(Washington)

The Fed is facing a herculean task, argues the Wall Street Journal. That task is to keep inflation at its target, while also steering a moderation in growth. In other words, how does the Fed keep inflation in check without causing a recession? One way to consider this challenge is to think about how the Fed may approach it: “focus more on the domestic economy and keep nudging interest rates higher to combat inflationary concerns, or pay greater attention to stresses abroad and in the markets, and hold rates steady or even nudge them lower”, says the WSJ.

FINSUM: We think this is not as hard as rumored. Our view is that the Fed should freeze rate hikes and broadcast that a long-term freeze is the plan. That should put the economy (and markets) on solid footing, and keep things from getting too out of hand.

(New York)

Investors may have gotten excited on Friday. Accommodative language from the Fed has a way of doing that. However, there is no reason to get to exhilarated, as this rally doesn’t seem to have legs. One of the big worries is about the largest group of shareholders in the country—Baby Boomers. Because this generation is retiring, they are likely to sell into any rally as they don’t have time left to wait for a big recovery. Accordingly, any rally will likely lose momentum quickly. As evidence, redemptions over the last four weeks have totaled $164 bn, or more than 1% of money in all stock and bond funds.

FINSUM: This is an interesting argument and one we tend to take seriously given the size of the Baby Boomer population and their large shareholdings. That said, we do not think it is large enough to affect the fundamentals of the market, just alter the amplitude.

(San Francisco)

What should investors do about tech stocks? That is a big question. After an extraordinary run over the last couple of years, things have a hit a real rough patch. Worries about regulation loom. With that said, Goldman Sachs is optimistic on some large and midsize tech stocks. One of its high conviction picks is Netflix, which is down around 30% recently. Goldman is steadfastly a believer, however, saying “We believe Netflix represents one of the best risk/reward propositions in the Internet sector”. Other names to look at from Goldman include Expedia and Etsy.

FINSUM: What we like about these three names is that they seem the least likely to be impacted by any new privacy regulations.

(New York)

Retail stocks are in a tenuous position. They thrived to begin 2018, and for three quarters rolled to solid gains. Then in the fourth quarter they got rocked despite the fact that they had been gaining momentum from healthier consumer spending and a stronger than expected holiday shopping season. So what to do? Jefferies says it is time to buy the dip, based on the fact that “The consumer is strong, Amazon isn’t killing retail, the Federal Reserve is more dovish, oil down, first-half weather compares easy, free cash flow piling up, margins are moving up and consumer discretionary stocks are cheap on absolute and relative basis”. Check out these names: Gap, American Eagle Outfitters, Five Below, Foot Locker, Kohl’s, Urban Outfitters, Under Armour, Tapestry, and Lululemon Athletica.

FINSUM: Our view is that at some point soon (has it already happened?), ecommerce and brick and mortar are going to fall into equilibrium. When that happens, it will be good for traditional retailing stocks.

(New York)

The big market rout has left no shortage of stocks trading at large discounts to their previous valuations. The important question is which ones are actually a good value given the eruption in markets. With that in mind, here are four well-known names to take a look at. They are General Motors, CVS Health, Macy’s, and American Airlines. GM and AA are trading at near 5x earnings, the latter despite a thriving business. AT&T is interesting too, as shares have fallen 20% in the last year, and the dividend has swelled to 6.7%.

FINSUM: This seems like a good chance to pick up some healthy stocks that have been heavily dented by a selloff, but are poised to recover. We particularly like American Airlines and AT&T.