Weekly Investor – December 17, 2012
Happy Holidays?
Market Summary:
The U.S. equity markets declined as another week passed in which modest improvement in the economy was overshadowed by U.S. budget discussions. In the U.S., Fed Chairman Bernanke reinforced stimulative monetary policy for the foreseeable future and set unemployment and inflation thresholds – 6.5% and 2%, respectively – that would need to be met before the Fed would raise short-term rates. In addition, U.S. inflation remained in check and housing starts and employment readings were again positive. Global economic readings showed promise as European and Chinese manufacturing PMI improved. In China, the Shanghai stock exchange continued its recovery in part due to government plans to invest in stocks, rising approximately 10% in the last two weeks alone. Investors will continue to look for clues from Washington to discern how happy this holiday season will turn out.
The S&P 500® closed down 0.3% for the week. The top-performing sectors in the S&P 500® Index included Basic Materials (1.6%) and Telecommunications (0.5%), while bottom-performing sectors included Utilities (-0.7%) and Consumer Discretionary (-1.2%). In the fixed-income market, the 10-year Treasury yield closed up for the week at 1.71%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Growth through Innovation
Founded in 1916 and headquartered inCleveland, Ohio, Eaton Corp. (ETN) is a leading diversified industrial manufacturer of fluid power systems, electrical control products, automotive systems and medium to heavy truck transmissions.
ETN is exposed to relatively strong end markets despite current economic conditions and therefore remains relatively uninterrupted by global economic headwinds. Over the last decade, ETN’s management successfully transitioned its business from a primarily auto and truck component supplier to a manufacturer of high-technology power and fluid systems. These products have enabled the company to benefit from secular trends such as the transition into “cloud” computing via the internet and the need for greater automotive fuel technology. As the economy and market’s expectations improve, we believe ETN is well positioned to further capitalize on growth opportunities, representing favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.1% |
| Lowes Cos. | 4.3% |
| Danaher Corp. | 3.8% |
| Allstate | 3.8% |
| Suntrust Banks | 3.8% |
| Qualcomm Inc. | 3.7% |
| CBS Corp. | 3.6% |
| Ebay, Inc. | 3.6% |
| Forest Laboratories | 3.6% |
| Gilead Sciences, Inc. | 3.4% |
U.S. Equity Indices
| Index | 12/14/12 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 13,135.0 | -0.2% | 7.5% |
| NASDAQ | 2,971.3 | -0.2% | 14.1% |
| S&P 500 | 1,413.6 | -.03% | 12.4% |
| Russell 1000 G | 651.9 | -0.6% | 12.9% |
U.S. Credit Rates
| Index | 12/14/12 | 12/07/12 | 12/30/11 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.7% | 0.6% | 2.0% |
| 10 Year T-Note | 1.7% | 1.6% | 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.
