Author Archive: David Peltier

The Dow Jones Industrial Average emerged from correction territory this week, as investors applauded earnings in the financial sector. At the same time, markets chose to ignore the now record-long U.S. government shutdown and ongoing Brexit saga in the U.K.

Financials Start Earnings Season On Positive Note

Bank of America (BAC), Citigroup (C) and Goldman Sachs (GS) all traded higher this week, after posting solid quarterly results. The earnings news was not all rosy however, as Morgan Stanley (MS) fell short of expectations on Thursday. Outside of the financial sector, Ford Motor (F) also cut profit expectations this week.

As the following chart shows, quarterly reporting activity will continue to pick up next week and the floodgates really open in February.… Read more

Investors stepped in this week to do some value shopping, leading to the longest winning streak for the S&P 500 since last September.

The minutes from the December FOMC meeting were released on Wednesday, suggesting a more patient outlook for future interest rate increases. In fact, Fed funds futures are now pricing in just a 19.2% probability of an interest rate hike in 2019, compared with a 10.4% chance of a rate cut.

According to Bespoke Investment Group, energy names and other cyclical groups have been behind the market’s recent winning streak, which are precisely the names that were a drag in 2019.… Read more

If the market’s resolution for the new year was to start with a clean slate and forget about the worries that piled up toward the end of 2018, that plan lasted fewer than two days.

Sure, traders bought into a sharply lower open on Wednesday and U.S. stocks actually ended with small gains.

However, after the close of the first trading session of 2019, Apple (AAPL) shocked investors with a revenue warning for the first time since 2002.

China Trade Talks Loom

The main reason that Apple cited for the lower quarterly sales was lower iPhone demand in China, heightened by tariffs and other trade issues.… Read more

Investors did not like what Chairman Powell and the Fed had to say this week, resulting in a 1,300-point decline in the Dow Jones Industrial Average in less than 24 hours.

When Doves Cry

As expected, the FOMC raised its short-term interest rate target on Wednesday, to a range of 2.25%-2.50%. The composite expectation of the committee for 2019 also turned more dovish, now calling for two more rate increases next year, down from three.

It’s not in the Fed’s mandate to make equity investors happy and traders quickly voiced their disapproval of the policy changes.

Prior to the announcement at 2 p.m.… Read more

The U.S. and China appear to be playing the long game with their trade talks, so investors shifted their focus more to Europe this week. The prospect of a Brexit vote fizzled out on Monday, and some selling pressure was relieved from stocks back here in the U.S.

Theresa May kicked the can down the road, so to speak, delaying a UK Parliament vote on finalizing the Brexit process, as reports suggested the measure would fail. May’s position as Prime Minister was then challenged by her own party with a confidence vote on Wednesday, which she survived.

On Thursday, Mario Draghi and the ECB announced the end of their quantitative easing (QE) strategy at the end of the year.… Read more

It was a short, but volatile week for U.S. markets, which were closed on Wednesday, in remembrance of President George H.W. Bush.

The big story this week was the partial inversion of the U.S. Treasury yield curve, as stocks swung violently against each conflicting headline resulting from ongoing trade talks with China and potential OPEC production cuts.

The yield curve is an important barometer for stock investors of all shapes and sizes. In general, the curve slopes upward over time, as positive economic growth and inflation tend to go hand-in-hand.

Source: www.treasury.gov

However, the curve inverted this week, when 5-year interest rates moved below 2-year rates.… Read more

No one likes digging through pages of regulatory filings, but they can often yield valuable information.

For example, institutional investors with at least $100 million of assets must file a 13F form with the Securities and Exchange Commission once a quarter. Think of this as a quarterly scorecard or a window into the holdings of some of the most successful and often secretive investors in the market.

Should you follow suit and piggy-back some of these trades? Well, it’s certainly cheaper than the $1 million minimum buy-in it often takes to invest with the most successful hedge funds, if you’re even invited.… Read more

Each November, the National Association of Real Estate Investment Trusts (NAREIT) hosts a conference that brings all of the key players in the sector together. The timing of REITworld creates an opportunity to see who’s poised to perform well in 2019 and beyond.

The general consensus from the meeting this year in San Francisco was that the Apartment owners are positioned well for the near future, while the outlook for Retail and Storage names remains volatile.

Individual pockets of both strength and weakness can be found where you least expect it and here are two REITworld winners and one loser that may have flown under the radar.… Read more

Energy commodity prices have been extremely volatile of late. Crude oil is down more than 20% in the past month, while natural gas is up more than 40% over the same period.

The result is that some of the most stable names in the energy sector, master limited partnerships (MLPs), have lost 6% or more in the past month, wiping out the benefit of an attractive annual dividend yield.

However, one thing that remains constant over time is that the market rewards faster earnings growth in stocks, even with income-oriented names. Higher profits can lead to higher future dividends, which in turn helps investors build wealth, even as inflation is rising.… Read more

When investors look for dividends, they usually think about blue-chip names that are just as common on Main Street as they are on Wall Street. However, there are a large number of single-digit stocks flying under the market’s radar that also offer attractive yields.

Individual investors tend to gravitate toward stocks trading under $10 for multiple reasons. For one, it can psychologically feel more powerful to buy 100 shares of a company trading for $7 than just seven shares of a $100 name.

While both investments are just as likely to generate attractive returns over time, low-dollar stocks have historically proven to be more volatile.… Read more