Saturday, February 18, 2017

TLH Market Review - 2/18/17

This week's highlight was from Janet Yellen's semiannual testimony in front of Congress. When asked why the Fed didn't update their growth projections at the December meeting like other organizations did. Yellen said the Fed decided to refrain from updating it's economic forecasts until they had greater clarity on on any fiscal stimulus measures that are going to be taken.  In other words now that it appears fiscal stimulus is on the way it seems the Fed maybe raising rates more than the markets expect them too.


That caused some jumping around in the expectations for rate hikes the rest of the year. Expectations for a hike before May jumped up, but have come down a bit.  I think we can still expect two hikes this year.  CPI was released and we saw a really good number. In fact it was the strongest since March 2012. With a 2.5% YoY increase in inflation I think the case for rate hike is being made on it's own.

Additionally we had a good showing with Retail Sales ex-auto up 0.8%, but some downside with Industrial Production slipping -0.3% when expectations were coming in for a flat reading.

Markets

The markets just continue to go up which is astounding quite a few people.  Sounds like music to the ears! With 5/7 weeks so far this year showing gains it's quite the difference from the beginning of 2016. We'll let the pundits keep calling for a correction. Totally fine here at The Long Haul. We can potentially use the pullback to add some mis-priced amazing stocks, and then we will continue doing what we do.  Which is not much besides holding onto great companies so they can make us plenty of money.

This week we saw earnings from  two portfolio members HCP Inc(HCP), and WhiteWave Foods(WWAV)

I'm not going to dive into WhiteWave's numbers to much since their merger with Danone should be completed soon.  I will say it looks much more obvious now the big growth in the healthy food space is behind us. WWAV showed 3% revenue growth for the quarter. That's down from the heady days of 10% plus growth on a regular basis.  Hain Celestial(HAIN) also had some bad news recently as they announced they would be filing their latest 10-K late.  That sent shares falling to the $33.50's. The company is still reeling from their accounting issues announced last year.

HCP has been working to reposition it's portfolio into the life sciences, and other higher end medical properties. that's apparent as the company continues to adjust it's portfolio. This year was no exception as the company completed over $700 million worth of acquisitions and dispositions. The company also repaid $1.7 billion worth of debt for the year with the proceeds from the QCP spinoff.  The company continues to be a steady dividend payer. It's not a growth stock rocket, but that's fine.  I think the stability of it's business will serve us well over the long haul.

That's all for now. Have a great weekend.

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