News & Our Thinking

Weekly Investor

Weekly Investor – December 23, 2013

30 December 2013

Tis the Season for Tapering!

Market Summary: 

U.S. equity markets were all up significantly last week despite the Federal Reserve’s announcement that it would begin to taper its stimulus measures. On Wednesday, the Fed formally announced that it will reduce its monthly bond buying program, currently at $85 billion, by $10 billion per month starting in January 2014.  Upon receipt of this news, equity markets did not waver, providing further evidence that the U.S. economy has the strength to stand on its own.  Additionally, economic data was also generally positive for the week as data showed improvement in manufacturing, productivity and industrial output as well as housing permits and housing starts.  Looking ahead to this week, markets will close early on Tuesday and also be closed Wednesday to observe the Christmas holiday.  Investors should expect a slow week and hope for continued positive market performance.

The S&P 500® was up 2.4% for the week.  The top-performing sectors in the S&P 500® Index included Industrials (3.3%) and Basic Materials (2.8%), while bottom-performing sectors included Consumer Staples (1.4%) and Telecommunications (0.8%). 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.

Strategy Change

bgBunge Ltd. (BG) engages in agriculture and food business worldwide among four segments: agribusiness, sugar and bioenergy, milling products and fertilizer. Along with food processing, BG is an international exporter of soybeans and participates in grain trading.  The company was founded in 1818 and is headquartered in White Plains, New York.

BG has a new CEO who is implementing a change in strategy.  The new strategy is focused on improving returns through both productivity improvements as well as the potential to exit BG’s existing low return businesses.  We have confidence in BG’s new leadership and feel the changes offer favorable odds for our portfolio.

Top 10 Equity Holdings

Google, Inc. 6.1%
CBS Corp. 4.8%
Lowes Cos. 4.6%
Forest Laboratories 4.4%
MasterCard, Inc. 4.3%
Danaher Corp. 4.1%
Endo Health Solutions 4.0%
SunTrust Banks 3.9%
Amgen Inc. 3.5%
Qualcomm Inc. 3.5%

U.S. Equity Indices

Index 12/20/13 Week % Chg YTD % Chg
DJIA 16,221.1 3.0% 23.8%
NASDAQ 4,104.7 2.6% 35.9%
S&P 500 1,818.3 2.4% 27.5%
Russell 1000 G 848.9 2.5% 29.0%

U.S. Credit Rates

Index 12/20/13 12/13/13 12/31/12
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 1.7% 1.5% 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.