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The Fed Won’t Taper

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Wednesday afternoon, Federal Reserve Chairman Ben Bernanke stunned the consensus and announced the continuation of quantitative easing. Nearly every major investment bank expected the Fed to taper bond purchases in September, so Bernanke’s surprise announcement ignited a rally in both the stock market and Treasury bonds. Why not taper? According to the Fed, the economy has not performed up to expectations over the past year, and more importantly, the Fed reduced its growth outlook for 2014. However, in our view, the real reason is that the Fed is concerned about another bout of incompetence from Congress stalling economic progress. The following words came from Bernanke during his post-policy announcement press conference: “A government shutdown, and perhaps even more so a failure … Read more

Summers Bows Out

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Equity markets jumped higher Monday as Federal Reserve Chairman frontrunner Larry Summers ended his pursuit of the position. The news suggested Summers had been President Obama’s preferred successor to current Chairman Ben Bernanke, but several Democratic senators opposed the nomination, and Summers may be bowing out to avoid any chance of embarrassment. With Summers out of contention, Fed Vice-Chair Janet Yellen is the clear frontrunner. As we’ve mentioned before, Yellen is viewed as a consensus builder and receives credit for predicting the housing bubble. Powerful Democratic Massachusetts Senator Elizabeth Warren, who sits on the Senate Banking Committee, supports Yellen and indicated that she would be able to gather the necessary votes for her nomination. Regardless of the politics behind the decision, … Read more

Which Sectors Are Leading the Market Higher? And Why Is This Important?

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Missed the ’13 Most Important Steps to Understand the Stock Market’? Click here. Demand academic evidence regarding the efficacy of the Valuentum process? Click here. Tobias J. Moskowitz and Mark Grinblatt documented the “strong and prevalent momentum effect in industry components of stock returns which accounts for much of the individual stock momentum anomaly” in their scholarly article published in the Journal of Finance, ‘Do Industries Explain Momentum’ (download here; stable link here; updated by Fraulo and Nguyen here). Moskowitz and Grinblatt also concluded that “industry momentum investment strategies, which buy stocks from past winning industries and sell stocks from past losing industries, appear highly profitable.” Such findings are consistent with the ‘Case for the Valuentum Style of Investing,’ and … Read more

Boeing’s Big Dividend Hike; Potential Deal with Embraer

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Image Source: Boeing.

We love Boeing. The company has been one of our favorites for years, but its performance during 2017 has simply been amazing. The dividend growth giant upped its payout in a big way recently, too, even as it is reportedly pursuing merger discussions with Embraer.

2,350-2,750 on the S&P? Could the Coronavirus Catalyze a Financial Crisis?

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Image: We think a rather modest sell-off in the market to the target range of 2,350-2,750 on the S&P 500 is rather reasonable in the wake of one of the biggest economic shocks since the Global Financial Crisis. The chart above shows how far markets have advanced since 2011, and an adjustment lower to the target range of 2,350-2,750 is rather modest in such a context and would only bring markets to late 2018 levels (note red box as the target range). The range reflects ~16x S&P 500 12-month forward earnings estimates, as of February 14, adjusted down 10% due to COVID-19. When companies like Visa talk about a couple percentage points taken off of growth rates, one knows that … Read more

Valuentum’s ETF Reports

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Image Source: GotCredit Welcome to Valuentum’s ETF coverage. If you’re new to the site, please be sure to access the stock reports and dividend reports as part of your membership. If you are looking for the archives to the Best Ideas Newsletter, they can be found here. The Dividend Growth Newsletter archives can be found here. The Exclusive and High Yield Dividend Newsletter have their own website with archives, the latter coming soon. To learn more about Valuentum’s ETF reports, please see  here . To request a report of an ETF we do not currently cover, please contact us. To access the relevant Valuentum reports for each major ETF category, please click on the respective link, “Click Here to Access Valuentum Report.” The links … Read more

US Congress Is Getting Ready to Pass a Massive ~$2.2 Trillion Fiscal Stimulus Bill

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Image Shown: US equities have started to recover some of their lost ground as the likelihood that the US Congress will pass a massive ~$2.2 trillion fiscal stimulus and emergency spending package, dubbed the CARES Act, has increased significantly over the past week as seen through the bounce in the SPDR S&P 500 ETF Trust (SPY). President Trump has clearly indicated that he intends to sign such a bill into law as soon as possible, with the US House of Representatives expected to take up the legislation this upcoming Friday morning on March 27. By Callum Turcan On March 25, the US Senate worked late into the night to secure a bipartisan compromise on a massive ~$2.2 trillion fiscal stimulus … Read more

ICYMI — Video: Will Hasty Policy Facilitate the Next Leg Down, or Do We Have It Coming Anyway?

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President of Investment Research and award-winning author of Value Trap: Theory of Universal Valuation Brian Nelson explains how US policymakers are stuck between a rock and a hard place, and how the market may be factoring in too high of a probability of a return to normalcy before 2021. This and more in the latest video report. Summary Make sure you review Value Trap on Amazon. Do so here. We think those that bought equities near the bottom of this swoon may be looking to take profits at present levels. The market is currently reflecting an 80%-85% probability of a return to normalcy before 2021, which we believe is too high at this time. Our main concern is that government … Read more

Roaring 20s? — Consumer Staples Valuations Stretched

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Strong outlooks for Kimberly-Clark, United Technologies, Hexcel and Lockheed Martin point to an economy that is still gaining momentum. We caution investors of consumer staples stocks, however, with many equities holding large net debt positions, and the sector trading at almost 20 times forward earnings. Learn about the difference between the Best Ideas Newsletter portfolio and the Exclusive publication and much more in this note. Image Source: Alan Levine — By Brian Nelson, CFA Welcome new members!    As you’re getting familiar with the website, please watch the Navigation Video. For those passionate about financial analysis and to see how deep our team goes with our research, please watch the Financial Analysis Video. Finally, don’t forget to flip through the , and read our … Read more

The Correction: Markets Collapse! Ebola Fears!

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This is why you pay us to do our job. We put you way ahead of the market, while others sat back and did nothing. This is what we talk about when we try to feed your mental model with the right information: “We’re not after a ‘two-second advantage’ on widely disseminated market-moving information. We’re trying to get you the right information…even before it becomes information.” We take our job seriously, and we sincerely care about you and your wealth. You now know that beyond a shadow of a doubt. The Dow Jones Industrial Average is down 300+ points at the time of this writing.   Please consider cancelling your free research provider or your higher-paid investment service provider because … Read more