Weekly Investor – September 23, 2013
Shutdown?
Market Summary:
U.S. equity markets ended the week mostly down as antics in Washington contributed to market volatility. In fact, the VIX index, which measures equity market volatility, was up nearly 18% for the week. It all began the previous Friday when the House of Representatives passed a continuing resolution without funding for the Affordable Care Act and investors spent the week eagerly awaiting any news on the Senate’s response. Despite Senator Ted Cruz’s 21 hour pseudo-filibuster against funding the Affordable Care Act, Senate Republicans decided not to block and Senate Democrats sent a clean continuing resolution, with funding for the Affordable Care Act, back to the House. Looking ahead, investors wait to see if an agreement can be reached by midnight today in order to provide equity markets with some clarity. If no resolution is reached, the result is a partial government shutdown of all non-essential services starting tomorrow. While a short-term shutdown is unlikely to affect the economy directly, it would continue to erode confidence in the U.S. government and the environment in which businesses and consumers are currently operating.
The S&P 500® was down 1.1% for the week. The top-performing sectors in the S&P 500® Index included Consumer Discretionary (-0.2%) and Utilities (-0.5%), while bottom-performing sectors included Financials (-1.9%) and Consumer Staples (-2.0%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
New Strategy
Lowe’s Companies, Inc. (LOW) operate as a home improvement retailer. The company offers a range of products for repair, remodeling, home decorating, and property maintenance.
LOW’s implemented a new strategy that focuses on slowing store growth and improving store productivity and margins. LOW’s also plans to return capital back to investors through substantial share buyback offers. We believe the new strategy will be successful and offers an attractive risk / reward profile for our portfolio.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.3% |
| Lowes Cos | 4.9% |
| CBS Corp. | 4.8% |
| Gilead Sciences | 4.8% |
| Danaher Corp | 4.1% |
| MasterCard, Inc. | 3.9% |
| Amgen Inc. | 3.8% |
| SunTrust Banks | 3.8% |
| Forest Laboratories | 3.6% |
| EMC Corp. | 3.6% |
U.S. Equity Indices
| Index | 09/27/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 15,258.2 | -1.2% | 16.4% |
| NASDAQ | 3,781.6 | 0.2% | 25.2% |
| S&P 500 | 1,691.8 | -1.1% | 18.6% |
| Russell 1000 G | 789.3 | -0.6% | 19.9% |
U.S. Credit Rates
| Index | 09/27/13 | 09/20/13 | 12/31/12 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.4% | 1.5% | 0.8% |
| 10 Year T-Note | 2.6% | 2.7% | 1.8% |
| 30 Year T-Bond | 3.7% | 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.
