Weekly Investor – September 16, 2013
A Surprisingly Positive Week
Market Summary:
U.S. equity markets ended the week on a high note as the potential U.S. military strike against Syria was delayed. The U.S. now intends to pursue a proposal by Russia in order for Syria to surrender its chemical weapons. Upon the release of two new phones, Apple Inc. (AAPL) dropped 6.7% for the week. Analysts criticized the phones for lack of new features and high price points. In economic news, retails sales for the month of August declined to their slowest point in four months. However, many investors view this as a positive signal as it relates to the potential for delayed tapering by the Fed. Looking ahead to this week, the Federal Open Market Committee (FOMC) is expected to make a decision on whether or not to begin tapering its $85 billion in monthly bond purchases and August housing number will be released.
The S&P 500® was up 2.0% for the week. The top-performing sectors in the S&P 500® Index included Industrials (3.0%) and Consumer Discretionary (2.7%), while bottom-performing sectors included Energy (1.2%) and Utilities (0.6%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.9%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
JP Morgan Chase & Co. (JPM) is a financial holding company that provides various financial services worldwide. Founded in 1823 and headquartered in New York, New York, JPM operates it business in several segments including investment banking, commercial banking, asset management services, retail finance services, as well as credit card and auto services.
JPM emerged from the financial crisis as one of the few financial institutions with a solid balance sheet. JPM recently demonstrated its superior financial position by passing the Federal Reserve stress tests and also obtaining approval to buyback shares and increase its dividend. Despite the headwinds of a low interest rate environment and a more onerous regulatory landscape, JPM is poised to gain market share as its weaker peers consolidate their businesses to improve their balance sheets. We believe JPM has the potential to significantly surprise on the upside as economic conditions continue to improve for the banking industry. For these reasons we have added JPM to our portfolio and believe it represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.3% |
| Lowes Cos | 4.8% |
| CBS Corp. | 4.7% |
| Gilead Sciences | 4.7% |
| Danaher Corp | 4.0% |
| Amgen Inc. | 3.9% |
| SunTrust Banks | 3.8% |
| MasterCard, Inc. | 3.7% |
| Forest Laboratories | 3.7% |
| EMC Corp. | 3.6% |
U.S. Equity Indices
| Index | 09/16/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 15,376.1 | 3.0% | 17.3% |
| NASDAQ | 3,722.2 | 1.7% | 23.3% |
| S&P 500 | 1,688.0 | 2.0% | 18.4% |
| Russell 1000 G | 781.6 | 2.2% | 18.8% |
U.S. Credit Rates
| Index | 09/16/13 | 09/06/13 | 12/31/12 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.7% | 1.8% | 0.8% |
| 10 Year T-Note | 2.9% | 2.9% | 1.8% |
| 30 Year T-Bond | 3.8% | 3.9% | 3.0% |
| 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.
