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Stock Valuations and US Male Employment October 10, 2013

By Knowledge Leaders Team in Uncategorized

For the last 20 years, valuations on the S&P 500 have correlated pretty well with the 25-54 year old male participation rate in the US.  The now 13-year old structural bear market in the US is easy to see.  The recent turn down in this participation rate suggest caution on equity valuations.

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VIX and High Yield Spreads October 09, 2013

By Knowledge Leaders Team in Uncategorized

Over the last five years, the CBOE Volatility Index (VIX) has had an 87% correlation with high yield spreads.  If the VIX keeps rising, high yield spreads are likely to widen.

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MSCI Cyclical and Counter-Cyclical Baskets October 08, 2013

By Knowledge Leaders Team in Uncategorized

We divide the MSCI World index into cyclical (including materials, industrials, technology and consumer discretionary, financials and energy) and counter-cyclical baskets (including consumer staples, health care, telecom, utilities).  The relative performance of cyclicals vs. counter-cyclicals generally improves when the economic news is improving and contracts when it is deterioratinig.

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