Markets

Quarterly Strategy Report: Global Equity Opportunities January 03, 2023

Posted by Steven Vannelli, CFA in Knowledge Leaders, Markets, Portfolio Management

In our Quarterly Strategy Report, we illustrate the relative attractiveness of select developed international sectors. Prefer to download this presentation in PDF? Please click here. 1. Summary -Monetary policy is considerably more restrictive than many perceive. The San Francisco Federal Reserve has calculated a “Proxy Rate” that…

Inversion December 20, 2022

Posted by Steven Vannelli, CFA in Economy, Markets

In a recent San Francisco Federal Reserve Publication titled “Monetary Policy Stance is Tighter Than Fed Funds Rate,” the authors argue that the “all in” policy rate is actually higher than the Fed Funds rate would suggest. They open: “The Federal Reserve’s use of forward…

Does the Inflation Risk Premium Decline Signal Lower Commodity Prices? November 28, 2022

Posted by Steven Vannelli, CFA in Economy, Markets

There are many ways to decompose the bond market to identify the component pieces to infer what the market is pricing in. The nominal long US Treasury bond is a function of two things: 1) the average expected future nominal short-term interest rate, and 2)…

International Innovation November 02, 2022

Posted by Steven Vannelli, CFA in Knowledge Leaders, Markets, Portfolio Management

Investors in innovation tend to focus on the US exclusively, and some of that is for good reason as the US spends more than any other country on research and development. But there are many innovative companies outside the US that spend substantial sums on…

Knowledge Leaders US Mid-Large Innovation Analysis October 25, 2022

Posted by Steven Vannelli, CFA in Knowledge Leaders, Markets

In recent reports, we’ve been highlighting that innovation—as a factor represented by R&D as % of sales—has stopped underperforming and it is selling for an attractive valuation. We used the S&P 500, Russell 2000 and other off-the-shelf indexes. Today we will highlight one of our…

S&P 500 Innovation Leaders vs. Followers October 18, 2022

Posted by Steven Vannelli, CFA in Knowledge Leaders, Markets

While many perceive the S&P 500 Index to be a broad innovation-heavy index, in a way it is and in a way it isn’t. It is an innovation-heavy index in so far as aggregate R&D investments total $478.8 billion, but it isn’t so innovation-heavy in…

Has Innovation Bottomed, Part 2: S&P 500 R&D/Sales 1st Quintile Analysis October 11, 2022

Posted by Steven Vannelli, CFA in Knowledge Leaders, Markets

A couple weeks ago, in our quarterly strategy report (see: QSR-Has Innovation Bottomed?), I argued that it appeared that innovation had bottomed. I showed the following chart, which is maintaining its September 21, 2022 low, highlighting the quintile spread of the S&P 500 on the…

Quarterly Strategy Report: Has Innovation Bottomed? September 28, 2022

Posted by Steven Vannelli, CFA in Knowledge Leaders, Markets, Portfolio Management

It appears to us that global innovation has bottomed and offers attractive value. An extended analysis follows in our Quarterly Strategy Report: Has Innovation Bottomed? Prefer to download this presentation in PDF? Please click here. 1. Summary -Innovation as a factor appears have bottomed earlier in…

Has Innovation Bottomed? Is It Cheap Yet? September 20, 2022

Posted by Steven Vannelli, CFA in Knowledge Leaders, Markets

Innovation was the market darling thematic for many years leading up to COVID. The pandemic turbo-charged returns for innovation as the stay-at-home beneficiaries did phenomenally well. However, since the first quarter of 2021 innovation has struggled as a thematic strategy. It appears to us that…

Four Technical Patterns in the Tech Sector September 14, 2022

Posted by Steven Vannelli, CFA in Markets, Portfolio Management

Using our proprietary point-and-figure-based charting system, I review a couple thousand charts per week in an attempt to identify interesting buy or sale candidates. I am never satisfied with sector or industry-level narratives because underneath the surface, there is always more than one narrative going…

Options Based Hedging is at Record Levels September 07, 2022

Posted by Steven Vannelli, CFA in Markets

Last week, the combined dollar value of hedge positions on the S&P 500, NASDAQ 100 and Dow Jones Industrial indexes was $121.43 billion, not far from the August 16 peak of $160.02 billion. Last week, large traders (50 or more contracts) bought nearly 5 million…

Is It Still June? Positioning is Still Quite Supportive of Equities August 29, 2022

Posted by Steven Vannelli, CFA in Markets

The most significant element going into the June low was positioning. Investors were hyper-aggressive buying hedges for equity exposure. Nothing has changed, especially after last Friday’s drop, and investors are still looking quite defensive. This is a positive in so far as it is indicative…

The Deus ex Machina Scenario August 19, 2022

Posted by Steven Vannelli, CFA in Economy, Markets, News

Given all the confusion in the world around COVID, supply chains, inflation dynamics and war, there are lots of potential externalities that could resolve themselves unexpectedly. We call this the Deus ex Machina scenario. Our analysis follows in our Mid-Quarter Update. Prefer to download this presentation…

Is Now the Time for Small Cap Growth to Shine? August 03, 2022

Posted by Steven Vannelli, CFA in Markets

Across US indexes, growth has experienced a resurgence relative to value off the June 17, 2022 low. In this piece, I am going to focus on small-cap stocks and consider their merits through the lens of: 1) US Treasury yields, 2) oil prices, and 3)…

Is the Japanese Yen’s Decline Over? July 26, 2022

Posted by Steven Vannelli, CFA in Economy, Markets

Since the COVID low in US Treasury rates and subsequent rise, the Japanese Yen has tracked the yield differential between the US and Japan. With the Federal Reserve having embarked on a rate hiking cycle, the monetary policy divergence between the US and Japan has…

Disclosures

The information presented here is for informational purposes only and is not to be construed as an offer to sell, or the solicitation of an offer to buy, securities. Some investments are not suitable for all investors, and there can be no assurance that any investment strategy will be successful. Hyperlinks may be included in this message that provide direct access to other internet resources, including web sites. While we believe these links are to reliable sources, Knowledge Leaders Capital (“KLC”) has no control over the accuracy or content of information contained on these sites. Although we make every effort to ensure such links are accurate, up to date and relevant, we have no control over pages maintained by external providers. The views expressed by these external providers on their own web pages or on external sites they link to are not necessarily those of Knowledge Leaders Capital.

The information provided on this blog is for illustrative or example purposes only and should not be construed as KLC’s opinion or investment outlook. As of the most recent quarter end, the named companies may have been held by KLC. For full information including additional policies and full disclosures, please visit our website: KnowledgeLeadersCapital.com.

Any reference to Index performance does not represent the performance of any investment product offered by Knowledge Leaders Capital, LLC. An investor cannot invest directly in an index. The performance of client account may vary from the Index performance. Index returns shown are not reflective of actual investor performance nor do they reflect fees and expenses applicable to investing.

Companies are selected for “Spotlights” based on high levels of innovation activities in their respective industries and illustrate innovation being employed across all sectors and geographies. Spotlight selection is separate from stock selection by the investment team. Spotlights are not necessarily representative of investment opportunities and can be selected regardless of investment performance or inclusion as a KLC holding.