News & Our Thinking

Weekly Investor

Weekly Investor – September 23, 2013

25 September 2013

Record High!

Market Summary:  

U.S. equity markets ended the week in positive territory and the S&P 500® Index posted its third straight week of positive performance, reversing August’s pullback.  Markets opened higher on Monday upon the news that Larry Summers had withdrawn his bid for Federal Reserve Chairman, as investors expected Summers to be the candidate most likely to aggressively wind down easy money policy.  On Wednesday, the Federal Open Market Committee (FOMC) made the decision not to initiate tapering, citing strains on the economy.  The news pushed equity markets up and the S&P 500 hit an all-time high of 1,725.  The balance of the week was less eventful as U.S. initial jobless claims came in at 309k, an increase from the previous week, but still lower than consensus estimates of 330k.  Looking ahead, investors hope for continued positive performance through the last stretch of the third quarter of 2013.

The S&P 500® was up 1.3% for the week.  The top-performing sectors in the S&P 500® Index included Industrials (1.9%) and Utilities (1.8%), while bottom-performing sectors included Energy (0.6%) and Telecommunications (0.0%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.7%.

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

Favorable Odds

LNCLincoln National Corp. (LNC) engages in multiple insurance and retirement businesses within the United States and sells a range of wealth protection, accumulation and retirement income products and solutions. LNC was founded in 1904 and is headquartered in Radnor, Pennsylvania.

Similar to its industry peers, LNC’s profit has been significantly impacted by the low interest rate environment.  However, improving economic signals currently point to the possibility of the Federal Reserve reversing its monetary policy in the near future.  This could lead to a slow climb in interest rates and thus a much improved operating environment for LNC.  Additionally, the improving U.S. economy indicates higher potential demand for LNC’s products.  We believe LNC is well positioned to benefit from steady U.S. economic improvement and offers favorable odds to our clients.

Top 10 Equity Holdings

Google, Inc. 5.4%
Lowes Cos 4.9%
CBS Corp. 4.8%
Gilead Sciences 4.7%
Danaher Corp 4.0%
Amgen Inc. 3.9%
MasterCard, Inc. 3.8%
SunTrust Banks 3.7%
Forest Laboratories 3.6%
Citrix Systems, Inc. 3.6%

U.S. Equity Indices

Index 09/20/13 Week % Chg YTD % Chg
DJIA 15,451.1 0.5% 17.9%
NASDAQ 3,774.7 1.4% 25.0%
S&P 500 1,709.9 1.3% 19.9%
Russell 1000 G 794.4 1.6% 20.7%

U.S. Credit Rates

Index 09/20/13 09/16/13 12/31/12
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 1.5% 1.7% 0.8%
10 Year T-Note 2.7% 2.9% 1.8%
30 Year T-Bond 3.8% 3.8% 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.