Weekly Investor – Aug. 30, 2010
Holding Pattern
Market Summary:
The major U.S. equity averages ended the week lower as worries over economic growth continued to take center stage. While lower than expected unemployment claims provided a modest positive tone, data on housing and retail sales continued to paint a picture of slowing economic prospects. News that Intel Corp. guided lower on its sales forecast for the upcoming quarter thanks to softening computer sales added credence to Wall Street’s cautious mood. During an address to global central bankers on Friday, Fed Chairman Ben Bernanke acknowledged the weakening economic backdrop but pledged the Fed’s commitment to act, if needed, to spur growth. The Fed Chairman’s reassuring words helped lift Wall Street for the day. Until investors have more confidence in the direction of the economy, Wall Street can expect the volatile ride to continue.
Over the past week, top-performing sectors in the S&P 500® Index included Utilities (+2.0%) and Telecomm (+1.2%), while bottom-performing sectors included Technology (-2.1%) and Industrials (-1.5%). In the fixed-income market the 10-year Treasury remained at the same level during the week with yield ending the week at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Positioning for a Rebound
Carnival Corp. (CCL), a subsidiary of Carnival Group, is a cruise and vacation company founded in 1974 with headquarters in Miami, Florida. CCL operates its cruise ships in North America, Europe, Australia and New Zealand. In addition to CCL’s cruise business, the company operates lodges in Alaska and the Yukon Territory of Canada, provides chartered coaches, and markets various sightseeing packages.
During this economic downturn, the discretionary nature of cruise travel spending has been reinforced, and as a result, companies have instituted deep price cuts to lure vacationers. While the outlook remains challenging, CCL has lived up to its “best of breed” reputation by continuing to separate itself from the competition. The company’s strong balance sheet and industry position should allow CCL to capture market share from its weakened competitors. Proceeding through the economic recovery with sustainable competitive advantages leads us to believe that CCL offers favorable odds for our clients.
Top 10 Equity Holdings
| Cisco Systems Inc. | 4.2% |
| Newell Rubbermaid Inc. | 4.0% |
| Google Inc. | 3.9% |
| Starwood Hotels | 3.9% |
| Danaher Corp. | 3.7% |
| Energizer Holdings | 3.7% |
| MasterCard Inc. | 3.4% |
| Biogen Idec Inc. | 3.4% |
| Allergan Inc. | 3.3% |
| EMC Corp. | 3.2% |
U.S. Equity Indices
| Index | 08/27/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 10,150.7 | -0.6% | -2.7% |
| NASDAQ | 2,153.6 | -1.2% | -5.1% |
| S&P 500 | 1,064.6 | -0.7% | -4.5% |
| Russell 1000 G | 474.5 | -1.0% | -5.1% |
U.S. Credit Rates
| Index | 08/27/10 | 08/20/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.2% | 0.1% |
| 5 Year T-Note | 1.4% | 1.5% | 2.6% |
| 10 Year T-Note | 2.6% | 2.6% | 3.8% |
| 30 Year T-Bond | 3.6% | 3.7% | 4.6% |
| Prime Rate | 3.3% | 3.3% | 3.3% |
This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC, a registered investment advisor. Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks.
