Public Publication Content

Recent Publications

Utilities drag industrial production down

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Industrial production fell at yearend. But manufacturing rose. Should get a boost in 2020 from trade deal. Housing starts surged at yearend. Trends bode well for residential investment growth in 2020. Consumer sentiment stable. Supports an outlook for steady spending growth this year.

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

Utilities drag industrial production down

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Industrial production fell at yearend. But manufacturing rose. Should get a boost in 2020 from trade deal. Housing starts surged at yearend. Trends bode well for residential investment growth in 2020. Consumer sentiment stable. Supports an outlook for steady spending growth this year.

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

Some interesting macro charts

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Population growth continues to fall and core capital goods orders are weak. ISM New Orders and Ifo World Climate Index are weak. But CEO confidence, trade deficit, and ISM composite improve.

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

Signs of complacency

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SPY hasn't had a 1% down days since early October. Short-term sentiment is reversing from an 18-month high. Reflationary narrative may be tested with crude and rates showing weakness.

Ned Davis Research | ETF Selection | Highlights | Weekly

Shifting toward cyclical growth

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Consumer Discretionary up to marketweight, Real Estate and Consumer Staples to underweight. Health Care, Com Services, and Technology now 150+ bps above benchmark. Strong Nasdaq 100 performance highlights investors' preference for Growth stocks in tech and consumer-related industries.

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

Dangerous concentration and complacency

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Increasingly concentrated advance with lack of broad market confirmation. As megacaps in Tech sector and U.S. have dominated, their valuations have worsened in both absolute and relative terms. Earnings optimism and complacent sentiment leaves equities vulnerable if fundamental and macro data fail to meet expectations.

Ned Davis Research | Equities | Global Focus | Weekly

Broad-based signs of economic recovery

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The global economy is showing its most decisive signs of improvement in over two years. This is supported by aggregate measures as well as rising global breadth. Our analysis implies an end to the global slowdown in the first half of this year.

Ned Davis Research | Economics | Global Focus | Weekly

Steady growth in retail sales

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Retail sales maintain a steady pace amid tight labor markets and high consumer confidence. Builder confidence still near highest since 1999. Implies a pickup in housing starts. Philly Fed manufacturing strengthens.

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

Steady growth in retail sales

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Retail sales maintain a steady pace amid tight labor markets and high consumer confidence. Builder confidence still near highest since 1999. Implies a pickup in housing starts. Philly Fed manufacturing strengthens.

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

The tenth rule

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Our 3 key rules are: Don't fight the tape, Don't fight the Fed, and Beware of the crowd at extremes. There are six additional, but less familiar, rules that are also important. I added a 10th rule - Don't fight the government, which is becoming increasingly important in determining economic performance.

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

Producer price inflation weak

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Subdued PPI and CPI inflation pressures suggest no change in Fed policy. Empire manufacturing activity stuck in low gear. Mortgage applications surge, reflecting strong housing demand at the start of 2020.

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

Producer price inflation weak

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Subdued PPI and CPI inflation pressures suggest no change in Fed policy. Empire manufacturing activity stuck in low gear. Mortgage applications surge, reflecting strong housing demand at the start of 2020.

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

Stock sentiment, long-term to short-term

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Most cyclical sentiment indicators are very stretched. But, there are a few contrary signs. Short-term sentiment extremely optimistic.

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

The changing nature of consumer spending

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Tight labor markets, high consumer confidence, favorable credit conditions, and a wealth effect support a positive outlook for PCE growth in 2020. Consumers are spending less on goods and more on services, e.g., health care, which smoothes the economic cycle. Increase in government transfers, e.g., retirement income, aids in income and spending predictability.

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

Consumer price inflation remains subdued

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CPI inflation up only slightly. Small business optimism declines at yearend, but still elevated. Budget deficit continues to expand.

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

Consumer price inflation remains subdued

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CPI inflation up only slightly. Small business optimism declines at yearend, but still elevated. Budget deficit continues to expand.

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

Large-cap Growth leads market to new highs

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Aligning with our models, we are shifting our tactical recommendation back to Growth over Value from neutral. Broad market breadth is bullish, with small-caps a weak spot. We are raising our yearend 2020 S&P 500 target to 3425 from 3325.

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

What matters most for macro?

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QE and global liquidity pushing risk assets higher. We introduce new indicators and charts on security purchases and bank credit for the Fed, ECB, and BOJ. We provide an update on repo and the Fed's asset purchases.

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

Oil - False breakout?

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In the months since our September upgrade, hedge funds have covered shorts and the U.S. has taken out Iranian General Qasem Soleimani. Despite the bullish catalysts, oil is flat. We remain bullish, but skeptical of the recent breakout.

Ned Davis Research | Commodities | Focus | Monthly

Employment trends slow

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ETI points to continued, albeit moderate, job creation ahead. OECD U.S. CLI suggests economic prospects are looking up.

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

Employment trends slow

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ETI points to continued, albeit moderate, job creation ahead. OECD U.S. CLI suggests economic prospects are looking up.

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

Large-Cap Growth Dominance Continues

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19-year high for Russell 1000 Growth (IWF) relative to global equities. Significant new relative strength lows for Large-Cap Value (VLV), Mid-Caps (IJH), Small-Caps (IJR), and European equities (EZU).

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

Volume precedes price

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Volume demand is well above volume supply. Volume demand usually peaks before prices. Double digit hypothetical gains when volume demand is above volume supply.

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

Jobs growth returning to trend

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Jobs machine slowing, as pool of available labor is drying up. Wage growth surprisingly weakens. We expect no change in monetary policy.

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

Jobs growth returning to trend

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Jobs machine slowing, as pool of available labor is drying up. Wage growth surprisingly weakens. We expect no change in monetary policy.

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

Again like the early '90s ... but which part?

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Watching for indicators to confirm a sustainable global market advance, like in 1993. Recognize excessive optimism, stretched valuations, and less favorable equal-weighted perspective. Watch oil prices and their correlations to market; also dollar, gold and emerging markets.

Ned Davis Research | Equities | Global Focus | Weekly

Signs of stabilization at home and globally

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The economy clearly weakened during 2019. But, there were signs of stabilization late in the year. I am still waiting for more data to turn positive on growth rates.

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

Consumer comfort highest since 2000

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Rising consumer comfort supports a positive outlook for spending growth in 2020. Jobless claims decline, as labor market remains tight.

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

Consumer comfort highest since 2000

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Rising consumer comfort supports a positive outlook for spending growth in 2020. Jobless claims decline, as labor market remains tight.

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

Macro drivers and risks

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Four fundamental drivers largely explained last decade's performance: inflation, economic growth, demographics, and technological change. These four factors will continue to be felt in the new decade. The biggest macro risks are geopolitical, U.S. politics, inflation, asset bubbles, and disruption of technology.

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

Signs of life in Europe?

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After two years of deteriorating momentum, we are beginning to observe signs that economy may be carving out a bottom. The recent data improvement has been associated with stronger equity market performance and higher bund yields. Despite these pieces of good news, we wouldn't get too excited about sustained upside in the eurozone.

Ned Davis Research | Economics | Global Focus | Weekly

ADP private payrolls jump at yearend

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ADP payrolls stronger in December, but hiring trend still moderates amid tight labor market conditions. Mortgage applications rise. Used vehicle prices normalize, which could add to CPI inflation this year.

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

ADP private payrolls jump at yearend

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ADP payrolls stronger in December, but hiring trend still moderates amid tight labor market conditions. Mortgage applications rise. Used vehicle prices normalize, which could add to CPI inflation this year.

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

Estimated 2019 ending valuations

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S&P 500 price/earnings ratios are well above "fair value." But P/E looks relatively worse using overall profits. Price/sales are at record highs.

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

Monthly sector update - January 2020

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Both cyclical Energy and Technology, as well as defensive Health Care and Utilities outperformed in December. We saw a bias toward global over domestic in sector performance. Holiday sales were better than expected, and we will likely lift our Discretionary underweight soon.

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

ISM services activity strengthens

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Firmer ISM services activity offsets manufacturing weakness. CEO confidence improves, but trend still implies weak capex growth in 2020. Light vehicle sales miss expectations. Trade deficit shrinks.

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

ISM services activity strengthens

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Firmer ISM services activity offsets manufacturing weakness. CEO confidence improves, but trend still implies weak capex growth in 2020. Light vehicle sales miss expectations. Trade deficit shrinks.

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

Global bond market outlook for 2020

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Yields range-bound to modestly higher. We remain focused on Europe, particularly Germany. High bar for policy change at the major central banks over the intermediate-term. Should see some steepening of global yield curves. Credit should remain well-supported and spreads tight.

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

Charts of the decade: 15 charts that tell the story of the 2010s

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Stocks outperformed other asset classes, with the S&P 500 never experiencing a 20% drawdown. The U.S. economy went the entire decade without a recession for the first time on record. Underpinning it all were central banks by keeping rates low and balance sheets large.

Ned Davis Research | Special Report | Mixed

Gold is shining

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Iranian conflict helped push gold prices (GLD) to a six-year high. TIPS (TIP) and Muni Bonds (MUB) made new all-time highs on a total return basis. On a relative basis, growth (MGK) is breaking out and value (IWD) is breaking down.

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

My technical look at global trends

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Global Big Mo Tape leans bullish. Most global markets have rising 200-day averages. Intermediate-term trends lean bullish as well. Emerging market trends are mixed to higher.

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

Manufacturing contraction deepens

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ISM Manufacturing Index drops to lowest level since June 2009. Construction spending up, led by public projects and housing. NYC services activity declines steeply.

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

Manufacturing contraction deepens

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ISM Manufacturing Index drops to lowest level since June 2009. Construction spending up, led by public projects and housing. NYC services activity declines steeply.

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

Global manufacturing ends the year positive

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The latest global manufacturing PMIs continue to suggest a modest recovery in the global economy in early 2020. The recovery broadened while leading indicators point to a more upbeat outlook. Asia is showing signs of life, the U.S. continues to expand, while conditions in Europe deteriorated.

Ned Davis Research | Economics | Global Focus | Weekly

A look at corporate debt

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Corporate debt for stock purchases leverages balance sheets. Corporate debt to GDP is at record highs. Yet, debt service is reasonably low. And, Joe Kalish and Ed Clissold are not very concerned.

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

Benchmark Review: Asset classes reflate!

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Easy monetary policies led to the strongest cross-asset class gains since 2009. The S&P 500 posted its biggest gain since 2013 and second-best year since 2000. All nine Russell style boxes gained at least 20% in 2019. All seven major regions and 10/11 sectors gained at least 10%.

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

Sector stories of the decade

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We believe the story of sectors for the decade can be told in two halves. The first half (2010-2014) was driven by consumer and broad capital spending. The second half (2015-2019) was driven by consumer and more narrow intellectual property capital spending.

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

After lopsided year, keep watching the flows

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Record highs in bond inflows relative to stock inflows. Cyclical caution for stocks, but secular potential. More secular risk for bonds. Watch rising inflows to emerging markets and gold.

Ned Davis Research | Equities | Global Focus | Weekly

Markit U.S. manufacturing PMI off slightly

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Factory activity recovers at a slightly slower pace. Layoffs and jobless claims show labor market remains tight. Consumer comfort up, supporting a positive outlook for spending growth in 2020.

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

Markit U.S. manufacturing PMI off slightly

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Factory activity recovers at a slightly slower pace. Layoffs and jobless claims show labor market remains tight. Consumer comfort up, supporting a positive outlook for spending growth in 2020.

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

Consumer confidence still elevated

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High consumer confidence suggests consumer spending will continue to drive economic growth in 2020. Fewer states projected to expand in 1H 2020, but national economy still edging up. Existing home prices firming.

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

Consumer confidence still elevated

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High consumer confidence suggests consumer spending will continue to drive economic growth in 2020. Fewer states projected to expand in 1H 2020, but national economy still edging up. Existing home prices firming.

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

Bond demand - a key factor for 2020

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Demand could remain strong, offsetting some marginally negative fundamentals. Demand has been broad-based, including households, banks, and foreign investors. Despite increased Treasury issuance, bid/cover ratios have firmed.

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

20/20 hindsight on 2018 to 2019

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Sentiment was extremely optimistic in January 2018. But shifted to extreme pessimism in December 2018. That was followed by a breadth thrust in January 2019. Should have gone bullish, rather than shift from cautious to neutral.

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

ETF Model adding EM exposure

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Asset allocation holds steady at 58% equities and 42% bonds. Model is recommending exposure to Emerging Markets (IEMG) for the first time in seven months. Intra-bond allocation getting more aggressive with High Yield and EM debt getting the heaviest weighting.

Ned Davis Research | ETF Selection | Model Update | Monthly

Regional factory activity still struggling

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Four of six regional manufacturing indexes show contraction. Pending home sales rebound on solid household fundamentals. Goods trade deficit shrinks to a three-year low. Net exports expected to boost Q4 GDP growth.

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

Regional factory activity still struggling

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Four of six regional manufacturing indexes show contraction. Pending home sales rebound on solid household fundamentals. Goods trade deficit shrinks to a three-year low. Net exports expected to boost Q4 GDP growth.

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

Reflationary Tailwinds

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Brazil (EWZ), China (MCHI), Materials (VAW), Commodities (DBC), and the U.K. (EWU) all broke to significant new highs last week. Bonds (AGG) closed the week at a 100-week low relative to global equities. High dividend funds (VYM, SDY) are exhibiting relative weakness.

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

Oil - Hedge funds reverse course

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Closing out the year, we remain officially bullish on crude oil However, the bull case is weakening. Hedge funds have swung from excessive bearishness to excessive bullishness.

Ned Davis Research | Commodities | Focus | Monthly

Proof is in the price

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Big Mo Tape says most stock prices are rising. Compare with macro - prices say little change in macro supply/demand from a year earlier. But, Fed tightening has turned to Fed easing. Watch metals prices to confirm any global green shoots.

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

Philly Fed state coincident indexes recover

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State coincident indexes pick up, confirming low risk of U.S. recession. Jobless claims fall and consumer comfort rise, supporting strength of the consumer.

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

Philly Fed state coincident indexes recover

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State coincident indexes pick up, confirming low risk of U.S. recession. Jobless claims fall and consumer comfort rise, supporting strength of the consumer.

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

Need more saving and investment for growth

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Negative interest rates may help borrowers, but they hurt savers. More aggregate consumption is not always a great thing when at excessive levels. More government spending is not always great, especially when excessive. Higher savings leads to higher investment, which leads to higher GDP.

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

Richmond manufacturing contracts again

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Weaker Richmond manufacturing adds to evidence of slow factory activity nationwide at yearend. Weekly retail sales close to trend.

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

Richmond manufacturing contracts again

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Weaker Richmond manufacturing adds to evidence of slow factory activity nationwide at yearend. Weekly retail sales close to trend.

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

Style rotation acting like Growth secular bull

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Growth/Value performance since September's violent rotation is consistent with a Growth secular bull. Our models are mixed, so our tactical Growth/Value call remains neutral. The magnitude of any global economic rebound should determine when our tactical call returns to Growth.

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

Switching to cash position and earnings growth

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Replacing shareholder yield and accruals ratio with cash position and EPS growth/stability Select companies based on free cash flow yield, cash position, price momentum, EPS growth/stability, and earnings revisions Favored stocks include: Microsoft, Facebook, Visa, Adobe, Nvidia, Morgan Stanley

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

Sector and gold sentiment

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Both Energy and Financials are historically underweight. Both Retail and Real Estate are historically overweight. Gold sentiment getting pessimistic short-term and mining stocks underweight long-term.

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

Durable goods orders sag

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Durable goods orders fall, led by defense aircraft. Manufacturing sector remains mired in a downturn. But CFNAI suggests growth in the broader economy recovered in November. New home sales trend picks up to best level since 2007, amid low mortgage rates and a strong labor market.

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

Durable goods orders sag

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Durable goods orders fall, led by defense aircraft. Manufacturing sector remains mired in a downturn. But CFNAI suggests growth in the broader economy recovered in November. New home sales trend picks up to best level since 2007, amid low mortgage rates and a strong labor market.

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

Increasing interest in Emerging Markets

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$3.5 billion flowed into the two largest iShares Emerging Markets equity ETFs (IEMG, EEM) in the past month. On a total return basis, Emerging Markets bonds (EMB) made a new all-time high. Brazilian equities (EWZ) closed the week at a five-year high.

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

2020 strategy

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Big Mo Tape is bullish. But, trend looks pretty mature. The Fed is very friendly, which is hard to fight for bears. But valuations are quite high, which should concern bulls.

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

It's all about the consumer

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Personal income and spending rise nicely. PCE inflation remains below the Fed's 2.0% target. Consumer sentiment strengthens to a seven-month high. Q3 real GDP steady, but profits revised down.

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

It's all about the consumer

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Personal income and spending rise nicely. PCE inflation remains below the Fed's 2.0% target. Consumer sentiment strengthens to a seven-month high. Q3 real GDP steady, but profits revised down.

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

Combining macro with valuations

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Unemployment rate is very low. Core inflation is relatively low. Do they suggest higher valuations?

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

Too far, too fast for SPY?

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S&P 500 is up 10% over the past 50 market days. Largest drawdown in the 50 days prior to the rally was 5.97%. Double-digit gains over 50 days typically follow larger drawdowns. The market was down in the six months after the last five rallies similar to the current one.

Ned Davis Research | ETF Selection | Highlights | Weekly

LEI still points to slower growth ahead

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Leading indicators suggest slower economic growth in 1H 2020. Housing inventory shortage hampers home sales in November. Philly Fed factory activity stalls. Jobless claims and consumer comfort trends bode well for consumer spending growth.

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

LEI still points to slower growth ahead

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Leading indicators suggest slower economic growth in 1H 2020. Housing inventory shortage hampers home sales in November. Philly Fed factory activity stalls. Jobless claims and consumer comfort trends bode well for consumer spending growth.

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

Bearish dollar signs - bullish for gold

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Indicators more negative for U.S. dollar, positive for gold. Contrasting outlooks supported by price, interest rate, sentiment and deficit trends. Emerging market currencies would stand to benefit most from broadening economic growth.

Ned Davis Research | Equities | Global Focus | Weekly

Millennials are (still) buying homes

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The demographic tailwind for entry-level housing remains. Slowing Building Materials & Garden Supply retail sales should be temporary. We remain long-term bullish on home-related industries with exposure to first-time homebuyers and remodel markets.

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

U.S. sector positioning in 2020

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Remain overweight securitized debt and particularly favor residential mortgages. Agency MBS remains the best relative value in the U.S. universe. Maintain overweights in CMBS and ABS. Continue to favor TIPS over nominal Treasurys due to favorable valuations and risk of higher inflation. Munis are attractive for investors in high tax brackets.

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

All I want for Christmas is Boris Johnson?

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Boris Johnson's landslide Tory Party victory was welcomed by markets. But the risk of a hard Brexit is still not off the table, as well as even greater consequences. Despite the exit not being official, the economy has suffered since the 2016 vote.

Ned Davis Research | Economics | Global Focus | Weekly

Architecture billings trend up

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Architecture billings trend suggests stronger nonresidential construction spending in 2H 2020. Mortgage apps slip, but longer-term trend shows solid housing demand.

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

Architecture billings trend up

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Architecture billings trend suggests stronger nonresidential construction spending in 2H 2020. Mortgage apps slip, but longer-term trend shows solid housing demand.

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

Q3 2019 quarterly asset allocation update

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Households, foreigners, and institutions continue to be overweight stocks, while underweight cash. This supports the argument that this bull market is in the mature phase, and future stock returns may be lower. This has been offset by heavy corporate buying, which has continued to propel the market.

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

Select companies with growing cash positions

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Companies with growing cash holdings outperform when earnings growth negative. Complement cash growth with lower accruals ratio, greater shareholder yield, and higher sales yield. Favored Stocks Include: Fiat Chrysler, Deutsche Post, LafargeHolcim, UPM-Kymmene, Veolia Environment, WPP, Associated British Foods.

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

The case for P/E contraction in 2020

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The S&P 500 median P/E has centered around +1 standard deviation above the long-term median since the financial crisis. When EPS has accelerated, P/Es have tended to fall. When the dollar has weakened, P/Es have tended to fall.

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

Trade deal may lead to higher food prices

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The phase-one U.S./China trade deal reduces trade uncertainty and creates an upward risk to our growth and inflation outlooks. But many tariffs (machinery and intermediate goods) remain in place, which is negative for capex. The massive increase in agricultural exports to China could lead to higher food prices.

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

Industrial production rebounds

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Industrial production rebounds on vehicle output surge, after the end of the GM strike. Housing starts and permits rise, supporting a positive outlook for GDP growth. JOLTS show labor market still tight.

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

Industrial production rebounds

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Industrial production rebounds on vehicle output surge, after the end of the GM strike. Housing starts and permits rise, supporting a positive outlook for GDP growth. JOLTS show labor market still tight.

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

High Yield and Credit Outlook for 2020

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We remain marketweight on credit and continue to favor investment grade over high yield. Within investment grade we prefer BBBs. Valuation concerns and deteriorating fundamentals have weighed on the outlook. Other factors, including liquidity and technicals, remain positive. To upgrade high yield we would probably need to see an upside yield breakout.

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

The best energy play for 2020?

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IMO 2020 is the catalyst that could send oil tanking stocks much higher. We list our favorite energy plays for 2020.

Ned Davis Research | Commodities | Focus | Monthly

Catch up time for EAFE and EM

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EAFE and Emerging Markets both broke through significant resistance levels last week. REITS are exhibiting relative weakness, which is weighing on mid-caps. 10th straight week of equity inflows.

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

Markit U.S. flash PMIs show stronger services activity

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Services PMI up, but Manufacturing PMI off slightly. U.S. economy set for continued moderate growth in 2020. Builder confidence surges to a 20-year high, boosting the outlook for housing starts. Empire manufacturing activity sluggish.

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

Markit U.S. flash PMIs show stronger services activity

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Services PMI up, but Manufacturing PMI off slightly. U.S. economy set for continued moderate growth in 2020. Builder confidence surges to a 20-year high, boosting the outlook for housing starts. Empire manufacturing activity sluggish.

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

Moving averages composite leans bullish

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Three of four stock market averages are rated bullish. Three interest rate indicators are bullish. Crude oil above moving average can be a negative.

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

Retail sales disappoint

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Retail sales rise less than expected in November, but still show underlying consumer strength. CEO confidence lowest in three years. But trade deals could lift the outlook. Import prices rise slightly on higher fuel costs.

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

Retail sales disappoint

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Retail sales rise less than expected in November, but still show underlying consumer strength. CEO confidence lowest in three years. But trade deals could lift the outlook. Import prices rise slightly on higher fuel costs.

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

Valuations stretched, margin growth slowing

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Market valuations have worsened and profit margins have been shrinking. Relatively expensive U.S. market would be likely to lead a decline. Relatively cheap Emerging Markets Index would be likely to lead a sustainable advance.

Ned Davis Research | Equities | Global Focus | Weekly

Q3 2019 quarterly debt and savings update

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U.S. debt is still relatively high, although it has been improving. Net national savings is still too low. Non-financial corporate and global debt are particularly concerning. Debt service is still relatively low with household debt service at a record low, helped by the recent rate cuts.

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

ETF ideas based on our 2020 Outlook

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NDR expects an end to the global slowdown with stocks outperforming bonds. Political risk has been priced into a number of industries. Look for outperformance from Biotech (IBB), Health Care Services (IHF), Oil, Gas & Consumable Fuels (XOP), and Banks (KBE).

Ned Davis Research | ETF Selection | Highlights | Weekly

What industries tell us about the 2020 election

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Performance of industries impacted by Elizabeth Warren policies could indicate her chances of winning. Health Care often outperforms/underperforms prior to an election when the incumbent wins/loses. Health Care, Energy, and Financials likely have the most political risk priced in, but we see this as a buying opportunity.

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

Producer price inflation weak

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PPI inflation near lowest in three years. Lack of pipeline pressures suggests it will remain low in the near-term. Jobless claims spike to a two-year high, due to holiday volatility. Labor market still strong. Consumer comfort up, pointing to solid consumer spending this holiday season.

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

Producer price inflation weak

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PPI inflation near lowest in three years. Lack of pipeline pressures suggests it will remain low in the near-term. Jobless claims spike to a two-year high, due to holiday volatility. Labor market still strong. Consumer comfort up, pointing to solid consumer spending this holiday season.

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

If the Fed remains on hold, will other central banks follow?

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Historical analysis shows that if the Fed remains on hold after three cuts, short-term interest rates outside of the U.S. still continue to fall up to a year later. This suggests that the tailwind of easy monetary policy will likely persist well into 2020. But a stronger dollar, higher food prices, and exhausted central bank options could make this time different.

Ned Davis Research | Economics | Global Focus | Weekly

FOMC participants still have a hiking bias

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Fed lowers projections for unemployment rate but not for inflation. Yet, dot plot moves gradually higher in 2021 and 2022. This apparent disconnect suggests we should ditch the dot plot. Fed not taking additional actions to address potential problems in funding markets at yearend.

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

CPI inflation up slightly

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Modest uptick in inflation. Suggests no change in Fed policy at this time. CFO optimism rebounds, but recession fears still dominate. Service sector revenues continue to advance, supporting the ongoing expansion.

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

CPI inflation up slightly

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Modest uptick in inflation. Suggests no change in Fed policy at this time. CFO optimism rebounds, but recession fears still dominate. Service sector revenues continue to advance, supporting the ongoing expansion.

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

Three leadership trends update

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Clear uptrends by high-beta areas would support the case for an upgrade of our U.S. equity outlook. They have not confirmed at this time. Small-cap/large-cap and Low Quality/High Quality ratios are close to establishing uptrends. Dividend Non-Payers have underperformed Payers recently.

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

Cyclical valuations and sentiment extended

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Median institutional grade common stock has a P/E of 26.3. S&P 500 price/sales is in rare high territory. NDR crowd sentiment poll got to 69.4% bulls.

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

Small business optimism jumps

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NFIB small business optimism rises on strong sales growth. Trend bodes well for economic activity in early 2020. Q3 productivity weak. ULC revised down. But tight labor market creates an upside risk for ULC and inflation in 2020.

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

Small business optimism jumps

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NFIB small business optimism rises on strong sales growth. Trend bodes well for economic activity in early 2020. Q3 productivity weak. ULC revised down. But tight labor market creates an upside risk for ULC and inflation in 2020.

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

EAFE grinding higher

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9th consecutive week of equity ETF inflows. Developed International (IEFA) is at a 96-week high. Now less than 5% below January 2018 peak. Australia (EWA) made a new one-year low relative to global equities.

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

2020 Global Outlook

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We expect better performance from global equities, rising bond yields, and increased global economic growth, with a likely stock upgrade to overweight and bond downgrade to underweight. Watch for rising oil prices, outperforming credit, steepening yield curves, emerging market outperformance, U.S. dollar weakness and gold strength. But our expectations are measured, including concerns about valuations and the unknowable impact of the trade war and other geopolitical influences.

Ned Davis Research | Special Report | Mixed

OECD U.S. CLI up slightly

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First increase in the CLI since April 2018. But the index level still suggests below-average growth ahead. Employment trends suggest solid payrolls growth in 1H 2020.

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

OECD U.S. CLI up slightly

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First increase in the CLI since April 2018. But the index level still suggests below-average growth ahead. Employment trends suggest solid payrolls growth in 1H 2020.

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

Breadth thrust update, but trend stretched

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So far this year, there were breadth thrust buys on January 9th and September 11th. But, trend appears stretched based upon long-term perspectives. Fab Five Tape gives the benefit of doubt to bulls.

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

Stunning employment report

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Strong job and wage gains and rising consumer sentiment should support consumption. The Fed can sit on its hands for a while - perhaps all though 2020.

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

Stunning employment report

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Strong job and wage gains and rising consumer sentiment should support consumption. The Fed can sit on its hands for a while - perhaps all though 2020.

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

Monthly Sector update - December 2019

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Rates and earnings revisions impacted performance. We upgraded Health Care and downgraded Consumer Discretionary. Look for us to get more cyclical soon, potentially upgrading both Technology and Financials.

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

Housing and stocks good, but other concerns

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Stocks and housing, which tend to be leading indicators, are showing strength and that is good for the economy. Yet, leading indicators composite is down for three months in a row. And the budget deficit, in the "greatest economy of all time," soars to over $1 trillion.

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

Trade deficit narrows

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Trade deficit shrinks. But falling imports may indicate weakening domestic demand. Layoff trends continue to show tight labor market conditions. Consumer comfort up. Factory orders weak y/y momentum suggests continued decline in manufacturing output.

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

Trade deficit narrows

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Trade deficit shrinks. But falling imports may indicate weakening domestic demand. Layoff trends continue to show tight labor market conditions. Consumer comfort up. Factory orders weak y/y momentum suggests continued decline in manufacturing output.

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

2020 U.S. Outlook

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Several macro cycles are converging to drive the markets in 2020, including economic, earnings, Fed/interest rates, and elections. Our base case is for the S&P 500 to rise 7%, GDP to expand 1.8%, the 10-year to move toward 2%, and oil to trend higher. Look for elections to create buying opportunities in Health Care Services, Biotechnology, Banks, and Integrated Oil.

Ned Davis Research | Special Report | Mixed

ISM services activity moderates

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Weaker services activity piles on the message of slower growth in Q4. ADP payrolls growth sputters, led by small businesses. But light vehicle sales on track for 17 million units this year, as consumer demand holds up.

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

ISM services activity moderates

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Weaker services activity piles on the message of slower growth in Q4. ADP payrolls growth sputters, led by small businesses. But light vehicle sales on track for 17 million units this year, as consumer demand holds up.

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

Cyclical sentiment historical perspective

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Price/cash flow in the top 7% of highest valuations. Price/net worth in the top 3%. Price/sales in the top 2%. Many other sentiment/valuation measures are also stretched.

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

Another repo crunch at yearend?

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The Fed needs to add about $350 billion from its September trough, or another $100 billion, to avoid another repo crunch. The Fed should have paid more attention to the usage of the RRP facility. Excess liquidity was removed by the end of Q1 2018. Banks were not the source of the repo problem - the Fed was.

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

State leading indexes deteriorate

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Growth projected to narrow across states in early 2020, but economy still not close to recession. NYC services activity improves. Weekly retail sales come short of expectations.

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

State leading indexes deteriorate

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Growth projected to narrow across states in early 2020, but economy still not close to recession. NYC services activity improves. Weekly retail sales come short of expectations.

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

Steady cash flows keep CRE attractive

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Commercial real estate remains competitive with other asset classes and relatively attractive compared with bonds. Remain overweight Industrial and underweight Retail. Prices keep climbing despite bearish sentiment. In the global hunt for yield, CRE continues to deserve a place in large, diversified portfolios.

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

Global manufacturing finally expands!

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Global manufacturing activity expanded for the first time in seven months amid reduced global risks. This adds to evidence that downside momentum in the global economy may be bottoming. Despite a deterioration in breadth, the world's largest economies continued to see improvements in manufacturing activity.

Ned Davis Research | Economics | Global Focus | Weekly

ISM manufacturing disappoints

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ISM Manufacturing Index holds below 50 for fourth straight month. Broad-based indicator weakness. But Markit U.S. Manufacturing PMI hits a seven-month high. Suggests factory activity is recovering. Construction spending declines, led by private sector.

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

ISM manufacturing disappoints

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ISM Manufacturing Index holds below 50 for fourth straight month. Broad-based indicator weakness. But Markit U.S. Manufacturing PMI hits a seven-month high. Suggests factory activity is recovering. Construction spending declines, led by private sector.

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

Model slashes international exposure

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Weakness in PMI indicator triggers a drop in equity allocation from 72% to 58%. The top-weighted fund last month, IEFA, saw its allocation cut from 22% to 4%. SPY and QQQ are now the heaviest weighted funds at 17.8% each.

Ned Davis Research | ETF Selection | Model Update | Monthly

U.S. dominance returns

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SPY made a new all-time high relative to MSCI All-Country World Index. 15-year low for Emerging Markets relative strength! New all-time highs on a total return basis for mid-caps, tech software, MTUM, and ARK Innovation ETF.

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

Trend leans bullish, but two potential warnings

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Big Mo Tape leans bullish. Yet, action since August is in line with bull market blow-off. And years ending in zero are often a problem.

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

Technology strong - an upgrade candidate

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The two largest industry groups in Technology, Hardware and Software, have outperformed since October 22. Breadth in the sector is improving, but valuation/sentiment is worsening. We will likely raise Tech's allocation when we turn more cyclical.

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

Update on inflation, employment and profits

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Despite tariffs, imported inflation continues to fall. Employment trends continue to fall suggesting lower GDP. Inflation (selling prices) are low relative to unit labor costs, which can weigh on profits.

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

Q3 real GDP revised up, but profits weaken

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Q3 GDP was revised up largely due to more inventory investment. Profits fell from a year ago. An uptick in durable goods orders suggests better capex growth in Q4. Stronger consumer comfort and jobs market bode well for yearend spending, despite a weak October.

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

Q3 real GDP revised up, but profits weaken

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Q3 GDP was revised up largely due to more inventory investment. Profits fell from a year ago. An uptick in durable goods orders suggests better capex growth in Q4. Stronger consumer comfort and jobs market bode well for yearend spending, despite a weak October.

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

Favor stocks with greater price momentum

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Favorable outlook for price momentum due to trend improvement and environmental tailwinds. Select companies based on free cash flow yield, shareholder yield, price momentum, accruals ratio, and earnings revisions. Favored stocks include: Apple, Intel, Qualcomm, S&P Global, Target, Allergan, Raytheon.

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

Fear index (VIX) as a sentiment indicator

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An extremely high VIX may be a useful buy alert indicator. Low VIX has a very mixed record. High number of VIX futures shorts may be positive for VIX, but negative for market.

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

Myth busting buybacks

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Stock issuance, including the exercising of stock options, has not increased as much as repurchases post tax cuts. Stocks with high net repurchase yields continue to outperform. Buybacks' bigger risk could come during the next recession, since they usually decline during economic downturns.

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

Consumer confidence remains elevated

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Modest downtick in consumer confidence, but level still high. Bodes well for consumer spending at yearend. New home sales continue to trend up. Strongest y/y momentum since 2013. Existing home prices up in September, reflecting firmer demand.

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

Consumer confidence remains elevated

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Modest downtick in consumer confidence, but level still high. Bodes well for consumer spending at yearend. New home sales continue to trend up. Strongest y/y momentum since 2013. Existing home prices up in September, reflecting firmer demand.

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

State of freight tempering U.S. outlook

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Declining freight volumes mostly reflect the weakness in manufacturing. It reinforces the outlook for slower growth ahead, which is already captured by other indicators. With slower shipments and sales growth, profits can increase only through cost cutting. This is a risk for jobs and wage growth in 2020.

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

More risk mitigation

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Reducing our U.S. bond exposure to 100% of benchmark duration from 105%. Taking Japan to an underweight 15% from 10%. Lowering U.K. exposure to a marketweight 5% from an overweight 10%.

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

Biotech breakout

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Biotech and Health Care funds are breaking out following disappointing starts to 2019. Small-cap and mid-cap growth funds broke to new all-time highs last week. 5 straight weeks of outflows for commodity ETFs.

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

CFNAI confirms weak start to Q4

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CFNAI consistent with below-trend growth and weak inflationary pressures. Texas factory activity contracts, but outlook improves slightly.

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

CFNAI confirms weak start to Q4

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CFNAI consistent with below-trend growth and weak inflationary pressures. Texas factory activity contracts, but outlook improves slightly.

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

Combining trend and sentiment

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Trend plus sentiment can enhance overall stock market returns. Same is true of sectors and groups. Consumer Discretionary and REITs questionable. Industrials and Financials are hopeful.

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

Lacking confidence and confirmation

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Big stocks lifted cap-weighted indices to new highs, but sentiment now reversing. Confirmation lacking from breadth indicators based on broad market, sectors and regions. Sign that markets have not gained the economic confidence needed for sustained advance.

Ned Davis Research | Equities | Global Focus | Weekly

Economic weakness across more states

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As more states weakened, U.S. growth slowed in October. But recession odds were still slim. Markit U.S. flash PMIs suggest activity re-accelerated in November. Consumer sentiment picked up, a positive sign for consumer spending at year-end.

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

Economic weakness across more states

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As more states weakened, U.S. growth slowed in October. But recession odds were still slim. Markit U.S. flash PMIs suggest activity re-accelerated in November. Consumer sentiment picked up, a positive sign for consumer spending at year-end.

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

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