The S&P 500 Utilities index has been on a tear. We have long favored utilities stocks at Young Research & Publishing. Last year when many investors were dumping utilities we were advocating new positions (see December 2013 Global Investment Strategy - subscription required). The consistent dividends, high-barriers to entry, and regulated returns have appeal for serious long-term investors. But the strength of the recent upleg might not be all roses and butterflies. The S&P 500 Utilities index is up a staggering 34% YTD making it the best performing sector in the index. Over half … [Read more...]
Archives for December 2014
Feeling Good
The Conference Board's index of consumer confidence was released this morning and consumers are feeling pretty good. More consumers believe jobs are plentiful now than did last month, and fewer think business conditions are bad. On the other hand, some more consumers believe that pay will decrease this year than did the month before. These mixed signals add up to reflect the flat readings over the last few months on my consumer confidence chart below. Confidence has remained near historic average readings for about six months. … [Read more...]
The Monday Melee: New Year, More Lending
Bank Lending Grows: For the first time since 2008 banks have been increasing their lending at average rates. Lending was driven higher by growth in industrial and commercial loans. This trend would seem to reflect growing confidence in the strength of the U.S. economy and higher rates banks can lend at. What We're Reading: Local Governments Declare War On Uber, Lyft (Investors.com) After a Bad Year for Funds, Prepare for a Tax Hit (Wall Street Journal) Top 5 stock market hoaxes of 2014 (Fortune) Supply, demand and the price of oil (Econbrowser.com) Junk Bond Risk … [Read more...]
Inappropriate Monetary Policy
Yesterday, the Bureau of Economic Analysis released its final estimate of third quarter GDP growth. Growth for the third quarter came in at a blistering 5%. That is the best quarter of economic growth in over a decade. It should now be evident to even Yellen & Co., that the Fed’s monetary policy is absurdly inappropriate. Interest rates should not still be at zero, nor should they have been held there for so long into the recovery. The last time we had nominal GDP growth this good, short-term interest rates were over 5%. By holding interest rates at zero for the entire recovery and … [Read more...]
Merry Christmas!
Dow Down 7.3% Jan & Early Feb
You may feel whipsawed by this stock market so make sure you’re getting paid cold, hard cash to invest in it. I only like dividend paying stocks for you because investors piling into the market now may be gone in January. Let’s not forget what a rotten start 2014 was as E.S. Browning of The WSJ observes: The concern is that those investors might move at least some of their money elsewhere after New Year’s Day. Something similar happened at the start of 2014, when the Dow fell 7.3% in January and early February. Bad weather hurt stocks then, too, but January usually is a strong month as … [Read more...]
The Monday Melee: Green Christmas?
Retailers Dreaming of Green this Christmas Retailers are looking for hope in retail sales going into the last stretch of the Christmas buying season. Trend growth in retail sales is on the decline in America. After showing some strength in mid-2014, the ICSC-Goldman Sachs Retail Chain Store Sales Index has reverted to its trend rates of growth. Seven Years Later: Planned Gift Spending Nears 2007 Levels "Shoppers around the country say they are planning to spend an average of $861 for gifts this holiday season, up from $801 last year according to the 30th annual survey on holiday … [Read more...]
Off the Charts
Over the last two days the S&P 500 has gained a staggering 4.48%. That’s more than half of the return one might expect in an average year…in only two days! To put that into perspective, the chart below shows the two-day percentage change in the S&P 500 with plus and minus three standard deviations overlaid. That is three standard deviations, not two which is a rare occurrence in itself. The probability of a normally distributed series coming in more than three standard deviations above the mean is .0015% or a 1 in 666 chance. … [Read more...]
Ski the Light
Have you ever skied at night? The guys over at Sweetgrass productions have. They did it to promote Phillips Ambilight TV. As you will see, the snowflakes glow in the dark. Isn't it amazing how every snowflake is different? You may have had this conversation before with a friend or loved one sitting on a chairlift folded into yourself for warmth. It hits home when you're staring at each unique crystal land on your gloves and melt. Then you look up and all you see is the same color of white blowing across the mountain. The art that is each tiny little snowflake is hard to comprehend. As … [Read more...]
Where to get 7% Yields
If you are a buyer of assets and a long-term investor, the recent turbulence in markets should be viewed as a welcome development. You may find this unusual, but I must admit that I enjoy periods of volatility. Not because I relish in the misery of others, but because volatility creates opportunity. And finding compelling investment opportunities for Young Research’s subscribers and our investment boutique clients is what I spend much of my time doing (it's true, I have no hobbies). It has been a tough slog over the last couple of years. Zero percent interest rates and trillions of money … [Read more...]