(New York)

Walmart has taken a pounding this year. The stock is down 8.4% even though it has seen solid earnings performance. The reason why? Shares first got beat up early in 2018 when investors worried its digital strategy wasn’t taking hold. Then in the middle of the year worries about margins cropped up. Finally, in November, shares saw losses even though Walmart beat earnings and raised payouts. Interestingly, the shares were a counterpoint to the rest of retail, which saw gains for much of the year.

FINSUM: We think Walmart is a great buy. It has good same store sales momentum and its ecommerce operation is growing rapidly. This seems like a good buying opportunity to us, especially as the brand sells consumer staples, which will hold up even in an economic downturn.

(New York)

Where to put one’s money in 2019? That is the difficult question every investor must face at the moment. For a long time “TINA”, or “there is no alternative”, was the mantra which kept guiding capital into stocks alongside miniscule yields. Now with rates and yields rising and stocks having seen big losses, where should investors turn? The reality is that bonds seem likely to outperform stocks next year, at least according to JP Morgan. The bank thinks EM debt is likely to have a good year as once the Fed stops tightening the Dollar will likely weaken, giving a boost to EM assets.

FINSUM: In our view, a lot of damage has already been done to stocks and there are now some very interesting buys. Furthermore, short-term debt has seen yields rise high enough that you can get decent returns without a lot of interest rate risk.

(New York)

If this stat doesn’t put the current state of the market into perspective for you, nothing is likely to: the fall in shares this month has been the worst December since the Great Depression of the 1930s. Stocks have fallen 10% alone this month, a big chunk of the 16% fall since the September peak.

FINSUM: So some of the fears about the Fed have been eased today because of the NY Fed’s comments (not that those mean much), but the new fear is about the threatened government shutdown. We imagine the shutdown will work itself out, but the trade war and threat of recession loom large. It is hard to imagine any significant rally before the New Year.

(Washington)

For the last few weeks, the Fed looked like an out of touch ivory tower central bank committed to driving the US economy into a recession through relentless rate hikes (or at least that was the anxious view). However, the Fed has finally made an announcement which gave investors some calm. The head of the NY Fed commented that being “data dependent” meant listening to markets too, not just the economy. He also contextualized the language from the last Fed meeting, softening its impact. The market jumped immediately on the news.

FINSUM: Too bad it isn’t Jerome Powell making the comments. That said, the Fed must be starting to get nervous that we are close to a bear market.

(New York)

How do you know when the market is bad? When the safest stocks are also the best performing. It sounds like an old market joke, but it couldn’t be more true right now. Stocks are down around 10% this month, the worst December since the Great Depression. A good sample of these low volatility stocks can be found in Invesco’s S&P 500 Low Volatility ETF (SPLV). That ETF has fallen just 7% from the market’s September peak, while the S&P 500 has fallen 16%. Looking at correlations, the majority of stocks with the best 90-day momentum are also those with the lowest volatility.

FINSUM: The market is playing defense, and with good reason.