larger maximum losses; and active strategies that can reasonably reduce the worst few declines result in significant gains.

Ned Davis Research | White Paper | Monthly

What happens to earnings and P/Es around rate cuts?

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EPS has fallen, but the P/E has soared in the year after first rate cuts. The EPS moderation has been much less in non-recession cases. S&P 500, EPS, and P/Es in the last year have been closest to the non-recession averages.

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

Valuation still a problem

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Stocks are overvalued based upon earnings. Stocks are also way too high versus sales. And valuation problems versus cash flow and book value.

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

G7 and BRIC outlook: Central banks to the rescue?

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We provide our quarterly economic update of the world's major countries and regions. Compared to our last outlook in April, economic conditions remain mixed to weak, amid heightened geopolitical risks. But looser monetary policy among most of the world's largest economies provides optimism to an otherwise weak outlook.

Ned Davis Research | Economics | Global Focus | Weekly

Consumer price inflation strengthens

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CPI inflation up, but expect the Fed to cut interest rates again in September to counter trade tensions. Small businesses more upbeat about the economy. Federal budget deficit moves closer to the trillion dollar mark.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Consumer price inflation strengthens

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CPI inflation up, but expect the Fed to cut interest rates again in September to counter trade tensions. Small businesses more upbeat about the economy. Federal budget deficit moves closer to the trillion dollar mark.

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

Moving up in credit quality

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We now favor investment grade corporates over high yield due to broad-based technical deterioration, led by energy. Economic fundamentals, however, are still favorable. Although we remain concerned longer-term about the deterioration in credit quality, we are not worried about it today.

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

Risk-off attitude intensifies

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AGFIQ Anti-Beta Fund (BTAL), eclipsed its high from the 2015/2016 bear, closing the week at a seven-year high. Junior gold miners (GDXJ) are breaking out on an absolute and relative basis. First outflows from bond funds in three months as HYG and JNK see significant redemptions.

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

Why Macro Matters - A Global Economic Framework to Identify Opportunities and Risks

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This white paper discusses why macroeconomics is an important input for investment decisions. At NDR, we believe that historical macroeconomic analysis sets the stage for broader investment decisions and helps identify important risks and opportunities. When analyzing the correct macroeconomic indicators, investors can gain important insight into asset allocation and geographical and sector positioning.

Ned Davis Research | White Paper | Monthly

Breadth Concerns

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Trend evidence is very mixed. The market got overbought and over believed, but this has much improved. There are divergences from the High/Low Logic Index, Russell 2000, Dow Transports, and Global Stocks.

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

How much did the Fed's balance sheet shrink?

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The Fed reduced its balance sheet by nearly $700 billion. Stopping the runoff two months earlier than expected added $62 billion of liquidity to the system, or 9%. Demand for currency remains strong.

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

A currency skirmish, as bonds and gold keep winning

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Risk-Off currencies favored over Risk-On and emerging market currencies. Overvalued dollar reversing from sentiment extreme. As yields decline, uptrends in gold and bonds likely to persist.

Ned Davis Research | Equities | Global Focus | Weekly

Producer price inflation weak

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Slow PPI inflation leaves room for the Fed to cut rates further.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Producer price inflation weak

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Slow PPI inflation leaves room for the Fed to cut rates further.

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

GDP and profits perspectives

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GDP for four quarters through Q1 of 2019 revised from 3.2% to 2.7%. Corporate profits for four quarters through Q1 2019 revised from +3.4% to -2.2%. Profits relative to GDP hits new 10-year low!

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

Monthly Sector Update - August 2019

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Sentiment reached extreme optimism and began to reverse late July. Our no-recession outlook coupled with our equity underweight position keeps us overweight both cyclical and defensive sectors. We maintain our Consumer Discretionary and Utilities overweights and Industrials and Energy underweights.

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

OECD U.S. CLI keeps falling

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CLI shows weakening growth momentum. Layoffs decline, but consumer comfort drops. Wholesale inventories flat and projected to slow in 2H 2019.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

OECD U.S. CLI keeps falling

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CLI shows weakening growth momentum. Layoffs decline, but consumer comfort drops. Wholesale inventories flat and projected to slow in 2H 2019.

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

How oversold/pessimistic is the market?

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In a news-driven market, focus on objective indicators. The stock market has relieved an overbought condition, but sentiment and technicals do not show a pessimistic or oversold market. Intermediate-term trend indicators remain positive, implying the damage done thus far has not broken the uptrend.

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

It's official, China is a currency manipulator!

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China was recently branded a currency manipulator, but there was a much stronger case to be made in the past than today. The designation may be inconsequential for China. The global economic outlook could get significantly worse if the U.S. designates other countries on its currency manipulator watch list.

Ned Davis Research | Economics | Global Focus | Weekly

What ICI data tells us about cyclical sentiment

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Continued flows out of active funds and into passive funds. Top 20 S&P 500 stocks are heavily weighted. Despite active outflows, most investors are fairly fully invested in equities.

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

Labor demand still strong

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High job openings and low layoff rate reflect tight labor market conditions. Stronger weekly retail sales bode well for Q3 growth.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Labor demand still strong

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High job openings and low layoff rate reflect tight labor market conditions. Stronger weekly retail sales bode well for Q3 growth.

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

Are bonds outperforming stocks?

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Every stock/bond ratio peaked in 2018. Performance has generally been range-bound. Yields have fallen due to fundamental and technical factors. Stock/bond correlations have been near-zero.

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

Earnings doubt and rising Risk-Off

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Indicators have deteriorated, with bearish message from Risk-On/Risk-Off Ratio. Dangerous concentration from stocks in sectors with stretched valuations. Dropping momentum of trailing and expected earnings growth, yet beat rate improvement lacking.

Ned Davis Research | Equities | Global Focus | Weekly

Oil & the Yuan devaluation

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China's move to devalue the yuan heightens the demand fears surrounding crude oil. Following the 2015 yuan devaluation, oil entered a brutal bear market. We remain officially neutral on oil.

Ned Davis Research | Commodities | Focus | Monthly

ISM services growth moderates

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Services growth moderates, following softer factory activity. Light vehicle sales decline. But employment trends remain positive.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

ISM services growth moderates

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Services growth moderates, following softer factory activity. Light vehicle sales decline. But employment trends remain positive.

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

Tough week for Emerging Markets

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Emerging Markets closed the week at a 15-year low relative to MSCI ACWI. Popular iShares Emerging Markets funds (EEM & IEMG) saw close to $3 billion in outflows last week.

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

Still bullish breadth thrust update, but market stretched

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Breadth thrust buys usually show more gains from six to 12 months out. Trend evidence leans bullish. But intermediate term overbought and long term stretched.

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

Mid-cycle adjustments and stocks

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Brief easing cycles have been rare recently, but are not unprecedented. One-and-done rate cuts have been bearish for stocks. Two-three cut cycles have been bullish over the next year, but in two cases they led to major bear markets within 16 months.

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

Employment back on trend

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Job growth slowing in line with expectations. Wage growth rebounds. Trade uncertainty rises. Deficit shrinking with China, but increasing elsewhere.

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

Employment back on trend

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Job growth slowing in line with expectations. Wage growth rebounds. Trade uncertainty rises. Deficit shrinking with China, but increasing elsewhere.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

With all the profits, and the tax cut, where's capex?

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Capex has been fairly soft, especially over the last year. CEO confidence is a big problem. Capacity utilization has rolled over.

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

Near-term economic recovery remains elusive

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The global manufacturing slowdown persisted in July amid rising risks, indicating that a recovery in the near-term remains elusive. A severe global recession has not materialized at this point, but rising geopolitical tensions increase the risk. Europe continued to lead the downside.

Ned Davis Research | Economics | Global Focus | Weekly

ISM factory activity slows further

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ISM Manufacturing Index falls to lowest level since August 2016. Construction spending drops. But labor market indicators remain strong.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

ISM factory activity slows further

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ISM Manufacturing Index falls to lowest level since August 2016. Construction spending drops. But labor market indicators remain strong.

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

What happens between the first and second rate cuts?

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Fed embarks on new easing cycle. Expect another rate cut in September. We remain focused on Europe and what the ECB will do. In between the first and second rate cuts yields fall, the curve steepens, and credit spreads widen.

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

DP private payrolls up, but trend slowing

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ADP payrolls rise, but trend weakens amid tight labor market conditions. Soft employment cost growth suggests subdued inflation pressures. Regional factory activity weakens.

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

ADP private payrolls up, but trend slowing

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ADP payrolls rise, but trend weakens amid tight labor market conditions. Soft employment cost growth suggests subdued inflation pressures. Regional factory activity weakens.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

Foreigners selling, but advisors and consumers are bullish

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Record net foreign selling of U.S. stocks. Yet, advisors show over three bulls for every bear. And consumers are very optimistic as well.

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

It's all about the consumer

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Higher consumer confidence and personal income support a positive outlook for spending growth in 2H. Pending home sales rise, while home price growth moderates.

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

It's all about the consumer

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Higher consumer confidence and personal income support a positive outlook for spending growth in 2H. Pending home sales rise, while home price growth moderates.

Ned Davis Research | Economics | Daily Economic Perspectives | Daily

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