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DATE

RESEARCH REPORT

30-Dec-08

Market Outlook: No Quick Fix
Our sense is that the market is predominantly looking at 2009 with an attitude of, "how can things possibly get any worse?" Accordingly, the prevailing belief is that the stock market is in store for a year of positive returns. We favor that view, although we see 2009 as a period where one will need to be more active than ever in managing investment holdings to capture outsized returns.

21-Dec-09	Market Monitor: Risk Factors We turn our attention to a number of factors that could pose a risk to the positive stock market outlook.
14-Dec-09	Market Monitor: No Risk, High Reward In our strategy meeting, we discussed why the market has stalled in recent weeks. The consensus view was that money managers simply do not want to take any undue risks right now. For managers who have outperformed their benchmark, there is no need to as a bonus payment awaits.
07-Dec-09	Market Monitor: Seeing a Split Personality The United States equity market appears to be settling down, but whether it is the pause the refreshes or the pause that regresses remains to be seen.
30-Nov-09	Market Monitor: Bonded, but Not Ensured The S&P 500 has risen nearly 70% from its March low and is on track for its eighth monthly gain in the last nine months. With a track record like that, it is easy to think money has been pouring into equity funds. Actually, it has not.
23-Nov-09	Market Monitor: A Peculiar Divergence We recently said we held a bullish short-term view that was predicated on a number of factors that included easy economic and earnings comparisons and anxious money managers fighting to catch up to performance benchmarks. The lack of a warning on asset prices, when the Federal Reserve Chairman had a chance to give one, can be added to the list.
17-Nov-09	Market Monitor: Little Has Changed Our perspective has changed very little over the past 3-5 months: This is a cyclical bull market that has a huge store of uncommitted money to pull in. Corrections will be short-lived and shallow. And the market will be broadly supported by a number of easy comparisons into year end.
10-Nov-09	Market Outlook: A Split View In general, we expect the bullish bias that has prevailed since March to persist in the near-term. This is a market, though, where few things should be taken for granted. There is an irreconcilable conflict brewing between the short-term view and the long-term outlook. The former is encouraging. The latter is not.
09-Nov-09	Market Monitor: Easy Money, Easy Rebound Once again, we have seen the market nip its losses in the bud and reclaim a good portion of lost ground in no time at all.
02-Nov-09	Market Monitor: What Comes Next? Volatility is one of the few things that looks cheap these days. That is the view we held two weeks ago. Anyone watching last week's action knows that volatility is not as cheap as it used to be.
26-Oct-09	Market Monitor: The Irony of Earnings Season You could not ask for much more as far as the third quarter earnings reporting period is concerned. Well, actually you can. Top-line growth remains deficient in most cases. From an earnings headline perspective, though, things could not be much better.
19-Oct-09	Market Monitor: Still Climbing That Wall The market remains swept up in good news stories, almost to the point of being irrational in its exuberance at times or, at the least, too Pollyannaish with its thinking. To be fair, though, there is room to feel better about things.
12-Oct-09	Market Monitor: Something Has to Give In the near-term, we continue to think the market will grind its way higher, underpinned by the same factors cited above, as well as the recognition that easy comparison periods (and arguably plenty of pleasant surprises) lie ahead in the next few quarters. The longer-term outlook is more problematic in our estimation.
05-Oct-09	Market Monitor: Follow the Leader Something peculiar is happening in the stock market. Bad economic news is actually eliciting a negative response.
28-Sep-09	Market Monitor: Cyclical Bull, Secular Bear Our emphasis remains on favoring quality names at this juncture versus chasing performance in crowded trades.
21-Sep-09	Market Monitor: Data Improves, but Market at Resistance The key positives we see are signs that the improvement in data appears to have some appreciable breadth, with production and sales picking up across the economy, rather than just in the automotive sector.
14-Sep-09	Market Monitor: A Historic Wall of Worry While it is undeniable that many longer-term obstacles sit firmly in our path, the stock market has nonetheless flown higher over recent months on clear signs that the unprecedented fiscal and monetary policy intervention measures have distinctly lowered borrowing costs, stabilized the banking system, and halted the economic "turtling" process across sectors.
08-Sep-09	Market Monitor: Take a New Aim September has a history and it is not the best history as far as the stock market is concerned. The Stock Trader's Almanac informs us that it holds the distinction of being the worst month for the stock market.
31-Aug-09	Market Monitor: Risk Aversion Lives At this stage of things, though, we are not all that enthused by what we are seeing primarily because what we are seeing is a speculative rush into high beta stocks (or into many of the garbage names if we are to use more pedestrian terms).
24-Aug-09	Market Monitor: The Shape of Things to Come? Short sellers are out of control. That is, they are out of control of the stock market, which has inflicted a lot of pain since early March, and certainly since mid-July, on participants making bearish bets.
17-Aug-09	Market Monitor: Seeing the W Through the V For us, the loss last week was not so much about the downturn as it was about the continued lack of conviction on the part of sellers.
10-Aug-09	Market Monitor: Every Rose Has Its Thorn The stock market keeps doing its thing, which is to frustrate the heck out of short sellers and to provide some comfort for long-only investors.
06-Aug-09	Market Outlook: Road Ahead Will Not Be Easy It might be true in business that the second million is easier to make than the first million, but that does not hold true for the stock market. The next 50% will be a lot harder to make than the first 50% -- and it will take a lot longer to make, too.
03-Aug-09	Market Monitor: Target Trading Range Revised Higher If you cry wolf long enough, eventually there will be a wolf. We are not crying wolf here, but we are crying for a short-term correction.
27-Jul-09	Market Monitor: A Case of Cost Cuts, Gridlock and Sentiment Happy days are here again for the stock market, yet a few months down the road we may be looking back and concluding that they were really more like delusional days.
20-Jul-09	Market Monitor: Having Trust Issues The bears were caught by surprise last week as a head-and-shoulders technical pattern in the S&P 500 that came to light with four straight losing weeks had plenty of participants thinking the worst.
13-Jul-09	Market Monitor: An Air of Uncertainty Lead, follow, or get out of the way. Right now investors seem to be getting out of the way, as incoming economic data has gotten them off the primrose path that was in full bloom throughout the spring.
26-Jun-09	Market Monitor: Stuck in a Rut The current market is a challenging one in many respects, not the least of which is the understanding that it cannot seem to make up its mind where it wants to go.
19-Jun-09	Market Monitor: The Wait Is On Things are less bad than before with the economy and earnings prospects. Recent market action (or the lack thereof), however, suggests the market is becoming more disinterested in that view, which is to say it is becoming more demanding of the headlines that drive the market.
12-Jun-09	Market Monitor: Caught Between a Rock and a Range Our belief is that the S&P will stay locked in a trading range between 825-1000.
05-Jun-09	Market Monitor: Speeding Through Potential Roadblocks Green shoots are everywhere -- or so it would seem based on the market's bullish bias that is plainly evident in rising stock prices, rising commodity prices, and rising Treasury yields. The question is do those green shoots have roots?
29-May-09	Market Monitor: A Resilient Market The month of May is over for the market and it was one of the more peculiar months of trading.
22-May-09	Market Monitor: Dollar Ship in Icy Waters "D" is for dollar and "C" is for clobbered, which is what the dollar got this past week. Put the two together and you have "DC," as in Washington, D.C., which sits at the intersection of the market's hopes and fears about the economy.
15-May-09	Market Monitor: Digging In Get it while the getting is good. That was the marching order this past week for a sizable number of companies that came to the market with secondary offerings of stock and debt.
11-May-09	Market Outlook: Time to Settle Down Since its March 6 low the S&P 500 has gained 39%. It gained 5.9% in the week of May 8th alone, as participants breathed a collective sigh of relief that the government's stress tests for the nation's 19 largest financial institutions were not as bad as feared.
08-May-09	Market Monitor: Easy Money Has Been Made The meeting of the minds in this week's Strategy Meeting did not produce a lot of new insight. The reason being is that our views were unchanged from the prior week.
01-May-09	Market Monitor: Getting Carried Away One of the stock market's indefatigable qualities is that it can rationalize anything.
24-Apr-09	Market Monitor: A Period of Wait-and-See It is not often one can say things unfolded exactly as expected, but we will go ahead and make such a claim considering that the S&P 500 closed the week less than 0.1% below where it began the week -- and that is after a 4.3% decline on Monday.
17-Apr-09	Market Monitor: Sailing Toward a Consolidation Period By and large, it can be said that the batch of reporters in the past week did not do any harm to the prevailing view that the worst of the economic slowdown and the financial crisis is behind us. Still, neither the earnings reporters nor the economic data created an impression that it is smooth sailing ahead.
09-Apr-09	Market Monitor: Shying Away from Risk Aversion The first quarter earnings reporting period is upon us and the market, reportedly, is nervous about what it might hear. As we begin here, we are going to put that report to rest.
03-Apr-09	Market Monitor: Market Finds Its Footing The market continues to confirm our view that an intermediate-term market bottom has been reached.
01-Apr-09	Market Outlook: Shaping Up, but Not Ship Shape The first quarter for the stock market was a good walk spoiled by a prevailing sense of uncertainty about the outlook. It was not the start to the new year most market participants had been hoping for. In many respects, it was the start we expected.
27-Mar-09	Market Monitor: A Shift in the Balance of Power In a dramatic reversal of fortune, the hits keep coming for short sellers as the market will log its third consecutive weekly gain, leaving it on track to record its biggest monthly percent gain since March 2000 when it jumped 9.7%.
20-Mar-09	Market Monitor: Floor of Support Has Risen In brief, we think there will now be less attention toward trying to pick the absolute bottom for this bear market and more conviction in initiating, or adding to, positions at a lower cost basis.
13-Mar-09	Market Monitor: The Return of a Rational Market John Maynard Keynes said, "The market can stay irrational longer than you can stay solvent." The good news for money managers is that the market has gotten more rational after the most painful adjustment period most have ever experienced.
06-Mar-09	Market Monitor: A Time to Accumulate Our strategy meeting this past week found us agreeing on one thing. That one thing is that an investable bottom in the stock market is close at hand.
27-Feb-09	Market Monitor: Capitol Hill Pilots Capital Flight When you have to look for direction from Washington each day, you run a heightened risk of falling victim to the over-promise, under-deliver slant.
20-Feb-09	Market Monitor: A Technical Take on Things Plenty of market observers were making note of technical levels in the past week, as key support areas were violated in a broad-based downturn led by none other than the woeful Financial sector, which plummeted 16%.
13-Feb-09	Market Monitor: Confidence Shaken, Not Stirred 007 is as smooth as they come, yet even he might have been rattled by what transpired in Washington this past week.
06-Feb-09	Market Monitor: Banking on a New Bank Recovery Plan Valentine's Day lies ahead, but the coming week should feel more like Christmas because the government is on track (we presume) to deliver some new recovery packages for the Financial sector and the U.S. economy.
30-Jan-09	Market Monitor: Stuck with Uncertainty With the month of January now complete for the stock market, we know a little more. What we do not know -- and what nobody knows for certain -- is how the rest of the year will unfold for the market. History is not kind in this respect, though.
26-Jan-09	Market Monitor: The Cheap Get Cheaper Last week was a historic one for the country with Barack Obama being inaugurated the 44th President of the United States. For the stock market, though, it was another bewildering week that was governed with a sense of uncertainty about the Financial sector and the timing of an economic recovery.
16-Jan-09	Market Monitor: A Sobering Start Any number of expressions can be used to sum up the first half of the new year for the stock market, but "ugh" is the most succinct expression we can think of to sum things up so far.
02-Jan-09	Market Monitor: A Moving Target 2009 is not going to be easy from an economic standpoint or from an investing standpoint. The ingredients seem to be in place for a reflation trade, yet the scale of the deleveraging process presents a fair amount of risk still to the outlook.

03-Dec-10	Institutional Long Equity Allocation - Q3 2010 In aggregate, institutional investors made modest weighting changes to their long equity allocation in Q3 2010 relative to the S&P 1500. Institutional investors remain overweight consumer discretionary, health care and technology, and continued to show a preference for small- and mid-cap shares relative to the S&P 1500 weighting.
23-Nov-10	Market Monitor: No Real Surprises in FOMC Minutes The minutes of the November 2-3 Federal Open Market Committee meeting produced few surprises. That was not a surprise because the views expressed by Fed officials leading up to that meeting and the views expressed by Fed officials after that meeting were well known to market participants.
05-Nov-10	Market Monitor: Free of Risks, but Not Risk-Free With the outcome of the midterm elections and the Federal Reserve's quantitative easing strategy now known, some key risks for the market have been eliminated, yet this is not a risk-free environment. We take a look at some additional near-term risks for the market, yet come back to the idea that there is still a wide gap between the forward four quarter earnings yield for the S&P 500 and the 10-year note that points to a value proposition in owning stocks versus bonds for the long term.
20-Oct-10	Market Monitor: Think Globally, Act Locally (Supplement) In a follow-up piece to our report last Friday that examined the international sales exposure of companies in the Dow Jones Industrial Average, we have provided a breakdown of each component's exposure based on specific geographic segment data reported in their most recent 10K filing. Additionally, we have provided price-to-earnings and dividend yield data for each of the Dow 30 companies.
15-Oct-10	Market Monitor: Think Globally, Act Locally Market pundits continue to push the investment opportunities available outside the U.S., namely in the emerging and developing economies of Asia and Latin America. Large-cap, U.S. companies with global brands and reasonable earnings multiples offer a conservative pathway to investing in those regions since their sales prospects are linked to the faster-growing economies, and not the fast-money financial markets, of the emerging and developing nations. In this report, we take a look at the Dow 30 and specifically at their international exposure. We also highlight other multinational companies that have strong global brands and market share position that will enable them to benefit from the economic growth outside the U.S.
24-Sep-10	Market Monitor: The End of a Sovereign European Vacation? Sovereign debt issues in Europe are festering again, particularly with respect to Ireland. However, could the rising cost to protect against Ireland defaulting on its debt be the work of speculators more than anything else? We address that question and provide some performance data that might be helpful for risk management strategies tied to the idea that the sovereign debt issue in Europe is going to become a bigger issue again.
17-Sep-10	Market Monitor: Heed the Earnings Yield Sign Based on the math of the Fed model, stocks look quite cheap relative to bonds right now. The problem is that the market does not believe in that math because uncertainty about global economic conditions has it doubting that earnings estimates are achievable. However, if one subscribes to the view that a double-dip recession will not come to fruition and that a deflation trap will be avoided, it is worth considering value-based investment strategies that utilize the earnings yield as a starting point. To the latter end, we have screened all S&P 500 members for their earnings yield, separating them by sector and ordering the components in each sector from highest earnings yield to lowest earnings yield.
16-Sep-10	Institutional Long Equity Allocation - Q2 2010 Institutional investors overall made modest changes to their long equity allocation in Q2 2010 relative to the S&P 1500. Institutional investors continued to show preference for small- and mid-cap shares relative to the S&P 1500 weighting. In aggregate, institutional investors are overweight consumer discretionary, health care, technology and materials compared to the S&P 1500.
27-Aug-10	Market Monitor: How Now Dow Dividend Payers? Just like the U.S. government, the companies in the Dow Jones Industrial Average are not going out of business anytime soon; only most of the Dow companies offer a better yield and more attractive, long-term capital appreciation potential than U.S. Treasuries. In fact, 24 of the 30 Dow components have a dividend yield that exceeds the yield on the 5-year Treasury note while 18 of them have a dividend yield that exceeds the yield on the 10-year Treasury note.
13-Aug-10	Market Monitor: Certain about Uncertainty The Fed added to the market's uncertainty in the past week, not so much in our estimation with the decision it made, which is supportive for risk assets, but by the seemingly confused manner in which the Fed arrived at that decision. As the uncertainty looms, the stock market will remain volatile with risk trades placed one day and taken off the next. Nonetheless, against a backdrop of low inflation that is going to remain low, low interest rates that are going to remain low, earnings that will continue to grow, and a Fed that is endorsing risk, the stock market still has its appeal.
06-Aug-10	Market Monitor: Risk on, Risk off The stock market is riding a wave of sentiment where the risk trade is on one day and off the next. While this condition is apt to persist and lead to a range-bound market, we see a benefit in utilizing a barbell strategy in the near term where positions are increased in cyclical sectors when the risk trade is off and positions are increased in counter-cyclical sectors when the risk trade is on, taking advantage of price weakness in both instances. Although there is still a good deal of uncertainty to deal with, things are less bad than they were a few months ago when stock prices were higher. That condition, coupled with reasonable valuation and low interest rates, is why we would continue to be long equities.
30-Jul-10	Market Monitor: It Is Earnings Appreciation Day Ahead of the June quarter earnings reporting period, the stock market got tripped up on concerns about the earnings outlook. With roughly two-thirds of the S&P 500 having reported earnings results, it can be said that those concerns were overblown. While we are not pounding the table on the stock market outlook (yet), we are not cutting the legs out from under it either. We cannot because the earnings growth is too solid to do so.
23-Jul-10	Market Monitor: Q2 Earnings Reporting - Act Two Entering the week, we were resigned to the idea of using interim signs of strength to reduce exposure to cyclical sectors. After a flood of Q2 earnings reports and guidance, we are resigned to putting an end to that strategy as those reports made it clear the U.S. is not headed for a double-dip recession. In turn, we consider the idea that the biggest risk to the stock market today is not a meltdown in stock prices, but a melt up in stock prices.
16-Jul-10	Market Monitor: Q2 Earnings Reporting - Act One There was plenty of drama surrounding the first week of earnings reporting for the June quarter. In particular, economic data clashed with generally reassuring earnings guidance, leaving the market inclined to think earnings expectations are still too high. Seeing how things played out, we remain wedded to our view that interim signs of strength in the stock market present an opportunity to reduce exposure to cyclical sectors.
09-Jul-10	Market Monitor: Q2 Earnings Season With the stock market having been hit hard in recent weeks on earnings concerns, there is a realistic prospect of a relief rally during the Q2 earnings reporting season. Should one occur, we would be selling into the strength, reducing exposure to cyclical sectors. Conversely, we recommend increasing allocation to counter-cyclical sectors where volatility is lower and dividend yields are generally higher.
02-Jul-10	Market Monitor: Warning Signs A number of indicators are flashing warning signs that the market is bracing itself for an economic slowdown. The unanswered question is, will it be a slowdown or will it be a recession? Either way, we are recommending reducing exposure to cyclical sectors.
18-Jun-10	Market Monitor: An Ultimate Fight for the FOMC The FOMC will not be raising the fed funds rate when it convenes at its next meeting. In fact, the FOMC may not raise the fed funds rate for quite some time, choosing instead to begin a tightening cycle with alternative measures first. Either way, history should prove again that it is worth owning dividend-paying stocks ahead of the first tightening action.
01-Jun-10	Market Monitor: S&P 500 Valuation - Q2 2010 The S&P 500 has had a setback of late, yet it is 63% above its March 2009 recession low. Despite the recovery run, most valuation metrics for the S&P 500 remain below their 10-year average. The technology, health care, telecom, and consumer staples sectors look particularly attractive relative to historical measures.
26-May-10	Market Monitor: Investment Asylum Offered in U.S. It has been a tough period for global markets in the past month. The U.S. has not been exempt from the selling pressure, but with international concerns serving as the tipping point, we have put together a list of companies that derive all of their sales from the U.S. and that could serve as a port in the storm of investment uncertainty.
14-May-10	Market Monitor: S&P 100 Exposure to Europe The euro is threatening its October 2008 lows as confidence is lacking in the economic recovery prospects for Europe. We looked at the S&P 100 to see which companies have the least, and the most, exposure to the weakening euro.
07-May-10	Market Monitor: A Game of Chicken Gone Bad European officials have hemmed and hawed about their willingness to help Greece avoid defaulting on its debt. This week things came to a head in a very nerve-wracking and costly way.
30-Apr-10	Market Monitor: A Little Off Center... and Further East All eyes have been focused of late on the sovereign debt issues besieging Western Europe. While that is understandable, it would be worthwhile to keep an eye trained on China and the correction taking place in its stock market.
29-Apr-10	Institutional Long Equity Allocation Q1 2010 In aggregate, institutional investors are overweight consumer discretionary, health care, technology, and materials in the S&P 1500 and are underweight consumer staples, energy, financials, telecom and utilities.
26-Apr-10	Market Monitor: Q1 Earnings Reporting Snapshot With roughly one-third of the S&P 500 having reported first quarter earnings, it is clear that the earnings recovery is for real and that it is broad-based. More importantly, it is shifting from a cost-cutting recovery to a demand-driven one.
19-Apr-10	Market Monitor: Near to "Normal" At last week's high, the S&P 500 was just 3% shy of where it closed the last business day before Lehman Bros. declared bankruptcy in September 2008. In other words, it was on the threshold of being back to "normal."
12-Apr-10	Market Monitor: A Dividend Divide Dividend payers have a time-tested history of boosting portfolio returns, but occasionally that history takes a backseat to the appeal of price appreciation. This is one of those periods.
05-Apr-10	Market Monitor: Outlook The return to normalcy for the stock market and the economy will be a vision quest as the year continues to unfold. That discovery process should mean good things in the near term, yet there are major issues to deal with when looking further out.
29-Mar-10	Market Monitor: Back to the Future With the first quarter drawing to an end, we will soon be providing an update to our Market Outlook. First, though, we look back as part of the process of looking forward.
22-Mar-10	Market Monitor: Flashing Yellow The stock market has run hard in recent weeks and, while it is prudent to proceed with caution for the time being, changes in investor sentiment make us think any near-term pullbacks will stop short of a 10% correction, barring an exogenous shock.
15-Mar-10	Market Monitor: Still Climbing a Wall of Worry The stock market does not have a shortage of things to worry about, yet that did not stop the S&P 500 from hitting a new 52-week high last week on signs of increasing participation from the retail investor.
08-Mar-10	Market Monitor: A Beatles Tribute We are on the cusp of another 10-year milestone that is sure to have snuck up on a lot of market participants given all that has happened in the last decade. The milestone is the 10-year anniversary of the Nasdaq Composite hitting its all-time high of 5132.52 on March 10, 2000. Today it sits at 2326.35.
05-Mar-10	Institutional Equity Allocation Q4 2009 Institutional investors continued to be overweight cyclical sectors and underweight defensive sectors, with the exception of healthcare and energy. Hedge funds increased bets on wireless telecom, airlines, and office electronics.
01-Mar-10	Market Monitor: Something Big or Nothing at All The U.S. stock market has been confined to a narrow trading range that is breeding apathy in traders. The low trading volume speaks to a market that is looking around the corner, unsure of what it will see there.
22-Feb-10	Market Monitor: Signs of Uncertainty The U.S. stock market has come back to life in recent weeks, gaining as much as 6.5% from its intraday low on Feb. 5. Despite that rebound effort, there are clear signs the market continues to hedge its bets on the outlook.
16-Feb-10	Market Monitor: Cloudy with a Chance of Earnings Revisions The fourth quarter earnings results continue to be filled with positive surprises. The problem for the stock market is that unfolding macro events are creating questions as to whether growth estimates for calendar 2010 are achievable.
08-Feb-10	Market Monitor: Caution Is Better Part of Valor With the stock market declining as much as 9.2% from its January high, conditions are ripening for a short-term bounce. With shifting market dynamics, though, selection will be key in a rebound trade.
01-Feb-10	Market Monitor: A Dynamic Shift The stock market has been unsettled by a growing sense of uncertainty, which has been driven in large part by a sense that policy dynamics will be shifting in 2010.
25-Jan-10	Market Monitor: A Change in the Status Quo If the market only had the earnings news to concentrate on in the past week, we suspect there would be little concern about its ability to bounce back quickly from its losses. Instead, the market was also wrangling with moves by China to slow its economic growth, worries about sovereign debt in the eurozone, and populist politics.
19-Jan-10	Market Monitor: Earnings Season The fourth quarter earnings reporting period is expected to end a dismal, nine quarter streak of negative earnings growth rates. That streak is due to end with a bang, too.
11-Jan-10	Market Monitor: Not a Good Start, a Great Start The S&P 500 jumped 2.7% in the first week of trading. Still, we remain hesitant to make any big calls about what lies ahead for the market based on one week of trading in a period that has historically been a favorable one for equities.
04-Jan-10	Market Monitor: A Concise 2010 Outlook Our expectation is that the S&P 500 will achieve a low single-digit to low double-digit percentage return, with the first half of the year looking better than the second half of the year in terms of performance.

13-Dec-11	Market Monitor: FOMC Sounds Familiar Message The policy directive from the December 13 FOMC meeting can best be described as being another dovish statement. It is possible to make such a characterization because that is what we said about the policy directive from the November 2 meeting and, with the exception of a few subtle changes, the two directives read very much the same on the key points. Even the vote played out in the same fashion. All FOMC members voted for the policy action with the exception of Chicago Fed President Evans, who supported additional policy accommodation at this time (just as he did in November).
30-Nov-11	Central Banks Travel Familiar (and Rocky) Road The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank announced a coordinated action to enhance their capacity to provide liquidity support to the global financial system. The announcement was a surprise and global equity markets soared in its wake. The experience of recent years has shown, however, that coordinated central bank action is mostly a stopgap for markets undone by an inability to solve fiscal problems. That is, it stops the internal bleeding, but it does not fix what is broken on the outside.
23-Nov-11	Briefing Research Multinational Equity Basket To request the complete basket, please contact your Institutional Salesperson, Jason Green, at 312-281-5484 or jgreen@briefing.com.
23-Nov-11	Institutional Long Equity Allocation -- Q3 2011 Institutional investors in aggregate increased their consumer discretionary, technology, and utilities long equity allocation in Q3 2011 relative to the S&P 1500. They decreased their consumer staples, energy, health care, industrials and materials allocation. Hedge funds increased long equity holdings in both energy and tech by 0.8 percentage points relative to the S&P 1500. While hedge funds reduced their holdings in consumer discretionary by 0.5 percentage points, they remain overweight by 7.6 percentage points. Money flowed into fixed income ETFs at a faster rate than domestic and international equity ETFs for the second consecutive quarter.
02-Nov-11	Market Monitor: A Telling FOMC Vote There was a dissenting vote cast at the November 1-2 FOMC meeting, only it was not from any of the members that have been identified in the past as being hawks. The dissent came from Chicago Fed President Evans, who supported additional policy accommodation at this time. As notable as the dissent was from Mr. Evans, it was perhaps not as noteworthy as the fact that Dallas Fed President Fisher, Minneapolis Fed President Kocherlakota, and Philadelphia Fed President Plosser fell into line with the consensus view at the November meeting. In this note, we assess what the latest vote, and remarks from Fed Chairman Bernanke's press conference, might mean for future monetary policy.
31-Oct-11	The Eurozone Debt Crisis: From Greco to Roman Wrestling The rescue framework provided by the EU on October 26 created more questions than answers because it was short on detail. That important shortcoming has arguably precipitated a jump in borrowing costs for Italy since the announcement, which seems to be taking over for Greece as the key risk gauge for the capital markets. Due to the lack of clarity from European leaders and the confusion derived from media-driven speculation, we wanted to approach the current situation in as linear a fashion as possible. This report outlines the concerns about Italy, as well as the next steps for Greece, the European bank recapitalization plan, and the new European Financial Stability Facility. In addition, we highlight dates to watch and consider what could go wrong as this intricate but delicate process for saving the eurozone unfolds.
29-Sep-11	Market Monitor: Finding Opportunity in Low/High Correlations During periods of high volatility in the capital markets, correlation between investable assets tends to increase. That has been readily apparent in recent weeks as macro concerns have trumped fundamentals as an equity market driver. We took a look at the S&P 500 universe to see which stocks had the lowest correlation during this tumultuous period. We did not stop there, though. Our main objective was to pinpoint companies with a strong balance sheet that justified the low correlation or, alternatively, validated the idea that some stocks with a high correlation may have been unjustifiably thrown out with the bath water.
21-Sep-11	Market Monitor: Fed Twists, Market Shouts As expected, the FOMC unveiled the modern-day version of "Operation Twist," saying it will buy $400 bln of Treasury securities with remaining maturities of 6 to 30 years by the end of June 2012 and selling an equal amount of Treasury securities with remaining maturities of 3 years or less. The knee-jerk reaction by the equity market to the announcement was not a positive one. Nonetheless, the effort to hold down long-term rates simply reinforced our view that the U.S. equity market offers tremendous relative value for long-term investors compared to Treasuries.
14-Sep-11	Europe's Greek Tragedy With dates upcoming that could define a new direction for the eurozone debt crisis, our feeling is that European governments have slowly begun to accept the idea of letting Greece default. That opinion seems to be growing in popularity. After running through various scenarios, it seems obvious European governments will have to act at some point -- and with much more conviction than they have to date. Options include a European TARP, bank privatization, and a larger lending facility. The best solution -- a eurozone debt market -- seems unachievable in the near term, but not beyond possibility. In this note, we examine the dynamic situation that is Europe's Greek tragedy.
30-Aug-11	Institutional Long Equity Allocation -- Q2 2011 Institutional investors in aggregate increased their financial, health care, industrials and materials long equity allocation in Q2 2011 relative to the S&P 1500. They decreased their technology, consumer staples, telecom and utilities long equity allocation. Money flowed into fixed income ETFs at a faster rate than domestic equity ETFs. Money flowed out of commodity ETFs. Hedge funds increased long equity holdings in technology by 1.2 percentage points relative to the S&P 1500 and are now overweight by 2.0 percentage points.
26-Aug-11	Market Monitor: Bernanke Passes Stimulus Buck to Congress The Fed chairman's speech at the Jackson Hole Symposium went largely as expected, but not entirely as expected. The impression we got from today's speech is that Mr. Bernanke is trying to transfer the stimulus onus to Congress and fiscal policy. The Fed will act if it has to, but it would prefer Congress take the proper fiscal path so it does not have to. That is no sure bet at this juncture, which is why it is not a sure bet that QE3, or some form of additional monetary stimulus, is a non-possibility.
23-Aug-11	Market Monitor: A Valuation Snapshot of Emerging Markets Despite the recent market turmoil, we continue to see relative value in U.S. equities, specifically in large-cap, U.S. multinationals with exposure to emerging economies. This strategy enables investors to take advantage of attractive valuations and the favorable growth prospects in emerging markets, while also capturing the dividend payments of U.S. firms. In this report, we provide a truncated list of U.S. companies with exposure to the Asia-Pacific, Latin America, and Eastern Europe, Middle East, and Africa regions. In addition, we outline country valuations in each region. These emerging markets have corrected in tandem with the Western world as risk has been taken off the table.
04-Aug-11	Market Monitor: Where Underperformance Meets Activism Recognizing market timing never works as a long-term investment strategy, and with a current equity bias for large-cap multinationals, we developed a proprietary screen to examine which S&P 500 members underperformed the market in the five-year period ended July 29, 2011. The 37 equities returned in our screen reads like a who's who of companies that, despite poor share performance, still hold potential to deliver much better returns based on their strong brand power and/or global presence. If that does not happen soon, though, they also have the potential to get increased attention from activist shareholders.
09-May-11	Market Monitor: Taking Stock of Market Drivers We looked at monetary policy, fiscal policy, economic growth, inflation, earnings growth, valuation, and exogenous factors in an effort to gauge their influence on the U.S. equity market. Bullish, neutral, and bearish dispositions were represented across this spectrum, yet the balance of positions skewed to the bullish side when considering the U.S. equity market outlook.
05-May-11	So the Bond Guy Says to the Equity Guy.... All roads point to equities right now and specifically to U.S. blue chips with multi-national exposure, as they have more appealing total return potential than many bonds do -- government-issued or otherwise. Yes, this is a "bond guy" extolling the virtues of equities.
11-Apr-11	Market Monitor: A Value Line Our view that there is relative value in the U.S. equity market remains unchanged. By extension, there must be relative value in individual stocks which comprise the equity market. This research note highlights some possible value-based investment ideas, using return on capital as a lead screening parameter and the 2003-2007 bull market as a basis for comparison.
11-Mar-11	Market Monitor: Change Happens - Part II There is a lot of attention right now on news items with a negative orientation, so much so that the potential for positive changes and the relative value that exists in the equity market have gotten lost in the mix. We examine what can still go right to keep the bull market on track.
03-Mar-11	Institutional Long Equity Allocation -- Q4 2010 Institutional investors in aggregate made modest changes to their long equity allocation in Q4 2010 relative to the S&P 1500. Money flowed out of fixed income ETFs and into domestic equity, international equity and commodity ETFs. As a percentage of beginning quarterly assets, more money flowed into domestic equities than international equities, commodities and fixed income.
08-Feb-11	Market Monitor: Change Happens - Part I The stock market's linear performance path, which has taken the S&P 500 up 26% since the end of August 2010, raises questions about what could go wrong. In this note, we examine possible changes at the margin that need to be respected as changes that could alter the investment outlook and, more importantly, the confidence in the fundamental forces needed to drive a sustained recovery.

18-May-12	Dividends and Inflation In accordance with our long-term strategic view, we believe large-cap, dividend-paying U.S. multinationals should be a core component of an investment strategy given their strong balance sheets, dividend growth potential, and ability to capitalize on faster growth in developing markets. In this note, we focus on the positive relationship between dividends and inflation as another reason why investors should be favoring equity dividends over coupon payments from long-term Treasuries for income generation.
25-Apr-12	Market Monitor: No Real Surprises from the Fed In essence there were two, key takeaways from the latest FOMC meeting and they did not surprise us at all, because they are consistent with what we have been saying for some time: (1) Monetary policy will remain supportive for the equity market; and (2) The FOMC remains fully prepared to adjust its securities holdings if incoming data warrant such a switch.
13-Apr-12	Market Monitor: Beware Seasonal Affective Disorder Can the equity market rally continue? It can and we believe it will, but we do not think it will be a rally that continues uninterrupted. Several psychological challenges are festering that could lead to some unsettling selling pressure and heightened volatility after the strong start to 2012. Accordingly, our near-term tactical view is more cautious entering the seasonally pernicious May to October period. Be that as it may, we continue to hold to our long-term view that stocks offer excellent relative value versus bonds.
29-Mar-12	Equity Strategy: Earnings Up, Dividend Payout Ratios Down From our vantage point, we believe there is a risk of complacency in the market over the near term as earning growth slows and investors lock in gains after a tremendous first quarter. For those concerned that a market correction could occur, high-quality, high-dividend stocks provide a conservative alternative. We adjusted our proprietary dividend model to screen for companies that have liquid balance sheets and low dividend payout ratios. These companies have the balance sheets to sustain any correction, and to potentially increase payout ratios.
23-Mar-12	Equity Strategy: Earnings Revision Analysis With the first quarter reporting period only a few weeks away, a slowdown in earnings growth presents a near-term risk for the equity market. In an effort to reveal potential areas of risk (and opportunity), we performed a data-driven analysis of S&P 500 companies that highlights trends in first quarter price performance and first quarter earnings revisions.
16-Mar-12	Equity Strategy: Financials for the Recovery Based on our expectation that the U.S. economy will outperform in 2012, a tactical equity strategy is to identify investment opportunities in economically-sensitive industry groups/stocks that are still well below their 2007 closing levels. With the recent release of the bank stress test results, we focus our analysis on the major banks and the investment banks.
13-Mar-12	Market Monitor: FOMC Has Its Say and Says Nothing New The March 13 directive from the Federal Open Market Committee read a lot like the directive from the January 24-25 FOMC meeting. Accordingly, the reminder and message of the Federal Reserve's monetary policy remains the same: it is supportive of the equity market.
28-Feb-12	Institutional Long Equity Allocation -- Q4 2011 Over the past year, instutional investors have steadily increased their overweighting of the health care and technology sectors. Allocation to financials fell sharply after four consecutive quarters of increases yielding positions by institutional investors of slightly overweight. Institutional investors in aggregate increased their long equity allocation in Q4 2011 relative to the S&P 1500 in energy and technology. They decreased their allocation in consumer discretionary and financials. Money flowed into fixed income ETFs at a faster rate than domestic and international equity ETFs for the third consecutive quarter. Corporate debt ETFs had a net inflow of $12.1 bln, the largest inflow on record.
25-Jan-12	Market Monitor: Fed Opens Line of Communication The Federal Reserve took an historic step today in communicating monetary policy by providing FOMC participants' individual forecasts for the appropriate timing of policy firming. The end result caught the market by surprise as it is now believed economic conditions are likely to warrant an exceptionally low level for the federal funds rate at least through late 2014.
20-Jan-12	Market Monitor: Opportunity Knocking The high equity risk premium reveals the considerable return potential that exists for the S&P 500 if the market can get past its subjective fears. There is apt to be some unsettling developments along the way, but at this point, with the equity risk premium sitting where it was in January 2009, it is arguable that a recession and a credit implosion in Europe are already priced into the market. In this note, we lay out our reasoning for why we think the market should be able to overcome what we consider to be the three most realistic fears related to the 2012 equity market outlook. At the same time, we highlight a shift in trend dynamics for three major growth drivers that we expect to temper fears about the outlook for the U.S. economy and the U.S. equity market.

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