Weekly Investor – Oct. 11, 2010
Bad News is Good News
Market Summary:
The major equity averages ended the week broadly higher last week, pushing further into positive territory for the year. Thanks to talks of “QE2”, last week was a case of “bad news is good news” for investors. Another round of quantitative easing by the Fed, or “QE2”, seems increasingly likely in hopes of stimulating the U.S. economy. Adding momentum to the belief that more Fed intervention is needed were another disappointing employment reading coupled with weakening manufacturing data. At the same time, positive data points including strong September chain-store sales, better than expected service business activity and a rise in pending home sales contributed to the mixed economic picture. With earnings season set to kick into high gear and general elections right around the corner, investors should expect volatility to remain high.
Over the past week, top-performing sectors in the S&P 500® Index included Basic Materials (+3.2%) and Industrials (+2.9%), while bottom-performing sectors included Telecomm (-1.4%) and Consumer Staples (+0.8%). In the fixed-income market the 10-year Treasury gained ground, ending the week at 2.4%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Strong Growth Opportunities
EMC Corp. (EMC) develops solutions for the information technology industry. It provides and supports infrastructure for storing, protecting, organizing and retrieving vast amounts of data. EMC’s information management operations can be broken into three segments: storage, archiving and security. With acquisitions, EMC continues to fill out its product portfolio in order to go after more market share.
With EMC’s core market as storage, the company is well positioned to benefit from the increase in online content from sites such as those specializing in video sharing. Management is aligned to improve market share while ensuring that current business avenues continue to be successful. At Argent, we view EMC as having favorable odds for our clients.
Top 10 Equity Holdings
| Newell Rubbermaid | 4.2% |
| Google Inc. | 4.0% |
| Cisco Systems Inc. | 4.0% |
| Starwood Hotels | 3.9% |
| Energizer Holdings | 3.7% |
| Danaher Corp. | 3.7% |
| Carnival Corp. | 3.6% |
| MasterCard Inc. | 3.3% |
| FactSet Research Systems | 3.2% |
| Biogen Idec Inc. | 3.1% |
U.S. Equity Indices
| Index | 10/08/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,006.5 | 1.6% | 5.5% |
| NASDAQ | 2,401.9 | 1.3% | 5.9% |
| S&P 500 | 1,165.2 | 1.7% | 4.5% |
| Russell 1000 G | 525.8 | 1.7% | 5.1% |
U.S. Credit Rates
| Index | 10/08/10 | 10/01/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.2% | 0.1% |
| 5 Year T-Note | 1.1% | 1.3% | 2.6% |
| 10 Year T-Note | 2.4% | 2.5% | 3.8% |
| 30 Year T-Bond | 3.8% | 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.
