Publications
Recent Publications
Leading indicators point to continued recovery
LEI posts the smallest of four consecutive gains. Points to continued, but slower, recovery ahead. Consumer sentiment up in September, but overall level still depressed. Current account deficit hits highest level since Q3 2008.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyLeading indicators point to continued recovery
LEI posts the smallest of four consecutive gains. Points to continued, but slower, recovery ahead. Consumer sentiment up in September, but overall level still depressed. Current account deficit hits highest level since Q3 2008.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyInflation or Japan?
10-year Treasury yields look more like what Japan experienced, rather than what the U.S. did in the 1970s. The debt bubble in both countries is deflationary. There can be bear markets and recessions without central bank tightening.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyTechnology Titans focus on Apple
Apple could be weak near-term as it typically underperforms three months after its fall iPhone announcement. Other factors such as profit margins, semiconductor growth, and Growth/Value trends remain favorable for Apple. We would be buyers of Apple on weakness, especially after a "death cross".
Ned Davis Research | Thematic | On the Radar | MonthlyGold still trending higher, dollar lower
Outlook remains bullish on gold and bearish on the U.S. Dollar Index. Consolidations correcting sentiment extremes. Euro strongest major currency. Swiss franc and yen would benefit from increased risk aversion. Gold remains a better option than bitcoin.
Ned Davis Research | Equities | Global Focus | WeeklyDon't call it a comeback... yet
Chinese retail sales increased for the first time this year, but the recovery is lackluster compared to other parts of the world. The risk of a renewed COVID outbreak and retribution over its strong industrial rebound pose risks to the recovery. Despite these potential barriers, relatively speaking, China has so far emerged from this crisis with the least damage.
Ned Davis Research | Economics | Global Focus | WeeklyHousing starts and permits pull back
Housing starts and permits decline, as relocation trend weighs on the multifamily sector. Initial jobless claims little changed at an elevated level. Consumer economic expectations still dour. Philly Fed region manufacturing activity grows moderately.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyHousing starts and permits pull back
Housing starts and permits decline, as relocation trend weighs on the multifamily sector. Initial jobless claims little changed at an elevated level. Consumer economic expectations still dour. Philly Fed region manufacturing activity grows moderately.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailySector and industry implications for the 2020 election
Sector leadership has been more cyclical following incumbent party losses and under Democratic presidents. Communication Services, Utilities, Financials, and Consumer Discretionary could be hurt most by a Biden corporate tax hike. Managed Health Care, Capital Goods, Aerospace & Defense, and Energy could be among most impacted from policy proposals.
Ned Davis Research | Equities | U.S. Sector & Industry Focus | WeeklyNo additional Fed actions to hit dual mandate
Forward guidance extends current policy rates through 2023. Fed hasn't been successful in hitting 2% inflation goal - much less going beyond. Nothing from today shows how that will happen. Economic projections revised significantly higher.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyRetail sales growth still stronger than normal
Retail sales post the smallest of four consecutive gains in August. But growth is still above average. Record high builder confidence bodes well for housing starts in the near-term. Rebuilding depleted inventories should support the economic recovery.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyRetail sales growth still stronger than normal
Retail sales post the smallest of four consecutive gains in August. But growth is still above average. Record high builder confidence bodes well for housing starts in the near-term. Rebuilding depleted inventories should support the economic recovery.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyEuropean tobacco cheapest in 20 years
European listed Tobacco industry at cheapest levels since 2000, largely due to British American Tobacco. British American Tobacco and Swedish Match rank #1 and #2 on combined ROA and FCF/EV rank warranting their inclusion in a European equity portfolio.
Ned Davis Research | Equities | Global Focus | WeeklyContinue to favor lower volatility stocks
Lower volatility has been outperforming over recent weeks. Favor stocks with stronger price momentum, liquid balance sheets, higher interest coverage, and lower volatility. Selected stocks include: ASML, Sanofi, Siemens, Hermes, Koninklijke, Legrand, Rio Tinto, Ferguson, Antofagasta, Halma.
Ned Davis Research | Stock Selection | Europe Portfolio Strategy | MonthlyMarket concentration as a sentiment indicator
Top 10 stocks as a percentage of the S&P 500 approached record highs. DAVIS265 hits 80% bulls. Despite excessive optimism, most stocks have failed to confirm.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyMarket messages as the election approaches
The stock market has tended to be stronger between September 15 and Election Day when the incumbent party has won than when it has lost. Weakness after incumbent party losses has often reversed in post-election years. Join us for our election webinar on Wednesday, September 16 at 1 pm Eastern.
Ned Davis Research | Equities | U.S. Focus | WeeklyIndustrial production recovery slows
Industrial production posts the smallest of four consecutive gains in August. Level still below pre-pandemic. Empire manufacturing strengthens in September. Nonfuel import price inflation picks up notably, amid a weaker U.S. dollar.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyIndustrial production recovery slows
Industrial production posts the smallest of four consecutive gains in August. Level still below pre-pandemic. Empire manufacturing strengthens in September. Nonfuel import price inflation picks up notably, amid a weaker U.S. dollar.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailySteeper or flatter? (and what we expect from the Fed)
We expect the FOMC to provide state-based forward guidance and see a downward shift in the longer run equilibrium fed funds target rate. We do not expect a formal shift in asset purchases or a yield curve target policy. Yield curve to remain range-bound without major policy shift.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyTech investors adding leverage?
Materials funds make new absolute and relative highs (VAW, XLB). Unlevered tech sees outflows, levered tech sees inflows (QQQ, TQQQ). Modest correction provokes largest flight to safety since March (SHY).
Ned Davis Research | ETF Selection | ETFs on the Move | WeeklyCycles, Big Mo Tape, and the Elite Eight
Cycle composite has not been useful during the first half of the year. Big Mo Tape is mildly bullish, but not as bullish as one would expect at the start of a new bull market. Elite Eight stocks have been dominating the market.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyConsumer price inflation firms slightly
Some pickup in consumer prices, but inflation still below the Fed's target. Services revenues collapsed in Q2.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyConsumer price inflation firms slightly
Some pickup in consumer prices, but inflation still below the Fed's target. Services revenues collapsed in Q2.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyParty over for the Q's?
QQQ price action comparable to earlier this century Early September correction remarkable for proximity to all-time high Option market response subdued relative to similar declines
Ned Davis Research | ETF Selection | Highlights | WeeklyDon't fight the Fed asset allocation charts
Lower and falling rates are bullish, while rising rates are negative. More liquidity versus a sluggish economy is bullish. Low inflation pressures are bullish.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyGlobal recession over, but tough recovery ahead
We now have enough evidence to call the end of the global recession. But the recovery will be difficult, as recent data indicate some stalling amid second waves of the virus. Poor employment prospects will weigh on both short- and long-term growth.
Ned Davis Research | Economics | Global Focus | WeeklyBack to pre-COVID?
Most breadth deterioration since early this year, ahead of February-March decline. Dropping Rally Watch aggregate and sell signals from model's breadth indicators. Sentiment and valuations extreme and starting to reverse. Watching bond yields and VIX.
Ned Davis Research | Equities | Global Focus | WeeklyProducer price inflation remains muted
Final and intermediate demand producer prices continue to decline from a year ago. Wholesale inventories decline. Initial jobless claims steady. Consumer comfort picks up.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyProducer price inflation remains muted
Final and intermediate demand producer prices continue to decline from a year ago. Wholesale inventories decline. Initial jobless claims steady. Consumer comfort picks up.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyEnergy: downgrade watch
Following large divergences in WTI and Energy sector returns, the sector has historically underperformed. Extreme near-term oversold conditions and bullish September seasonality keep us from downgrading Energy. However, we will likely use any strength as an opportunity to downgrade the sector.
Ned Davis Research | Equities | U.S. Sector & Industry Focus | WeeklyFlood of global liquidity subsiding
While liquidity remains abundant, the rate of change has decidedly slowed in recent weeks. Additional policy support could be announced in the coming weeks. We introduce a new set of charts to track central bank balance sheets and asset purchases.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyAn atypical catalyst at a typical time
Option volatility may have been the trigger to the recent pullback, but it came at a time when economic, stock market, election, and seasonal cycles suggested the market was vulnerable. Our base case is that the recent decline is a pullback within an ongoing cyclical bull market. Watch technical damage as sentiment indicators work off excessive optimism.
Ned Davis Research | Equities | U.S. Focus | WeeklyJob openings rise, but hires lag
Job openings increase in July, but hires slump. Q4 hiring plans strengthen. Weekly retail sales and mortgage application trends remain positive.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyJob openings rise, but hires lag
Job openings increase in July, but hires slump. Q4 hiring plans strengthen. Weekly retail sales and mortgage application trends remain positive.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyIn 2000, Value way undervalued versus Growth
Small-cap Value coming into 2000, was undervalued versus large-cap Growth. Market value is way above GDI, even with upward bias. Cash is low relative to market value.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklySmall business optimism picks up
NFIB optimism index up, but uncertainty still constrains the outlook. OECD U.S. CLI shows the economy in recovery mode. Employment trends still sluggish.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailySmall business optimism picks up
NFIB optimism index up, but uncertainty still constrains the outlook. OECD U.S. CLI shows the economy in recovery mode. Employment trends still sluggish.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyTime to buy European consumer staples?
Long-term outperformance of consumer staples has reflected fundamentally stronger businesses within this sector. Currently consumer staples look cheap relative to history. Consumer staples are likely to outperform if the outlook for low economic growth and low yields is correct. Looking for technical indicators to improve before becoming more bullish.
Ned Davis Research | Equities | Global Focus | WeeklyOil: $30 now...$100 later
After consolidating for months, crude oil appears poised to breakdown. The physical market remains weak. I am downgrading crude oil from neutral to bearish.
Ned Davis Research | Energy | Focus | MonthlyFlashback and look forward
Once again, some investors are worried that the large amount of policy support will create inflation and push yields higher. This time the market seems to get the Fed's message. Look for gradual shift toward more long-term Treasury purchases. Little incentive to implement explicit YCTs.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyComparing some trend indicators
The main point on trend indicators is not making a huge mistake. Trend indicators usually tell an investor to cut losses short and let profits run. Starting at around 1968 sets up a fair comparison.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyUnemployment plunges
Widespread, but slower, jobs recovery continues in August. Household survey shows surprising strength. Unemployment rate plunges to 8.4%. Even so, without additional fiscal support, income and spending growth will remain restrained.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyUnemployment plunges
Widespread, but slower, jobs recovery continues in August. Household survey shows surprising strength. Unemployment rate plunges to 8.4%. Even so, without additional fiscal support, income and spending growth will remain restrained.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyProfit perspectives
Despite record stimulus, profits fell sharply from a year ago. Thus, the ratio of market value to profits soared to twice its long-term norm. The good news is that profits are likely to turn up.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyISM services rebound moderates
The NMI slips in August, a sign the economic recovery has lost some momentum. Layoff trends continue to improve, but still show excessive labor market slack. Trade deficit widens in July, as imports jump more than exports. Q2 productivity revised up, as hours worked decline more than output.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyISM services rebound moderates
The NMI slips in August, a sign the economic recovery has lost some momentum. Layoff trends continue to improve, but still show excessive labor market slack. Trade deficit widens in July, as imports jump more than exports. Q2 productivity revised up, as hours worked decline more than output.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailySecular chart watch, Part III
Third in series of charts that help determine if the secular bull is intact or giving way to a secular bear. Watching gold, U.S. dollar, commodities and relative strength trends of commodity and consumer sectors, Technology, emerging markets and the U.S. market. Along with charts addressing price performance, economic developments, valuations and sentiment, these charts will help us determine if the secular trend is changing.
Ned Davis Research | Equities | Global Focus | WeeklyMonthly sector update - September 2020
FANMAG and cyclical Growth sectors were strong in August. Cyclical Growth sectors are very overbought relative to cyclical Value sectors. COVID-impacted industries outperformed in the month.
Ned Davis Research | Equities | U.S. Sector & Industry Focus | WeeklyWhat's wrong with the 10-year fair value model?
The fair value model jumped due to the output gap component. The model assumes the bond market will move counter-cyclically to the economy. This assumption is no longer valid given current Fed policy. We are switching to a version that eliminates this problem.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyAre too many stocks being left behind?
Creative destruction is common around bear markets. The difference is that it is happening more in the S&P 500 in 2020. Since the February highs, NDX 100 return distributions have been broad-based, but S&P 500 returns have been bifurcated. Confirmation from long-term breadth gauges would offset S&P 500 divergences.
Ned Davis Research | Equities | U.S. Focus | WeeklyADP private payrolls growth still slow
ADP payrolls up again in August, but gains have slowed by industry and firm size, compared to early summer. Light vehicle sales rebound moderates. Factory orders jump.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyADP private payrolls growth still slow
ADP payrolls up again in August, but gains have slowed by industry and firm size, compared to early summer. Light vehicle sales rebound moderates. Factory orders jump.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyGlobal manufacturing moving back to normalcy
The global manufacturing PMI reported its second straight month of expansion, adding further signs that the global recession is over. Rising COVID cases, higher price pressures, and weak employment and exports pose risks to the outlook. Second waves are threatening the recovery in parts of Europe and Asia.
Ned Davis Research | Economics | Global Focus | WeeklyAugust 2020 sentiment/valuation update
Stock absolute valuations are stretched. Sentiment is also stretched. But, not all indicators are negative.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyISM factory activity strengthens further
ISM Manufacturing Index hits highest level since November 2018. But COVID environment still constrains growth. Construction spending weak, weighed down by the public and private nonresidential sectors.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyISM factory activity strengthens further
ISM Manufacturing Index hits highest level since November 2018. But COVID environment still constrains growth. Construction spending weak, weighed down by the public and private nonresidential sectors.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyWaiting for the "all clear" signal
Perhaps nothing better symbolizes the plight of SMEs than BDCs, which contain a high degree of credit and liquidity risk. We introduce two charts to track BDCs. BDCs have been underperforming since early June. Sustained outperformance would produce an "all clear" signal for the economy.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyETF Model fully allocated to stocks
Top-level model now has 100% allocation to stocks. U.S. Growth, U.S. Value, U.S. Large Caps, and Emerging Markets received all of the allocation. The global equity breadth indicator flashed a new signal favoring stocks. However, some indicators are near their threshold for favoring bonds.
Ned Davis Research | ETF Selection | Model Update | MonthlyCategory 4 season
New home construction and a quarantine related home improvement boom caused significant rallies in lumber and home improvement stocks. Both lumber and home improvement stocks have historically outperformed during hurricane seasons with a Category 4 storm. Consumer Discretionary ETFs offer higher exposure to home improvement retailers than home building ETFs.
Ned Davis Research | ETF Selection | Highlights | WeeklyStock market trend question
Stocks total return has been up over the long run. Same for corporate bonds over the last 40 years, while gold has been more volatile without dividends and interest to compound. Putting the three together in an asset allocation model could be useful.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyIncome and spending still depend on government support
Personal income and spending rise in July, still boosted by government transfers. Inflation muted. Consumer sentiment up slightly in August, but hovers near lowest level since 2013. Regional factory activity mixed. Advance goods trade deficit widens.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyIncome and spending still depend on government support
Personal income and spending rise in July, still boosted by government transfers. Inflation muted. Consumer sentiment up slightly in August, but hovers near lowest level since 2013. Regional factory activity mixed. Advance goods trade deficit widens.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyMacro still bullish, but some negatives
I still believe the economy bottomed in April. The Fed is still providing gobs of cheap and available money. But, banks tighten loan standards, some mortgages are in trouble, and architecture billings are quite soft.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyQ2 corporate profits sink with the economy
Corporate profits drop in 1H 2020 by the most since the GFC. Initial jobless claims come down, but level still historically high. Pending home sales rise further, in show of labor market strength.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyQ2 corporate profits sink with the economy
Corporate profits drop in 1H 2020 by the most since the GFC. Initial jobless claims come down, but level still historically high. Pending home sales rise further, in show of labor market strength.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyThe upcoming cliff edge?
Government income support has been critical in eliminating short-term economic pain. But some countries may see this support fade in the near-term, amidst a dour employment situation. The trade-off of extending stimulus is not a simple one.
Ned Davis Research | Economics | Global Focus | WeeklyReducing cyclical exposure
We get less cyclical by downgrading Financials to marketweight and upgrading Consumer Staples to marketweight. Credit conditions are likely too weak for Banks and Financials outperformance. Household Products has been a bright spot for Consumer Staples.
Ned Davis Research | Equities | U.S. Sector & Industry Focus | WeeklyThe intersection of the Fed, banks, credit, and inflation
Banks are still part of the problem, not the solution. There won't be any meaningful and sustained rise in inflation without credit creation. If the Fed wants to hit its inflation target, it needs to figure out how it can get the banks to lend to fuel the real economy.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyWeekly check-up on the U.S. economy
We introduce our High Frequency U.S. Economic Indicators report. All indicators are off their pandemic lows, but most have not yet recovered to pre-pandemic levels. Most consumer behavior trends have slowed in recent weeks, putting the broad economic recovery at risk.
Ned Davis Research | Economics | U.S. Focus | MonthlyDurable goods orders continue to recover
Durable goods orders exceed expectations, led by vehicles and defense aircraft. State coincident indexes imply the recession ended in Q2. Mortgage applications continue to show housing market strength.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyDurable goods orders continue to recover
Durable goods orders exceed expectations, led by vehicles and defense aircraft. State coincident indexes imply the recession ended in Q2. Mortgage applications continue to show housing market strength.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailySelect stocks with higher, consistent eps growth
The long-term eps growth/eps stability strategy has tailwinds including an elevated factor score. Select companies based on long-term eps growth/eps stability, price momentum, EBIT/assets, and free cash flow/enterprise value. Favored stocks include: Facebook, Intel, AbbVie, Lowe's, Vertex, Activision, CSX.
Ned Davis Research | Stock Selection | U.S. Portfolio Strategy | MonthlyAt extremes, it pays to be contrary
DAVIS265 hit a high of 73.3% bulls. Record high invested position by both domestic and global mutual funds, record high stocks-to-GDP ratio, and record high median P/E for NYSE stocks, etc. S574 not as high, but I review the record at extremes.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyWhat was the DJIA index committee thinking?
Apple's upcoming stock split would have lowered the DJIA's Tech weight, so Salesforce was added. After changes, the DJIA is still underweight Tech and Communications, and overweight Industrials, versus the S&P 500. The DJIA has risen faster in the year before changes than in the year after.
Ned Davis Research | Equities | U.S. Focus | WeeklyConsumers losing confidence in the recovery
Consumer confidence hits lowest level since 2014. But new home sales surge. Existing home prices steady.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyConsumers losing confidence in the recovery
Consumer confidence hits lowest level since 2014. But new home sales surge. Existing home prices steady.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyG7 and BRIC outlook: Rebounds threatened by second wave
We provide our quarterly economic update of the world's major countries and regions. All economies have staged large rebounds due to easing of lockdown measures. V-shaped recoveries remain unlikely, as economies struggle with a resurgence of COVID-19 along with expiring stimulus.
Ned Davis Research | Economics | Global Focus | WeeklyInflation and the Fed's policy framework review
Fed has failed miserably at achieving symmetry around its 2.0% inflation target. Expect Powell to announce average inflation targeting. Long-term inflation expectations fall short of the Fed's goal.
Ned Davis Research | Fixed Income | Focus | Bi-Weekly2020 claims another victim
2020 busted our Total Petroleum Model. We managed to sidestep the carnage by applying a "weight-of-the-evidence" approach. For now, we remain neutral crude oil.
Ned Davis Research | Energy | Focus | MonthlyCFNAI shows softer recovery in July
CFNAI declined, led by softer production and employment related indicators.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyCFNAI shows softer recovery in July
CFNAI declined, led by softer production and employment related indicators.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyTape plus Fed on corporate bonds
Despite a 40-year bull market, the tape remains bullish on corporate bond total return index. The Fed buying T-bonds has also been a help. The tape plus Fed is favorable, despite low yields.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyExisting home sales soar
Record jump in existing home sales in July. But rising delinquencies pose risk to the recovery. Markit U.S. flash PMIs rise, reflecting a broadening expansion in August. The decline in trucking volume shows the recovery is still weak.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyExisting home sales soar
Record jump in existing home sales in July. But rising delinquencies pose risk to the recovery. Markit U.S. flash PMIs rise, reflecting a broadening expansion in August. The decline in trucking volume shows the recovery is still weak.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyRule Number 10
Don't fight city hall (Federal government) is now rule #10. Seemingly, there are no more deficit hawks left. Modern Monetary Theory funds it all like a free lunch.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyLEI improves, but trends still weak
LEI up for the third straight month in July, pointing to recession end but still slow recovery. Philly Fed manufacturing activity moderates. Jobless claims head back up. Consumer comfort and economic expectations weak.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyLEI improves, but trends still weak
LEI up for the third straight month in July, pointing to recession end but still slow recovery. Philly Fed manufacturing activity moderates. Jobless claims head back up. Consumer comfort and economic expectations weak.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyNew record following waterfall. Now what for sectors?
Sector leadership has historically shifted more defensive following new highs after waterfall declines. Election uncertainty has been consistent with defensive leadership, but COVID monetary and fiscal responses favor cyclical sectors. There is not yet enough evidence to upgrade the most oversold sectors.
Ned Davis Research | Equities | U.S. Sector & Industry Focus | WeeklySecular chart watch, Part II
Second of three-part series on charts that help determine if the secular bull is intact or giving way to a secular bear. Watching cyclically-adjusted valuations, forward earnings yields, and growth-adjusted relative valuations. Also watching market cap to GDP ratio, unemployment and confidence, household and corporate sentiment.
Ned Davis Research | Equities | Global Focus | WeeklyRisks and opportunities in CMBS
Despite economic and political uncertainties, non-agency and lower-rated credits are bouncing from their spring lows. CMBS 2.0 may offer better relative opportunities. Prefer IG corporates to CMBS. Remain marketweight CMBS.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyCOVID is masking typical early bull trends
The NDR Early Cycle Composite (ECC) has risen since March 23, but less than normal. Some ECC components have been upended by COVID-19 and have not experienced their typical early bull strength. Enough ECC components are outperforming to suggest the bull market is not nearing exhaustion.
Ned Davis Research | Equities | U.S. Focus | WeeklyArchitecture billings still shrinking
The decline in billings suggests nonresidential construction spending will remain weak well into 2021. Mortgage applications mixed. Delinquency rate spikes to a nine-year high.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyArchitecture billings still shrinking
The decline in billings suggests nonresidential construction spending will remain weak well into 2021. Mortgage applications mixed. Delinquency rate spikes to a nine-year high.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailySelect Lower Volatility Stocks
Lower volatility has a positive factor composite score. Favor stocks with stronger price momentum, liquid balance sheets, higher interest coverage, and lower volatility. Selected stocks include: ASML, Siemens, Schneider Electric, Lonza, Rio Tinto, BHP Billiton, Ferguson, Halma
Ned Davis Research | Stock Selection | Europe Portfolio Strategy | MonthlyMarket stretched, despite friendly tape and Fed
"Real" S&P 500 is well above long-term trend. Most active stocks are overbought and the DJIA price-to-book is above four. Cash reserves are lower and record stock offerings.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyHousehold debt amplifying economic risks
Household debt declined in Q2 for the first time since 2014, led by credit card debt. Income support from the government is keeping household finances afloat. Lack of organic income growth is a major risk. Delinquency rates have picked up, as debt service has become more burdensome.
Ned Davis Research | Economics | U.S. Focus | MonthlyHousing starts and permits surge
Housing starts and permits jump in July, helping the economic recovery. Empire services activity worsens in August. Pessimism about the outlook returns. Weekly retail sales climb up slowly. E-commerce shines.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyHousing starts and permits surge
Housing starts and permits jump in July, helping the economic recovery. Empire services activity worsens in August. Pessimism about the outlook returns. Weekly retail sales climb up slowly. E-commerce shines.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyEuropean equity revival?
Euro strength favours allocation to European equities on an unhedged basis. Technical and fundamental reasons to expect further euro strengthening. European recovery fund provides longer term narrative supporting equities.
Ned Davis Research | Equities | Global Focus | WeeklyCorporate credit risks by sector
In aggregate, corporate leverage has increased, while interest coverage has deteriorated. But there are large differences among sectors. Low-risk sectors include Technology and Communication Services. Energy and Utilities are higher-risk.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyEquities back in the spotlight
Broad-market new all-time high for price and AUM (VTI). Thematic portfolios outperforming the broader market (CARZ, ACSI, PZD). Commodity inflow streak broken (GLD).
Ned Davis Research | ETF Selection | ETFs on the Move | WeeklyBuilder confidence highest since 1998
Surge in builder confidence implies a strong pickup in housing starts.Empire state manufacturing activity moderates.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyBuilder confidence highest since 1998
Surge in builder confidence implies a strong pickup in housing starts.Empire state manufacturing activity moderates.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyGold trend and money supply
Gold trend remains positive. Lower real interest rates from the Fed are bullish for gold. While overbought short-term, gold looks good relative to money supply.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyRetail sales and industrial production up in early Q3
Both retail sales and production post smaller gains in July than in June, but recovery still in place. Consumer sentiment near flat in August, which could hold back spending growth. Unit labor costs surge in Q2, but don't expect higher inflation this year.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyRetail sales and industrial production up in early Q3
Both retail sales and production post smaller gains in July than in June, but recovery still in place. Consumer sentiment near flat in August, which could hold back spending growth. Unit labor costs surge in Q2, but don't expect higher inflation this year.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyWhom to trust on the economy?
Investors appear bullish based upon what they are willing to pay for stocks. Professional economic forecasters and investment advisors are bullish. CEOs and banks appear worried.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyVIX pricing in election volatility?
The S&P 500 is back to February highs and realized volatility has dropped. Implied volatilities have dropped at all expirations from their levels three months ago. Despite the drop, the curve has steepened creating a headwind for long volatility ETFs.
Ned Davis Research | ETF Selection | Highlights | WeeklyHas the role of government changed forever?
The COVID crisis may have triggered an inevitable move to massive fiscal spending. While ballooning debt is worrisome, it's not a near-term concern. Demographics plays a big role behind the surge in overall stimulus over the past decade and may also be the source of change going forward.
Ned Davis Research | Economics | Global Focus | WeeklyInitial jobless claims fall below a million
Jobless claims decline. But uncertainty about future benefits weighs on consumer comfort. CEO confidence improves slightly. Import prices up in July, but annual inflation still negative.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyInitial jobless claims fall below a million
Jobless claims decline. But uncertainty about future benefits weighs on consumer comfort. CEO confidence improves slightly. Import prices up in July, but annual inflation still negative.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyUsing macro to identify COVID recovery themes
Five PCE categories were hit particularly hard by the pandemic. Health Care Services saw the biggest dollar decline, representing pent-up demand. Look for us to recommend more COVID recovery themes as spending trends mean revert.
Ned Davis Research | Equities | U.S. Sector & Industry Focus | WeeklySecular chart watch, Part I
Three-part series focuses on charts that help determine if the secular bull is intact or giving way to a secular bear. Annualized returns have diminished, while gains and duration still more consistent with secular bear. Persistent and broadening advance would indicate re-assertive secular bull.
Ned Davis Research | Equities | Global Focus | WeeklyReal rates and market implications
There may be a limit as to how far real yields can fall. If nominal yields are implicitly or explicitly capped by the Fed and real yields don't fall much further, then inflation expectations will flatten out. If real yields stop falling and the dollar stabilizes, gold could lose a bullish support.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyAs S&P approaches record, what's next?
An S&P 500 record high in the near term would be quickest reversal from a 30% decline on record. A rotation from Growth to Value could result in more modest gains in cap-weighted benchmarks. A broader rally could require money coming off the sidelines. If not, the cyclical bull could be shorter than average.
Ned Davis Research | Equities | U.S. Focus | WeeklyConsumer price inflation re-emerges
CPI spikes in July, but annual inflation still limited and below Fed's target. Commercial real estate conditions challenging, but 12-month outlook more positive. Mortgage applications up, as housing demand strengthens.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyConsumer price inflation re-emerges
CPI spikes in July, but annual inflation still limited and below Fed's target. Commercial real estate conditions challenging, but 12-month outlook more positive. Mortgage applications up, as housing demand strengthens.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyThis time is different?
Stock market relative to GDP is at a record high. NYSE median P/E is at a record high. Both domestic and global mutual funds' cash are at record lows. But, there are some offsets.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklySmall business optimism pulls back
NFIB index slips on re-emerging worries about the economy and sales growth. Producer prices jump in July, but annual inflation still minimal. Weekly retail sales remain soft.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailySmall business optimism pulls back
NFIB index slips on re-emerging worries about the economy and sales growth. Producer prices jump in July, but annual inflation still minimal. Weekly retail sales remain soft.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyCan the U.S. have negative yields without the Fed?
The FOMC is not interested in pursuing a negative policy rate. Yet, the market continues to price in that possibility. Yields could go negative if foreign investors bought Treasurys that yielded more than comparable overseas maturities after hedging the currency risk.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyOil: Total Petroleum Model turns bullish
Our Total Petroleum Inventory Model flipped onto a buy signal last week. For now, we are discounting the signal due to the abnormal macro backdrop. We remain neutral crude oil for now.
Ned Davis Research | Energy | Focus | MonthlyEmployment trends moderate
ETI up again in July, but by less than in the prior two months. Labor demand still subdued. OECD U.S. CLI shows continued recovery from the pandemic shutdown.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyEmployment trends moderate
ETI up again in July, but by less than in the prior two months. Labor demand still subdued. OECD U.S. CLI shows continued recovery from the pandemic shutdown.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyThe complicated weight of the trend evidence
Trend evidence for S&P 500 and Super Seven stocks leans bullish. But, other markets are really still on the defense. And Big Mo Tape and NDR Supply and Demand are mildly positive.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyWhere the U.S. economy stands in Q2 2020
We analyze 12 sub-cycles and the overall cycle. The recession likely ended in Q2, with several sub-cycles moving to expansion, helped by large monetary and fiscal support.
Ned Davis Research | Economics | U.S. Economics Cycle Snapshot | QuarterlyWhere the U.S. economy stands in Q2 2020
We analyze 12 sub-cycles and the overall cycle. The recession likely ended in Q2, with several sub-cycles moving to expansion, helped by large monetary and fiscal support.
Ned Davis Research | Economics | U.S. Economics Cycle Snapshot | QuarterlyJobs recovery continues
Despite labor market improvement in July, a deep hole remains. Fed to stay accommodative for a long time. Majority of job gains came from leisure/hospitality and retail industries, primarily part-time and lower paying jobs. Used car demand strengthened further.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyJobs recovery continues
Despite labor market improvement in July, a deep hole remains. Fed to stay accommodative for a long time. Majority of job gains came from leisure/hospitality and retail industries, primarily part-time and lower paying jobs. Used car demand strengthened further.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyRecord bullish surprises on economy but...
The economy has soared following Leading/Coincident buy in April. Record number of upside economic surprises, record existing home prices, and record three-month surge in retail sales - thanks to boom in money supply and government spending. But, bank lending standards are tighter and organic income growth is poor.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyGlobal breadth and valuation concerns
Global market rally has been losing breadth support. August has tended to be a negative month during past 10 years. Equity valuations at new extremes in absolute terms, worsening relative to bonds, and now negative on a growth-adjusted basis.
Ned Davis Research | Equities | Global Focus | WeeklyThe global economy finally expands!
The global composite PMI reported its first expansion since the COVID crisis started. Although the worst of the recession is likely behind us, cracks in the data suggest a rocky recovery. Economies that have been more successful containing COVID have generally recovered faster.
Ned Davis Research | Economics | Global Focus | WeeklyInitial jobless claims recede
Initial jobless claims decline, but level still nearly double what it was during the GFC. Consumer comfort picks up.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyInitial jobless claims recede
Initial jobless claims decline, but level still nearly double what it was during the GFC. Consumer comfort picks up.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyMonthly sector update - August 2020
July was the first month since March that sector leadership skewed more toward risk-off than risk-on. While our sector model didn't make any recommendation changes in July, its allocation shifted more defensive. We will likely move to get our exposure more in line with the model in the coming weeks.
Ned Davis Research | Equities | U.S. Sector & Industry Focus | WeeklyReinstating the European peripheral debt trade
Upgrading European peripheral debt to overweight from marketweight. Significant monetary and fiscal support should help peripheral debt outperform in the near-term. Overweight European IG corporates, as part of a broader global call.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyContested elections
Markets not knowing the president by the following morning are rare, but not unprecedented. The stock market has tended to be weak when the election has been in doubt. A video summary of our 2020 election handbook report can be found here.
Ned Davis Research | Equities | U.S. Focus | WeeklyISM services activity improves further
The ISM NMI shows services activity strengthened in early Q3. But the recovery in ADP payrolls slowed dramatically. Trade deficit narrowed in June. Trade flow trends still negative.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyISM services activity improves further
The ISM NMI shows services activity strengthened in early Q3. But the recovery in ADP payrolls slowed dramatically. Trade deficit narrowed in June. Trade flow trends still negative.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyJuly sentiment/valuation update
Absolute valuations indicate the market is overvalued, but relative valuations look better. Margin debt jumps and advisory service sentiment is excessively optimistic. Consumer Confidence is neutral.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyFactory orders rise
Factory orders rise for a second month in June, indicating some revival in capex demand. Vehicle sales continue to recover. NYC services activity improves, but outlook sours. Weekly retail sales still soft.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyFactory orders rise
Factory orders rise for a second month in June, indicating some revival in capex demand. Vehicle sales continue to recover. NYC services activity improves, but outlook sours. Weekly retail sales still soft.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyEuropean sectors - will winners keep on winning?
Clear industry winners and losers in the post-pandemic world compounding secular trends Industry and sector trends often unfold over years Based on price and earnings momentum, Technology is our favourite sector, and we would avoid Energy We are constructive on the Household and Personal Products industries but cautious on Banks
Ned Davis Research | Equities | Global Focus | WeeklyPolicy trumps history
Increasing bond exposure to 110% of benchmark duration from 100%. Closing out curve steepener, as long-term rates likely to remain subdued. Moving investment grade credit to overweight, as outperformance continues.
Ned Davis Research | Fixed Income | Focus | Bi-WeeklyRevisiting the outlook for U.S. commercial real estate
In Q2, commercial real estate returns suffered their biggest loss since Q4 2009, led by Hotels. Continue to overweight Industrials and underweight Retail. We're not willing to write-off all commercial office space, and not panicking on multifamily. A broader rent assistance program for households and businesses may be needed to avoid lasting damage to large swaths of CRE.
Ned Davis Research | Economics | U.S. Focus | MonthlyETF Model increases stock allocation
Top-level model giving 86% allocation to stocks. U.S. Growth, U.S. Large Caps, and Emerging Markets received more than two-thirds of the allocation. The stock/bond relative strength indicator now supports stocks, but the global equity breadth indicator flashed a new signal favoring bonds.
Ned Davis Research | ETF Selection | Model Update | MonthlyISM factory activity continues to recover
ISM Manufacturing Index best since March 2019. Shows broadening recovery, but employment still weak. Construction spending weaker than expected.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyISM factory activity continues to recover
ISM Manufacturing Index best since March 2019. Shows broadening recovery, but employment still weak. Construction spending weaker than expected.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailyThe Super Seven and TINA
The stock market (S&P 500) has not done much this year, but the Super Seven have soared. They now would be at a huge weighting compared to S&P 500 with high valuation multiples. They look a lot like our bubble composite. Except for super stocks, the rest of the stock market has underperformed bonds and gold over the last two and a half years.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyPersonal income falls in June, but spending still up
Personal income falls as government support eases, but spending still up, driven by pent-up demand. A decline in consumer sentiment puts the economic recovery at risk. Employment costs ease in Q2, driven by lower compensation in services. Regional factory activity continues to improve in early Q3.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailyPersonal income falls in June, but spending still up
Personal income falls as government support eases, but spending still up, driven by pent-up demand. A decline in consumer sentiment puts the economic recovery at risk. Employment costs ease in Q2, driven by lower compensation in services. Regional factory activity continues to improve in early Q3.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailySquare root economy and more on the dollar
Unemployment claims plunge and retail sales soar. But they appear to have leveled out, which combined with low inflation will keep the Fed friendly. Real U.S. interest rates are below foreign rates, which puts pressure on the dollar.
Ned Davis Research | Ned's Insights | Institutional Hotline | 3X WeeklyEuro leads as dollar bleeds
Gold records confirmed by strengthened dollar downtrend, fueled by euro recovery. Within long-term trends, reversal chances supported by extreme sentiment. Focused on composites, deficits, economic influences, yield differentials, and secular comparisons.
Ned Davis Research | Equities | Global Focus | WeeklySteep decline in Q2 real GDP, but income soars
The COVID-ravaged U.S. economy shrank at a record pace in Q2, with most components falling at double-digit rates. Initial jobless claims rise for a second straight week. Consumer comfort backtracks.
Ned Davis Research | Economics | U.S. Daily Economic Perspectives | DailySteep decline in Q2 real GDP, but income soars
The COVID-ravaged U.S. economy shrank at a record pace in Q2, with most components falling at double-digit rates. Initial jobless claims rise for a second straight week. Consumer comfort backtracks.
Ned Davis Research | Economics | U.S. Daily Perspectives NL | DailySector allocation during Covid limbo
With hopes of a V-shaped recovery dashed, rates and the U.S. dollar have taken center stage. A weak dollar and declining Treasury yields have historically favored Growth sectors and Materials. We may soon downgrade Financials and upgrade Materials and/or Health Care.
Ned Davis Research | Equities | U.S. Sector & Industry Focus | Weekly