Saturday, May 13, 2017

TLH Market Review - 5/13/17

Despite what seems to be a constant barrage of worries about European elections, Chinese capital flows, trade & tax reform going nowhere, and dysfunction in DC as normal the markets keep chugging along to new highs just about everyday.




The S&P 500 continues to set new highs and came within centimeters of closing over 2,400. Of course other major indexes such as the Nasdaq, Dow, and Russell 2000 also continue to trade near or at new highs.  Seemingly nothing that can knock this bull over so let's enjoy it for once.  I still think a couple shallow pullbacks are warranted, and healthy.  I just don't see a reason for stocks to crash right now.  Evidently many investors agree as the Volatility Index(VIX) trades near record lows and closed beneath 10, and is at it's lowest level in 24 years.

Many are clamoring that each time the Fed raises rates the market is going to falter. That just hasn't been the case. Sure the knee-jerk reaction can be to the downside, but the trend has been for the market to run higher in each rate hike's wake.  Speaking of the Federal Reserve the odds of a rate hike in June have been dancing around 80% more or less.  Personally I think it might be a bit soon this year.  I could see it maybe in September if the data gets better.

Reason being is CPI just came in at a lukewarm 0.2%, but YoY is still up 2.2%.  The Fed talks a lot about inflation, and right now it loves skirting the line between to hot and to cold. On top of that Retail Sales came in at 0.4% which missed expectations at 0.6%.  It was a good sign to see last months -0.3% revised upwards to +0.1%. That still has not stopped the SPDR Retail ETF(XRT) from losing 2.9% this week, and remains one of the worst performing sectors in the S&P 500 YTD.

Last Friday's Non-Farm Payrolls showed 211,000 jobs were added to the economy. That's better than March's 98k which caught many off guard.  It's still not a huge amount of job growth, but that's been lacking for over a decade. Only 8 times in the last ten years have we seen a report showing more than 300,000 new jobs. That's a far cry from the 1990's when there were 29 months with 300k+ job growth.

The majority of our portfolio has reported earnings.  Overall I've been quite pleased.  The stock price doesn't always reflect what I'd like it to, but I know over The Long Haul our picks will get us right where we need to be.

This week we received a 20% dividend increase  from Wabtech(WAB), and Hain Celestial(HAIN) gave an update on their accounting investigation and delayed 10-Q filing.  Hain shares popped on the news. However it's been a tough stock to own lately. The company sells a variety of great healthy products that consumers love, and need everyday. I think in  5 years from now as we sip on some Sleepy Time tea before bed while reviewing our portfolio's we will be pleased.

Last week we also received earnings from Cognizant Technology Solutions(CTSH). This month the company will be paying it's first ever dividend at $0.15/share. It feels good to be the first in line for what's expected to be a long line of payments.  Shares popped 4% on the news, and held onto most of their gains for the year.  The stock is up 14% YTD.

Have a great weekend and Happy Mother's Day! Show mom some love by directing her to this blog!

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