News & Our Thinking

Weekly Investor

Weekly Investor – October 22, 2012

23 October 2012

Bricks or Digits?

Market Summary:  

The major U.S. equity markets were mixed last week as the focus for a change was squarely on the U.S. economy.  Investors caught a glimpse of the potential for a stronger U.S. consumer as housing measures continued to improve and retail sales registered better than expectations.  In other votes of confidence in the U.S. economy, the leading economic indicators (LEI) improved and the Empire/Philly manufacturing readings fell less than anticipated.  On the earnings front, news was less positive as technology bellwethers Intel, IBM and Microsoft either missed estimates or offered cautious outlooks, causing the technology-heavy Nasdaq to take a breather for the week.  Global economic news was on the lighter side, although the combination of lower growth and low inflation in China heightened expectations for future economic stimulus, causing a strong rally in the Shanghai equity index.  As earnings season kicks into high gear, investors will continue to keep a close eye on the direction of consumer confidence and the appetite for corporate investment.

The S&P 500® closed up 0.3% for the week.  The top-performing sectors in the S&P 500® Index included Basic Materials (2.1%) and Financials (2.0%), while bottom-performing sectors included Consumer Staples (-0.6%) and Technology (-2.4%).  In the fixed-income market, the 10-year Treasury yield closed up for the week at 1.77%.

We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.


Innovative Catalysts

biibBiogen Idec Inc. (BIIB) develops, manufactures and brings to market therapies for multiple sclerosis, rheumatoid arthritis and lymphoma. BIIB also has numerous products in the pipeline for treating complications such as hyponatremia. The company currently offers four products: Avonex, Rituxan, Tysabri and Fumaderm.

Catalysts that should continue to help garner attention from investors include the expansion of its lead oncology drug, Rituxan, as well as the continued penetration of its next-generation MS drug, Tysabri.  While Wall Street has been at times skeptical of BIIB’s ability to deliver growth into the next decade, feedback from our Main Street contacts gives us added confidence in the company’s ability to continue delivering innovative medical treatments.

Top 10 Equity Holdings

Gilead Sciences Inc. 5.1%
Google, Inc. 5.0%
Lowes Cos. 4.1%
Sun Trust Banks, Inc. 4.0%
Danaher Corp. 3.8%
Express Scripts Holdings 3.8%
Qualcomm Inc. 3.7%
Ebay, Inc. 3.6%
Forest Laboratories 3.6%
CBS Corp. 3.5%

U.S. Equity Indices

Index 10/19/12 Week % Chg YTD % Chg
DJIA 13,343.5 0.1% 9.2%
NASDAQ 3,005.6 -1.3% 15.4%
S&P 500 1,433.2 0.3% 14.0%
Russell 1000 G 657.7 -0.6% 13.2%

U.S. Credit Rates

Index 10/19/12 10/12/12 12/30/11
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 0.7% 0.7% 2.0%
10 Year T-Note 1.8% 1.7% 3.3%
30 Year T-Bond 2.9% 2.8% 4.3%
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.