Displaying items by tag: stocks

(New York)

JP Morgan just published what could be the most well-documented financial crisis forecast ever written. The bank’s quant team put out a 143-age report chronicling how the next crisis will unfold which features the opinions of almost 50 of Wall Street’s top analysts and strategists. The consensus is that there will be a major “liquidity crisis” with huge selloffs in major asset classes, and no one to step in to buy. The losses will be exacerbated by the shift to passive management and the rise of algorithmic trading. JP Morgan says that the Fed and other central banks may even need to directly buy stocks, and there could even be negative income taxes. The bank thinks the crisis will hit sometime after the first half of 2019, most likely in 2020.

FINSUM: Assessing the validity of these kinds of predictions is always hard. While we have no idea about the timing, or whether this will actually happen, the argument is well thought out and quite logical.

(New York)

The Fed seems almost certain to hike later this month, as well as in December. Rates heading higher looks like a certainty. So what does that mean for high yielding equity sectors which many Americans rely on for dividend income? The answer is a mixed picture. Pure rate-driven sectors like utilities, real estate, and telecoms will likely be hurt, but high-yielders like healthcare and and consumer staples should hold up better because their businesses can generate a lot of cash that can be returned to shareholders via dividends and buybacks.

FINSUM: Pharma has returned over 12% this year while real estate is just around 2%, showing how the former can outperform in rising rate environments.

(Washington)

Right now it does not seem like it has a high likelihood, but given the current direction of antipathy towards Trump, a sweep by Democrats in the midterm elections could happen. If it does (as opposed to the more likely option of Democrats only taking the House), the following sectors should do well, says Barron’s. These include: consumer staples, utilities, and real estate, all rate-sensitive sectors. The reason why is that Democrats are expected to push through a big infrastructure spending plan if they win, which would create deflation and keep rates pinned.

FINSUM: This is quite an insightful take on what might flourish if Democrats do have a breakthrough. It seems unlikely, but then again, it seemed unlikely Trump was going to win going into election night!

(New York)

Safe dividend stocks are absolutely prized by America’s retirees. No group relies on dividends more than retirees, and most seek safe and reliable dividends with underlying businesses that can provide some price appreciation too. With that in mind, three stocks to look at are McDonalds, Corning, and Starbucks. All three companies have strong and growing businesses and seem committed to rewarding shareholders. They also have the formidable capital position to be able to invest in continuing robust growth even in changing times.

FINSUM: We don’t know much about Corning, but McDonalds seems like a good bet to us. The company has responded well to the shifts in consumer tastes and it has been innovative in adapting its menu and model to the new environment.

(New York)

Retail clients, and some advisors, are adopting an increasingly defensive outlook on the market as the economy roars and rate hikes look more and more certain (not to mention soaring valuations). So what are the best defensive ETFs to protect a portfolio? The range of defensive strategies is broad—from dividend-focused, to shorting, to multi-factor. Some of the most popular include the AdvisorShares Dorsey Wright Short ETF, the Fidelity Dividend ETF for Rising Rates, or the Principal Mega-Cap Multi-Factor Index ETF.

FINSUM: It seems a smart choice to have defense ETFs be a decent portion of one’s portfolio right now. That said, we would be anxious to make shorting-focused ETFs a substantial holding.