Mid-cap stocks hiding in plain sight (video)

Investors who overlook mid-cap stocks in their portfolios could be missing significant opportunity. Here to explain is Bryant VanCronkhite, CFA®, CPA, portfolio manager with the Wells Capital Management Special Global Equity team.

Be the first to comment

Don’t let the bed bugs bite (by not riding the subway)

Stocks closed higher on a full day of economic news ahead of the long weekend. Consumer spending and incomes in July disappointed, inflation was kept in check, Chicago-area manufacturing picked up pace, and the consumer mood brightened.

The Dow rose 18 points, with 20 of its 30 components advancing; the S&P 500 Index gained 6; and the Nasdaq was higher by 22. Advancers led decliners by seven to three on the NYSE and the Nasdaq. The prices of Treasuries weakened. Gold futures dropped $3.00 to close at $1,287.40 an ounce, and the price of crude oil gained $1.41 to settle at $95.96 a barrel.

For the month of August, the Dow gained 3.23%, the S&P 500 rose 3.76%, and the Nasdaq jumped 4.86%.

 

In Other Business News:
Continue reading

Be the first to comment

The Fed and the ECB: Things are the same in the U.S., different in Europe

While many investors focus on the Consumer Price Index as a gauge of inflation, the Federal Reserve (Fed) prefers the personal consumption expenditures (PCE) index, and the PCE index has once again stayed below the Fed’s 2.0% target. PCE decreased $13.6 billion in July. After adjusting for inflation, real PCE decreased 0.2%. The bulk of the decline was driven (pardon the pun) by a decrease in spending on motor vehicles and parts.

The price index the Fed targets, the PCE price index, increased 1.6% year over year. There is a continuing divergence between prices of services and prices of goods. Year over year, the PCE price index for services increased 2.2%, while the index for goods increased 0.3%. Within the goods category, durable goods (items expected to last three years or longer) have been declining in price (-2.3% most recently) and nondurable goods have been rising slowly.
Continue reading

Be the first to comment

Ask for advice, win a rocket ship?

Shares fell as Ukraine’s president accused Russia of invading Kiev, trumping positive economic news in the U.S. The Dow dropped 42 points, with 21 of its 30 components declining; the S&P 500 Index fell 3 points; and the Nasdaq lost 11 points. Decliners led advancers by five to four on the NYSE and by five to three on the Nasdaq. The prices of Treasuries strengthened. Gold futures gained $7 to close at $1,290.40 an ounce, and the price of crude oil rose 67 cents to settle at $94.55 a barrel.

In Earnings News:

Continue reading

Be the first to comment

Opportunities for European stocks (excerpt)

Dale Winner

Dale Winner

With economic recovery in Europe “lackluster at best,” investors are left wondering how could there possibly be opportunity for stocks. Dale Winner, co-portfolio manager on the EverKey Global Equity team at Wells Capital Management, explains in this excerpt of On the Trading DeskSM from Tuesday, August 26, 2014.

Listen to the full interview.

Briefly, what is the current state of the European economic recovery?
Briefly, it’s lackluster at best. But we now have seen four consecutive quarters of GDP [gross domestic product] growth, although this has been lackluster. For example, first-quarter GDP grew only 0.2%. Also, unemployment in the eurozone is high at 11.5%, and inflation was only 0.4% in July. We are constructive, though, because there’s huge pent-up demand in Europe on a normalized basis.

In a recent CNBC interview, Wells Capital Management’s economist Jim Paulsen indicated that Europe might be a great place for an investor to diversify if the Federal Reserve begins to tighten here in the U.S. With Europe’s recovery being what it is, what’s your reaction to that?
We totally agree with Jim. The U.S. markets are trading close to all-time highs. They are rich in terms of valuation versus their long-term averages. Essentially, they’ve benefited from very aggressive quantitative easing [QE]. On the flip side, they essentially haven’t even started traditional QE in Europe yet. This divergence in the economic prospects and QE between U.S. and Europe is being reflected in dollar strength and euro weakness. This weakening euro will likely be the first catalyst for reflation in Europe, and that should be followed by improved bank lending.

Dale, you talk about financials. In recent months, we’ve seen the European banks come under increased scrutiny from a regulatory standpoint. Do you view those valuations as being attractive at this time, given the central bank policies and balance sheets?
It’s very stock specific for us. We are stock pickers, not macro forecasters. So, we focused on financials that look cheap on their normalized earnings power but in the meantime have a very strong capital basis. We do agree that there’s a lot of regulatory pressure on banks. We feel it’s mostly on the investment banking and wholesale banking side, and so we’ve also tried to narrow down our focus to domestic franchises.

Continue reading

Be the first to comment

Raising more cash to raise a child

Stocks paused after yesterday’s record close above 2,000 for the S&P 500 Index. Weighing down stocks were escalating battles in Ukraine and a downgraded assessment of the U.S. economy for the rest of the year from the Congressional Budget Office.

The Dow rose 15 points, with 17 of its 30 components gaining ground; the S&P 500 Index gained a fraction of a point; and the Nasdaq lost 1. Advancers led decliners by four to three on the NYSE, and decliners edged out advancers by five to four on the Nasdaq. The prices of Treasuries strengthened. Gold futures fell $1.80 to close at $1,283.40 an ounce, and the price of crude oil gained 2 cents to settle at $93.88 a barrel.

In Earnings News:

Continue reading

Be the first to comment

Laundro-bars: Sudsy fun or struggles for snuggles?

Stocks gained on merger news and positive economic data about consumer optimism. The Dow gained 29 points, with 17 of its 30 components advancing; the S&P 500 Index added 2 points; and the Nasdaq rose 13. Advancers led decliners by two to one on the NYSE and the Nasdaq. The prices of Treasuries weakened. Gold futures rose $6.30 to close at $1,285.20 an ounce, and the price of crude oil added 51 cents to settle at $93.86 a barrel.

In Earnings News:

Continue reading

Be the first to comment

Opportunities in European stocks (podcast)

Dale Winner

Dale Winner

Some describe economic recovery in Europe as flagging, one that’s dipped not only once, but twice, and perhaps, as some estimate, for a third time. This leaves investors wondering, how could there possibly be opportunity for stocks? Today’s guest has confidence in companies that have self-help characteristics. Joining us is Dale Winner, CFA, co-portfolio manager on the EverKey Global Equity team at Wells Capital Management.

Listen to the podcast.

Be the first to comment

Back to school shopping trends

Corporate deals helped send stocks higher today, with the S&P 500 Index crossing the 2,000-point threshold for the first time during intraday trading.

The Dow gained 75 points, with 24 of its 30 components advancing; the S&P 500 Index added 9, closing just shy of 2,000; and the Nasdaq rose 18. Advancers led decliners by five to three on the NYSE and by nearly four to three on the Nasdaq. The prices of Treasuries strengthened. Gold futures lost $1.30 to close at $1,278.90 an ounce, and the price of crude oil fell $0.30 to settle at $93.35 a barrel.

In Other Business News:

Continue reading

Be the first to comment

1984—Not this time

Manley on the Street1984. It was a year of fear, frustration, and anticipation. It was a year that began with worries about inadequate economic growth and evolved into one where fears of excessive growth (and the subsequent return of inflation) produced a meaningful decline in the U.S. equity market. It was the last hurrah of the inflation mongers and the birth of the disinflationary environment that brought forth, with the exception of two terrible weeks in October 1987, a five-year rise in stock prices. It was the test, and the world’s economies passed it.

In a way, it had to happen. Back in September 1981, interest rates peaked at unprecedented levels as the Federal Reserve (Fed) concluded an epic battle to end inflation, which had the American economy in its thrall for 15 years. As the economy contracted, pricing power followed suit. Within a year, stocks were rising, not on then-current earnings but, rather, on the potential for a slow measured economic expansion with little inflationary pressure. That thought worked well while the economy was in recovery mode and showed a rebound in economic activity, with few strains on capacity. However, by the beginning of 1984, growth had become robust, and the capital markets were seized with the fear that inflation had not been killed after all. It merely had been lurking behind a curtain of recessionary slack and now was set to reemerge in all of its terrible might.

In retrospect, the fear was unfounded. Then–Fed Chairman Paul Volcker raised rates slightly, lowered the economic growth vector, and eradicated any reasonable signs of inflation. The results were glorious. Profits, sentiment, and multiples soared in the next several years on the realization that the beast was dead and that we could go back to our normal lives.

Continue reading

Be the first to comment