FINSUM

FINSUM

Email: عنوان البريد الإلكتروني هذا محمي من روبوتات السبام. يجب عليك تفعيل الجافاسكربت لرؤيته.
الجمعة, 21 أيلول/سبتمبر 2018 09:04

What Investors Misunderstand About Rising Rates

(New York)

The whole market is generally afraid of rising rates. Both in 2015 and 2018, there were significant mini-meltdowns about the prospect of aggressive rate rises. One of the aspects that most worries investors is that higher rates will drive participants out of stocks and into higher-yielding bonds. However, while true in some respects, that narrative is far too simple. Higher rates are a symptom of a healthy and growing economy, which means the business fundamentals driving stocks are getting better, a factor which is likely far more important than incremental changes in rates.


FINSUM: We think there is some wisdom in these words, especially as they perfectly encapsulate what has happened with the market this year.

الجمعة, 21 أيلول/سبتمبر 2018 09:03

This Dividend Sector Has Big Upside

(New York)

Utilities, telecoms, consumer staples, and REITs, all sectors that should get hurt as rates rise, right? Think again. Dividend stocks are doing well, and telecoms, in particular, look like they have a lot of upside for investors. According to Oppenheimer, the price war in the sector is coming to an end, which means telecoms, which have trailed the market this year, could be in for a good run. Also notable is that the dividend yield spread between AT&T and Verizon is now at its highest ever, with the former at 6% and the latter at 4%.


FINSUM: Favorable bundling and higher per user revenue seem likely. Those drivers, combined with the fact that dividend stocks have a lot of momentum, could mean the sector might strongly outperform the market.

الجمعة, 21 أيلول/سبتمبر 2018 09:01

Oil Investors Need to Worry about a Trade War

(Houston)

Many investors are simply unfazed by the current trade war erupting between the US and China (just look at share prices for evidence). However, even those who may be bullish on equities need to be worried for oil. While the increasing sanctions on Iran are supportive of prices, a trade war would likely be very bad. The reason why is that increasing tariffs would likely cause an economic downturn in emerging markets, which would then heavily sap oil demand, leading prices lower.


FINSUM: The oil and other commodity markets are demand-driven (and realistic) in a way that stocks aren’t. Watch them for where the economy is actually headed.

الخميس, 20 أيلول/سبتمبر 2018 07:40

Dividend Stocks are Powering Returns

(New York)

One would think that with rates and yields rising, and set to continue doing so, dividend focused stock sectors might be suffering. Yet, the opposite is true in the last month, the biggest gainers in the S&P 500 have been the dividend stalwarts—utilities, consumer staples, and telecoms. The driver of the gains seems to be less about the returns provided by dividends, and more about the fact that these are defensive sectors that can protect against a downturn.


FINSUM: This development is a little confusing (but then again so is the whole market), as the defensive characteristics would seem to be somewhat offset by the downside of rising rates’ impact on these sectors.

الخميس, 20 أيلول/سبتمبر 2018 07:39

BAML Warns the End of the Bull Market Has Arrived

(New York)

The market has been doing very well lately. Political worries, trade wars, it doesn’t matter, nothing seems to be able to contain the market’s optimism. Despite all this, though, Bank of America says it is all about to come to an end. The bank’s top strategist says that weakening growth, rising rates, and a glut of debt will conspire to weaken stocks. “The Fed is now in the midst of a tightening cycle, ignoring structural deflation, focusing on cyclical inflation … Until this Fed hiking cycle ends we suspect absolute returns from financial assets will remain slim & volatile”. BAML says that weakening bank stocks even in the face of rising rates (which should be good for them) may be a sign of how badly the Fed’s tightening will affect of the overall economy.


FINSUM: This is quite a gloomy and contrarian opinion. We see the argument, but it certainly seems to contradict everything one can observe in the market and economy right now.

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