George Hosfield, CFA, discusses Ferguson Wellman's quarterly strategy titled, "Inflation's Flame Flickers," which addresses the narrow market leadership, the impact of higher interest rates on inflation and how assets are priced at this stage of the economic cycle.
George Hosfield, CFA, discusses the firm's quarterly strategy titled "Stalemate," which highlights the Fed's ongoing battle to tame inflation along with our views on the health of the banking industry and capital market expectations for the balance of the year.
Director and Chief Investment Officer George Hosfield, CFA, discusses the Fed raising interest rates, peaking inflation and our view on equities and volatility across all asset classes in our Investment Strategy titled, “Balancing Act.”
As the final days of May unfold, American consumers are feeling notably more optimistic. After several months of declining sentiment, the latest consumer confidence data showed a strong rebound from an almost five-year low, with the increase largely attributed to easing trade tensions.
After a 20% rebound from its April 7 lows, the S&P 500 is positive for the year, marking one of the most significant short-term comebacks in market history. The market rallied on Monday following weekend news about tariff negotiations with China. In a complete reversal from the earlier “Liberation Day” tariff announcement, the punitive 145% tariff rate on Chinese goods was reduced to 30%, with a 90-day pause implemented. In response, China lowered its retaliatory tariff rate on U.S. goods from 125% to 10%.
This week, the presidential inauguration and subsequent flurry of executive orders left investors deciphering what is ‘signal’ versus ‘noise’. Fortunately, in the background, public companies have started reporting fourth quarter earnings and reveal expectations for the year ahead.
There has been a decade's worth of world events in the last three months. An oil price war between Russia and Saudi Arabia, growing tension and trade disputes with China, a global pandemic and this week the worst domestic civil unrest in a generation.
This week we experienced something we haven’t in some time: a down week. Stocks struggled to a close, down 3.8 percent with no help from blue-chip names. Alphabet (GOOGL) and Apple reports weren’t favored by Wall Street, driving the stocks down 5.2 and 4.3 percent, respectively.
The S&P 500 was up nearly 1 percent again this week as economic data continues to confirm a growing economy. An underwhelming jobs report on Friday took yields on 10-year U.S. Treasuries to a new low on the year of 2.15 percent.
The stock market was up for the week with the S&P 500 returning .20 percent. During the week, the S&P 500 climbed to an all-time high on Thursday. Bonds were higher in price and lower in yield with the 10-year Treasury moving from a
The resilience of the equity markets has been quite impressive. At the time of the February lows, pessimism was rampant. Faith in the Chinese economy was shaken, gold was on the rise and there were faint whispers of imminent recession. Fast forward six weeks and the S&P 500 has rallied
by Ralph Cole, CFAExecutive Vice President of Research
Monster Mash
No holiday better describes earnings season than Halloween. When companies announce earnings, investors are hoping for treats but often times end up getting tricks. In our view, improving corporate earnings are the catalyst to improving stock market returns in the coming year. As we close out the best month for the stock market since 2011, we should review some of the tricks and treats of earnings season.
Treat
Apple reported earnings earlier this week and beat expectations on almost every level. IPhone sales continue to grow at a robust pace around the world. The company sold 48 million iPhones in the third quarter, up 22 percent from last year. Analysts expect the company to sell 79 million iPhones in the final quarter of the year. Average selling prices of the phones continue to rise, which enhances profitability and will lead to $60 billion in free cash flow this year alone.
Tricks
As expected, the energy sector has had a rough time of it this earnings season. Earnings for the S&P 500 energy sector were expected to be down 73 percent this quarter and that indeed has been the case. During these distressing times all companies begin to dramatically scale back investment and reduce headcount. We feel that higher quality companies with good assets, low debt levels and quality management teams will benefit from the eventual rise in oil prices.
Trick and Treat
In no place is the bifurcations of earnings season more evident than in footwear. Nike reported earnings that beat analyst estimates by 12 percent and the stock responded with a nine percent pop the next day. Nike also reported a solid outlook for the coming quarters as well. Sketchers, on the other hand, tricked investors and missed earnings by a whopping 21 percent last week and the stock dropped 31.5 percent with the news.
Why have stocks responded so positively to a mixed earnings environment? Expectations for third quarter earnings had been lowered so much that companies have been able to meet and often beat those reduced forecasts. Also, the much advertised slowdown in China has not had as big of an impact on earnings as investors feared. While the investment slowdown in China has hurt some industrial companies, the Chinese consumer has actually helped the likes of both Apple and Nike.
Takeaways for the week
