(New York)

While markets have been doing a little better of late, investors may be looking for safe stocks that could perform well. Well, if that is the case, look no further than three old-time consumer goods companies that look ripe for outperformance. Coca-cola, PepsiCo, and P&G all look set to thrive and are available at a bargain. On the back of a slew of industry factors, consumer goods stocks are down by over 12% this year. However, the three stocks mentioned are solid dividend producers and seem likely to provide strong earnings growth, making a 10% total return for the year look likely.

FINSUM: 4% dividend yields with good top-line revenue growth for rock solid stocks seems like a pretty attractive proposition to us.

(New York)

One of the pioneers of smart beta investing has just gone on the record tearing down the concept. A long time quant strategist, Vincent Deluard, who helped build early smart beta funds, has lost faith in the strategy as he has seen fund providers use statistics to disingenuously prove all manner of strategies using selective back-testing. Deluard even built model portfolios to show how “dumb” constructions could lead to good results, and “smart” constructions could lead to poor results.

FINSUM: We don’t think smart beta is necessarily “smart” or “dumb”. In the end, these are really just strategies that are only as “good” as the market circumstances they are applied to. Smart and dumb is ultimately about the buyer of the funds.

(Washington)

The fiduciary rule saga presses on. Just when it looked like it was all over and the DOL had finally avoided its own rule, the court battle is not over. A new group of state attorney generals has just asked the to be allowed to appeal the fifth circuit court’s ruling against the DOL rule. California, Oregon, and New York have all asked for a rehearing of the court’s May 2nd decision to deny their request to step in as defendant. In their appeal, the states said “The federal government is no longer pursuing this appeal … Given that posture, the exceptional importance of the issues, and the grave harm the states will suffer as a result of the panel opinion — billions of dollars in lost retirement income to their residents and tens of millions of dollars in lost tax revenue — the states respectfully request that the court reconsider the decision”.

FINSUM: This is dragging on so long it is even getting annoying to report on! This does not seem likely to be granted, but one can never be sure.

(New York)

Morgan Stanley has just put out a very bold prediction. The investment bank has picked a stock which it says will have a $1 tn market cap within a year. That stock is Microsoft. The stock current has a cap of around $740 bn and has risen more than 40% in the last year. But the big catalyst for a move higher is the success of its cloud computing division, Azure. Morgan Stanley summarizes its view this way, saying “Revenue drivers including Azure (Microsoft emerging as a public cloud winner), data center (share gains and positive pricing trends), Office 365 (base growth and per user pricing lift) and the integration of LinkedIn should drive durable double-digit revenue growth over the next three years”.

FINSUM: While bullish, this does not seem at all unlikely.

(New York)

Investors beware. US equity prices now seem to be entirely at the mercy of bond yields. Stocks have consistently struggled as yields have moved higher, and today Treasury yields seem to have broken an important threshold. Treasuries traded as high as 3.13% this morning, the highest level in seven years. Stock markets unsurprisingly fell. The markets were initially spooked by a solid US retail sales report that seemed to indicate the Fed might hike more aggressively than expected.

FINSUM: Yields definitely seem to have a strongly upward trend at the moment and have definitively broken out of that 2.9% band they had been locked in for a few weeks. Next stop 3.50%?