(New York)

One could argue that we are in a stock pickers’ market. With valuations down and no clear narrative to lift all boats, the market seems set to let stock pickers shine as companies start to trade on their fundamentals more than in the last few years. With that in mind, here are four of the best REIT picks. REITs are a very diversified group, and picking them now is more complicated than ever given rising rates and slumping real estate markets. The best areas in REITs right now are those that deal in ecommerce warehousing as well as data centers. Here are 4 picks that could do well: Hersha Hospitality Trust (HT), CyrusOne Inc. (CONE), Federal Realty Investment Trust (FRT), and Stag Industrial (STAG).

FINSUM: We think the industrial REIT area (ecommerce warehousing) seems to be a really good choice as the underlying demand for space is steady and growing.

(New York)

Here is an eye-opener—all the carnage of December is almost in the rearview mirror for the Nasdaq. The index has just about risen out of its bear market, up 20% from its lows. That is an amazing turnaround from its nadir on December 24th. The index is heavily weighted towards big tech shares and has recently rallied on the back of optimism about improving US-China trade relations and a more dovish Fed.

FINSUM: We like good news, but the rally in the Nasdaq feels like too much too soon!

(New York)

One of the hottest trades in the last several months has been to buy a basket of low volatility stocks. The idea is that one can insulate their portfolio from the market’s fluctuations by buying stocks that are less likely to see swings in value. The problem is, the trade has gotten very crowded. Legal & General Investment Management says that “Low volatility might be becoming vulnerable as investors chasing recent performance and buying into gloomy 2018 outlooks flock into it … It is becoming a relatively consensus position, which for us is a warning sign”.

FINSUM: Low volatility stocks held up well in the tumultuous fourth quarter, but the attractiveness of the strategy has made valuations quite high. Such stocks typically lag in upward markets, so there does seem to be some significant risk here.

(Seattle)

Amazon has had two rough patches following its last two earnings releases. The stock fell in October after its third quarter earnings release, and again last week after its fourth quarter numbers. December as a whole was a rough patch too. However, all this presents a good buying opportunity, says one equity research analyst. “Amazon typically experiences some downside follow-through over the day and week after a move lower on earnings, but over the next one and three months, these moves lower have presented very good buying opportunities”, says the analyst, from Bespoke Investment Group.

FINSUM: This is not arguing that Amazon is suddenly some kind of value stock, but if you are thinking of going long anyway, the current environment may represent a good buying opportunity.

(New York)

Real estate across northern cities is taking a pummeling right now. There appears to be a significant exodus of wealthy homeowners leaving high-tax northern states like New York and New Jersey in favor of sun belt areas with lower taxes. The big catalyst for the move has been the elimination of SALT deductions above $10,000. Florida, for instance, has no state income tax and no estate tax. Accordingly, Miami, as well as other sun belt cities like Las Vegas and Phoenix, have seen real estate markets holding up well compared to the trend across the north.

FINSUM: Northern states are going to have to adjust (assuming the federal government doesn’t change policy) as the logic is just too simple for people right now: “should I live in a cold place with high taxes, or a warm place with great weather and low taxes?”.

(New York)

Dividend stocks have not been looking as appealing lately because of the rise in rates. Yields on even short-term assets now look much more attractive than the near zero coupons that were being offered a few years ago. That said, dividend stocks have a special niche within a portfolio, and it is not hard to find some very solid stocks with good yields. One of the best ways to buy dividend stocks is through an ETF that can select a large and balanced group. With that in mind, here are three ETFs to do just that: ProShares Dividend Aristocrat ETF (NOBL), the SPDR S&P Dividend ETF (SDY), and the Vanguard Dividend Appreciation ETF (VIG).

FINSUM: With the Fed showing dovishness on rates, the outlook for dividend stocks has suddenly brightened.

(New York)

We ask you, readers, to name the single most important factor that has supported stock prices through all the turmoil over the last year. We bet more than half of you uttered “earnings” to yourself. Earnings have grown strongly in the last year, something that helped keep prices stable despite big geopolitical worries. However, there pillar of the market may now be crumbling as analysts have just turned the earnings outlook negative for the first time in three years. Analysts now expect first quarter earnings to decline by almost 1% from last year. By contrast, at the end of December, expectations were for a 3.3% gain. Most expect the weakness to come from margins, not top line growth.

FINSUM: Continued strong earnings were supposed to be one of the positives this year. If earnings sputter out, what is there to hold up the market in the face of so much uncertainty?

(Washington)

The SEC’s regulation Best Interest Rule appears to have backfired badly. A darling of the industry, in most senses, the rule is so convoluted and lacking in specificity that it seems to have been one step too far for the anti-DOL rule lobby. What we mean is that the rule was so poorly received, and so poorly defended by the SEC, that it can be seen as responsible for the big surge in state-level fiduciary rules that are cropping up across the nation.

FINSUM: The interesting part about this is that the SEC’s new rule, which was supposed to be the sensible solution between demands for a fiduciary standard and industry practicality, has completely undermined its own interests. The rule seems to have been so one-sided and poorly marketed, that it has only emboldened fiduciary advocates and “left them no choice”.

(Seattle)

There has been a lot of speculation lately, including by FINSUM, that Amazon might buy FedEx. FedEx’s share price could be considered cheap, and it would be a bold and strategic move if Amazon is actually committed to building its logistics business. However, Barron’s is today arguing that Amazon will never buy FedEx. The reasons why are two-fold. The first is that the 10.7x p/e ratio is not actually very cheap, and secondly, because Amazon does not really need FedEx’s capabilities, which have less to do with last mile delivery than they do with “upstream sorting”.

FINSUM: The real question here is whether Amazon wants to build up a logistics business in its own right, not just internal capabilities to serve its ecommerce business. If it does, then it is a smart acquisition. However, it would likely face significant anti-trust hurdles.

(New York)

For the last six months, there has been a lot of focus in the media and amongst analysts that a recession will be arriving in 2020. 2019 always seemed to close of a call because of how the economy was trending, but 2020 seems to be a safe bet based on some of the indicators out there. Now, JP Morgan is saying a recession in 2020 is unlikely. The catalyst for the change? The Fed. Strategists at JP Morgan concluded “If the Fed is less spooked by full employment, more tolerant of an inflation overshoot and less anxious to reach restrictive policy, then 2020 might not be a year to think about recession and so late 2019/early 2020 would be premature to position defensively cross-asset”.

FINSUM: This analysis is dead simple, but we would agree. If the Fed is less hawkish, then it will prolong this cycle.